The Effect Of Lump Sum Contracts On Bidding Behavior And Procurement Costs In Public Highway Construction
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The Effect Of Lump Sum Contracts On Bidding Behavior And Procurement Costs In Public Highway Construction
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Author :
language : en
Publisher:
Release Date : 2014
The Effect Of Lump Sum Contracts On Bidding Behavior And Procurement Costs In Public Highway Construction written by and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with categories.
I study the effect of lump sum contracts on bidding behavior and procurement costs in highway construction. For highway construction projects we usually observe ex-post changes in design due to unforeseen site condition. The Florida Department of Transportation (FDOT) offers two different contract types regarding compensations for ex-post quantity changes of work item. Under the standard contract, the department provides a list of work items and their quantities. If there is a quantity change, the contractor's unit price bid on that work item is used to make pay adjustment. On the other hand, under the lump sum contract, bidders are allowed to design the project themselves and no pay adjustments are made for ex-post quantity changes. In Chapter 1, I propose a theoretical model to describe bidding behavior under the lump sum. They are willing to inflate bids to self-insure against ex-post changes, while they should make a cost-efficient design to win the contract. Compared to the standard, lump sum contracts may increase or decrease bids, but they reduce the expected payments in many cases. In Chapter 2, I estimate the effect of lump sum contracts on (winning) bids and procurement costs. I assume that the outcome variables are independent of the assignment conditional on observables. And I use regressions and propensity score methods to estimate the effects. Specifically, I use a trimmed sample for regressions in which some seemingly extreme observations are dropped based on the propensity scores. With miscellaneous projects, lump sum does not increase the outcome variables. And I allow the assignment decision to be endogenous and use the treatment effect model to quantify the impact. In particular, I use district and task dummies as instrumental variables. It turns out that the outcome variables do not increase under the lump sum. And I test for unobserved project heterogeneity conditional on all the covariates by exploiting multiple bids within an auction. Using the FDOT data, the correlation coefficient for the trimmed sample is close to zero, which implies no serious unobserved project heterogeneity. Thus, the regression results with the trimmed sample are supported.
The Effect Of Information On The Bidding And Survival Of Entrants In Procurement Auctions
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Author : Dakshina G. De Silva
language : en
Publisher:
Release Date : 2008
The Effect Of Information On The Bidding And Survival Of Entrants In Procurement Auctions written by Dakshina G. De Silva and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with categories.
In government procurement auctions of construction contracts, entrants are typically less informed and bid more aggressively than incumbent firms. This bidding behavior makes them more susceptible to losses affecting their prospect of survival. In April of 2000, the Oklahoma Department of Transportation started releasing the internal cost estimates to complete highway construction projects. Using newly developed quantile regression approaches, this paper examines the impact of the policy change on aggressive entrants. First, we find that the information release eliminates the bidding differential between entrants and incumbents attributed to informational asymmetries. Second, we argue that the policy change affects the prospects of survival of entrants in the market. We find that those who used to exit the market relatively soon are now staying 37 percent longer, while at the median level bidding duration increased by roughly 68 percent. The policy has the potential to encourage entry in government procurement auctions and thus increase competition.
Best Value Procurement Methods For Highway Construction Projects
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Author : Sidney Scott
language : en
Publisher: Transportation Research Board
Release Date : 2006
Best Value Procurement Methods For Highway Construction Projects written by Sidney Scott and has been published by Transportation Research Board this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with Government purchasing categories.
"TRB's National Cooperative Highway Research Program (NCHRP) Report 561: Best-Value Procurement Methods for Highway Construction Projects examines procurement methods, award algorithms, and rating systems for use in awarding best-value highway construction contracts. The report also explores screening criteria for selecting projects for application of best-value procurement, implementation strategies, and a model best-value specification"--Publisher's description.
The Impact Of Timing On Bidding Behavior In Procurement Auctions Of Contracts With Private Costs
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Author : Dakshina G. De Silva
language : en
Publisher:
Release Date : 2010
The Impact Of Timing On Bidding Behavior In Procurement Auctions Of Contracts With Private Costs written by Dakshina G. De Silva and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010 with categories.
