Supporting contractors’ bidding decision: RBF neural networks application

Agnieszka Leśniak

Citation: AIP Conference Proceedings 1738, 200002 (2016); doi: 10.1063/1.4951974

View online: http://dx.doi.org/10.1063/1.4951974
View Table of Contents: http://aip.scitation.org/toc/apc/1738/1
Published by the American Institute of Physics
 Supporting Contractors’ Bidding Decision: RBF Neural
Networks Application
Agnieszka Leśniaka
a
Cracow University of Technology, Faculty of Civil Engineering,
Institute of Construction and Transportation Engineering & Management,
Warszawska 24; 31-155 Kraków; POLAND

Abstract. A bidding decision, despite its being important for the contractor, often needs to be made quickly and within a
limited timeframe. To facilitate the contractor’s reasoning by limiting randomness that may lead to mistakes decision support
models are frequently applied. This paper presents possible applications of an Artificial Neural Network (ANN) to support
bidding decisions. The proposed model involving networks with radial basis functions (RBF) was to perform a classification
task. On the basis of a set of input data, the network was to suggest either participation in the bid or resignation from it. The
results, 93% of correctly classified cases, confirmed the usability of RBF network in solving the problem.
Keywords: bidding decisions, classification, Artificial Neural Networks, RBF Networks,
PACS: 89.20.Bb

INTRODUCTION
For the construction company, tendering is the most popular way of acquiring contracts. The decision to
participate in the tender needs to be made carefully since it significantly contributes the company’s success. The
ability to choose the right bid influences the company’s general condition and future development, considering the
risk involved in any construction project [3], [9]. The efficiency of bidding decisions can be improved by applying
decision support models. Many researchers developed various mathematical models, such as [1], [2]. With
increasing frequency, decisions concerning construction projects employ the fuzzy sets theory [4], [5], [6], [12],
[14], [15], [17], [18] or artificial neural networks [7], [8], [10], [16].
Artificial neural networks (ANN) belong to a dynamically developing field of knowledge involved in a number
of scientific domains. ANNs indeed make a good tool to solve the problems involved in classification, prediction or
regression [13]. Due to the structure imitating biological neural networks they possess unusual features, including
[13]: ability to learn and generalize the acquired knowledge, ability to adapt to changing conditions and small
sensitivity to errors in the input data.
The aim of this article is to propose a model based on the artificial neural networks involving radial basis
functions to support the contractors’ bidding decision.
The RBF networks which belong to a special group of unidirectional neural networks reveal certain advantages
when compared with other networks, such as a multilayer perceptron (MLP) [13]: first, RBF can model any non-
linear function by means of a single latent layer, which eliminates the need to decide on the number of latent layers.
Second, a simple linear transformation performed in the output layer may be fully optimalized by means of
traditional techniques of linear modelling which are quick and do not involve such problems as local minima, found
in MLP training. For this reason RBF networks can be trained within a considerably short period of time.
The process of constructing a classification model involving artificial neural networks consists of a number of
stages, presented in this paper.

DATA COLLECTION
The development of a method for determining the bidding decision using artificial neural networks requires the
development of an appropriate database. On the basis of the factors identified in [11], experts evaluated 88 bidding
procedures, with emphasis on the participation of the contractor. Each tender was described by means of 15 criteria
(factors) influencing the bid/no bid decision (Table 2). Each factor was evaluated in accordance to a 1-7 scale, where
1 was the factor with no influence on the decision and 7 was the one with the greatest significance in decision
making. For each case there was the bidding result added: win (Yes) or lose (No).

International Conference of Numerical Analysis and Applied Mathematics 2015 (ICNAAM 2015)
AIP Conf. Proc. 1738, 200002-1–200002-5; doi: 10.1063/1.4951974
Published by AIP Publishing. 978-0-7354-1392-4/$30.00

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 SPECIFYING THE VARIABLES IN THE MODEL
The issue of classification requires the network to assign each case represented by an appropriate set of input
data to one selected category.
The 15 factors that influenced the bidding decision have been adopted as input parameters of the neural network
model (Table 1):

TABLE 1. The input parameters of the neural network model

Factors influencing bid/no bid decision
x1 - type of works
x2 - past experience with similar projects x9 - time of project duration
x3 - contract conditions x10 - criteria of bid selection
x4 - owner’s reputation x11 - location of the project
x5 - value of the project x12 - time for the preparation of the bid
x6 - need of worx x13 - possible subcontractors
x7 - size of the project x14 - necessity for specialized equipment
x8 - profits from similar past projects x15 - degree of complexity of works

The problem discussed here involves a bid/no bid decision as the dependent variable. Thus the network’s
purpose is to assign (or not) each case that is represented by a set of input data to a particular class. The class is
represented by one output neuron.
The output variable was defined as a quality variable: „Yes” – indicates class membership – that is a bidding
decision, „No” - means no class membership, that is resignation from entering the bid.

