Risk Assessment of Competitive Procurement

Crowley, Larry G.; Hancher, Donn E.

doi:10.1061/(asce)0733-9364(1995)121:2(230)

Cited by 43 publications

(28 citation statements)

References 7 publications

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“…In our regression analysis we created a dummy variable where the open procedure equates to 1. 8 Among the various types of Italian CA, we considered: Public Administrations, Regional Authorities, Territorial Association in Mountain Regions, Provincial Authorities, Municipalities, the National Health Service, National Railways, National Roadworks Board (Anas), Postal Services, public corporations and other public organizations, concessionaires and administrator of public infrastructure and networks, and the Council Housing Board (IACP). 9 In our regression, we found that COV and CVA were positive, and since they are both affected by the option value (even if COV is affected by the option value, CVA by its variabil-province, year, type of public works and type of CA; Columns 2, 3 and 4 discard the fixed effects for province, type of works, CA, respectively, ceteris paribus.…”

Section: Time Overruns In Italian Ppcsmentioning

confidence: 99%

“…The seminal paper by Bajari and Tadelis (2001), modeling the tension between ex-ante incentives and ex-post transaction costs due to costly contract renegotiation, represents the first analysis considering both ex-post adaptation and ex-ante screening in procurement. 1 Differently, engineering and construction management literature tends to concentrate on the effects that the volatility of the production costs has on the supplier's bidding strategy (Crowley and Hancher, 1995;Levin 1998;Xu and Tiong, 2001). In particular, uncertainty on estimated investment costs give rise to significant risks and opportunities which may prompt suppliers to adopt an opportunistic behavior, such as under-pricing and time overruns (King and Mercer, 1985;Chapman et al 2000; You and Tam, 2006;Lo, Lin and Yan, 2007).…”

Section: Introductionmentioning

confidence: 99%

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Time Overruns as Opportunistic Behavior in Public Procurement

et al. 2012

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This paper considers the supplier's strategic delivery lead time in a public procurement setting as the result of the firm's opportunistic behavior on the optimal investment timing. In the presence of uncertainty on construction costs, we model the supplier's option to defer the contract's execution as a Put Option. We include in the model both the discretion of the court of law in enforcing contractual clauses (i.e. a penalty for delays) and the "quality" of the judicial system. Then, we calibrate the model using parameters that mimic the Italian procurement for public works and calculate the maximum amount that a firm is "willing to pay" (per day) to postpone the delivery date and infringe the contract provisions. Our results show that the incentive to delay is greater the higher the construction costs and their volatility, and the weaker the penalty enforcement by the courts of law.

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Section: Time Overruns In Italian Ppcsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Time Overruns as Opportunistic Behavior in Public Procurement

et al. 2012

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“…For example, Crowley and Hancher [6] designed a statistical procedure for substantiating the risk of growing costs in projects that were competitively bid for. Their statistical findings demonstrated that projects awarded to bidders with extremely low bids were more likely to undergo excessive cost growth than a project awarded to bidders with more reasonable bids.…”

Section: Related Researchmentioning

confidence: 99%

Applications of electronically facilitated bidding model to preventing construction disputes

Wang

Yang

2005

Automation in Construction

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“…Another avenue of research is the development of mathematical models that help to make the decision of whether to compete for a contract. And if so, determining the optimum value based on certain criteria and risks for tenderers [16][17][18][19]. The latter group may include the development of prediction models based lower rates taking into account historical economic openings of a particular public body [20][21].…”

Section: Introductionmentioning

confidence: 99%

Analysis of the Scoring Formula of Economic Criteria in Public Works Procurement

Bargues¹

2013

IJEBO

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Public works procurement regulates two award procedures from within the same criteria: either the price or a variety of different conditions. Although the question of price may not seem the most important factor to be considered, it is imperative to always be aware of it when bearing in mind the award criteria. Economic scoring formulae (ESF) are numerous and each agency has the authority to determine which will be used for each of their bids, making this article a comparative analysis of all the options. The results show that most formulas give the highest score to the most economic bidder, it is necessary to eliminate the use of formulas that give the highest score to the offers which are closest to the average of all bids submitted. One should always opt for formulas with moderate or strong scoring gradients across various stages or phases, thereby giving more weight to economic analysis, as set out in the various administrative clauses.

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Risk Assessment of Competitive Procurement

Cited by 43 publications

References 7 publications

Time Overruns as Opportunistic Behavior in Public Procurement

Time Overruns as Opportunistic Behavior in Public Procurement

Applications of electronically facilitated bidding model to preventing construction disputes

Analysis of the Scoring Formula of Economic Criteria in Public Works Procurement

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