We provide a comparison of bidding behavior between multi-round and single-round auctions considering bid lettings for asphalt construction contracts. Using a reduced-form difference-in-difference approach as well as the nonparametric estimation technique proposed by Racine and Li (2004) we find that, bidding is more aggressive in a sequential multi-round setting than in a simultaneous single-round format. We explore potential causes for the bidding difference across formats related to synergies and level of bidder participation.
Time Related Incentive And Disincentive Provisions In Highway Construction Contracts
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Author : Gary J. Fick
language : en
Publisher: Transportation Research Board National Research
Release Date : 2010
Time Related Incentive And Disincentive Provisions In Highway Construction Contracts written by Gary J. Fick and has been published by Transportation Research Board National Research this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010 with Business & Economics categories.
This report will be of interest to state and local highway agency construction managers and contractors with regard to learning about best practices of time-related incentive and disincentive contract provisions and their effect on staffing levels, productivity, project cost, quality, contract administration, and the contractor's operations and innovations. The report also presents a decision process guide to use as a template for crafting the incentive/disincentive provisions.
Optimizing The Size Of Public Road Contracts
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Author : Atsushi Iimi
language : en
Publisher:
Release Date : 2017
Optimizing The Size Of Public Road Contracts written by Atsushi Iimi and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017 with categories.
Procurement packaging has important effects on not only the bidders' bidding behavior, but also contractors' performance. By changing the size of public contracts, procurers can encourage (or discourage) market competition and improve contract performance, avoiding unnecessary cost overruns and project delays. In practice, there is no single solution about how to package public contracts. With procurement data from road projects in Nepal, this paper examines the optimal size of road contracts in rural areas. The optimum varies depending on policy objectives. To maximize the bidder participation, the length of road should be about 11 kilometers. To minimize cost overruns and delays, the contracts should be much larger at 17 and 21 kilometers, respectively. Compared with the current procurement practices, the findings suggest that procurers take more advantage of enlarging road packages, although contracts that are too large may increase the risk of discouraging firms from participating in public tenders.
A Comparison Of Cost And Time Between The Traditional Lump Sum And The Design And Construction Procurement Systems As Used By The Department Of Works Qld And Other Public Authorities
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Author : Arnold Peter Breen
language : en
Publisher:
Release Date : 1987
A Comparison Of Cost And Time Between The Traditional Lump Sum And The Design And Construction Procurement Systems As Used By The Department Of Works Qld And Other Public Authorities written by Arnold Peter Breen and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1987 with Construction contracts categories.
Project Management For Construction
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Author : Chris Hendrickson
language : en
Publisher: Chris Hendrickson
Release Date : 1989
Project Management For Construction written by Chris Hendrickson and has been published by Chris Hendrickson this book supported file pdf, txt, epub, kindle and other format this book has been release on 1989 with Construction industry categories.
Itf Roundtable Reports Public Private Partnerships For Transport Infrastructure Renegotiation And Economic Outcomes
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Author : International Transport Forum
language : en
Publisher: OECD Publishing
Release Date : 2017-02-24
Itf Roundtable Reports Public Private Partnerships For Transport Infrastructure Renegotiation And Economic Outcomes written by International Transport Forum and has been published by OECD Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-02-24 with categories.
Public-private partnerships (PPPs) are an important vehicle for private participation in infrastructure investment, delivery and management. Renegotiations are an integral part of the PPP process but their prevalence varies markedly in different parts of the world. Renegotiations can be ...
Price Adjustment Policies In Procurement Contracting
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Author : Georgia Kosmopoulou
language : en
Publisher:
Release Date : 2014
Price Adjustment Policies In Procurement Contracting written by Georgia Kosmopoulou and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with categories.
The fluctuations in fuel prices over the past decade led a number of government agencies to introduce price adjustment clauses in procurement contracting. Those clauses were primarily designed to reduce contractors' uncertainty without considering the impact of such initiatives on bidding and the budget. We analyze a newly constructed, detailed panel of observations on bids for construction contracts and compare bidding behavior across periods and projects, and across items within projects. Estimates from a difference-in-differences approach, indicate that bidding becomes more aggressive and less dispersed after the implementation of this policy. The difference is more pronounced when we consider itemized bids than overall project bids. Alternative techniques of regression discontinuity and nonparametric estimation are applied and yield consistent results.