NETWORK SELECTION
The model involves neural networks with radial basis functions (RBF) which constitute a special group of
unidirectional neural networks. What distinguishes them from the multilayer perceptron is the single latent layer
consisting of neurons with radial functions implemented as activation functions. Input information include signals
described with an input vector x and the latent layer represents a non-linear mapping of neurons of radial basis
function. In a radial basis function, denoted as (x-c), the latent neuron performs a function changing radially
around a selected centre c [13].
The output neuron assumed as linear corresponds to the following function:

H (1)
y   wkk  b
k 1
where:
k- radial basis functions: 
k  G x  c k Q  . (2)
The shape of the assumed radial network is presented in Figure 1. The number of neurons in the hidden layer will
be changed within the interval from 5 to 25.

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 b

FIGURE 1. The general shape of the radial network

TRAINING A NEURAL NETWORK

This paper discusses the use of supervised learning that is typically applied for a classification in which the value
of the dependent variable has been observed and recorded in the learning sample, which allows to construct a
prediction model (on a new testing sample).
Training a RBF network is divided into separate stages. During the first stage centres and divergences of radial
neurons are determined; subsequently, the output layer is optimized.
The database was divided into:
 the learning set L – 70% of cases
 the validation set V – 15% of cases,
 the testing set T – 15% of cases..
The selected records of the database of teaching information, that is the values of describing variables (x1 …x15) and
the values of the described variable (T), are presented in Table (2).

TABLE 2. The chosen records of the database of teaching information

i X1 X2 X3 X4 X5 X6 X7 X8 X9 X10 X11 X12 X13 X14 X15 T
3 5 4 5 6 4 7 3 4 3 4 4 6 6 4 4 Yes
63 7 7 4 4 3 5 3 4 5 3 5 5 4 6 6 No
Source: own research

Network training began with involving 5 neurons in the latent layer. Their number successively increased up to
25. In total, 100 networks were trained, of which 3 networks that generated the most stable training results were
chosen.

EVALUATION OF THE MODEL

The main aim was to construct a network that would be able to generalize and to operate well on a set of data
that was excluded from training. Model evaluation concerned the efficiency of classification expressed as a
number of correctly identified cases for the learning, validation and testing sets. The choice of the best network
depended on the high similarity between the classification power of the validation and testing sets, which were
never significantly higher than the efficiency of the learning set [teoria seci pdf].
The results are presented in Table (3).

TABLE 3. The RBF neural network - results

Framework of network*
classification power
Learning set Validation set Testing set
RBF 15-5-2 90,32% 92,31% 92,31%
RBF 15-10-2 88,71% 92,31% 92,31%
RBF 15-20-2 83,87% 84,62% 84,62%
* As a result of learning, the network returns a response using the technique "one of N." In the one-of-N encoding, one
neuron corresponds to only one of the N possible values of the variable under consideration (here N=2). The actual state of the

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nominal variable is represented by the signal value of 1appearing on the corresponding neuron, while the values on the other
neuron equals 0. As a result of modelling, the output should contain two neurons to receive one answer from the network.

The best results of training, taking into consideration the assumed evaluation criteria, were obtained by the 15-5-
2 RBF network which includes 5 neurons in its latent structure. The classification efficiency of the validating and
testing sets is comparable and, additionally, the classification ability of the learning set is not significantly higher.

CONCLUSIONS
The paper presents a model based on an artificial neural network designed to support bidding decisions. The
modelling performed here involved training, validation and testing the neural networks of radial basis functions,
assuming a varying number of neurons in the hidden layer. The network solved the problem of classification. The
evaluation of the model was satisfactory. The best network proved to be the RBF 15-5-2 one which generated the
most efficient classification, namely the 93,31% of correctly identified cases that did not participate in the training
process. The other networks proved to be similarly effective. The results obtained suggest that the model may be
used to create a system supporting bidding decisions. Such a system may enable contractors (decision makers) to
increase the efficiency of decision making processes concerning their joining tenders and, subsequently, decrease
subjectiveness and randomness of a bid/no bid decision.

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