Underpricing in Social Infrastructure Projects: Combating the Institutionalization of the
            <i>Winner’s Curse</i>

Signor, Regis; Love, Peter E.D.; Marchiori, Fernanda Fernandes; Felisberto, Alexandre David

doi:10.1061/(asce)co.1943-7862.0001926

Cited by 8 publications

(4 citation statements)

References 18 publications

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“…Skitmore 2004) -in this case, abnormally high or low bids. These can be from transcription errors, but also from excessively aggressive or conservative bidders (Signor et al 2020b). In most cases, these bids are not representative of a truly competitive market and must be removed before expression (4) is applied for calculating the 𝐶𝐶𝐶𝐶 � value of each dataset.…”

Section: Discussionmentioning

confidence: 99%

Standard Deviation of Bids for Construction Contract Auctions

Ballesteros‐Pérez

Skitmore

Cerezo-Narváez

et al. 2021

J. Constr. Eng. Manage.

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Previous research has confirmed that the distribution of bids for construction auctions can be 5 reasonably modelled with the Lognormal distribution. The location parameter of this distribution (the 6 mean µ) has been found to have a good linear correlation with the bidders' cost estimates. However, 7 the scale parameter (standard deviation of the bids, σ) remains noticeably difficult to anticipate. 8 By analyzing 13 construction auction datasets, hard evidence is provided that the high 9 variability of σ observed in construction auctions is mostly due to sample size (number of bids per auction). Moreover, we show that the coefficient of variation (σ/µ) of log-transformed bids follows the same χ² distribution in uncapped auctions. This means the σ's population value in similar auctions is nearly proportional to µ provided the bid price is not upper limited. Other findings are that more frequent bidders do not tend to bid lower, but their dispersion is narrower than sporadic bidders.These findings allow the introduction of important simplifications in construction bidding models, especially when access to historical data is limited.

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Section: Discussionmentioning

confidence: 99%

Standard Deviation of Bids for Construction Contract Auctions

Ballesteros‐Pérez

Skitmore

Cerezo-Narváez

et al. 2021

J. Constr. Eng. Manage.

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“…Trazendo a questão para as licitações brasileiras, em que geralmente o critério de seleção do vencedor é o menor preço, observa-se que a maldição do vencedor ocorre porque, na prática, os vencedores raramente rejeitam valores inexequíveis (Signor et al 2020). Por exemplo, Dias (2021) analisou métodos e teorias de autores precedentes para identificar a maldição do vencedor ainda na fase de licitação, concluindo que nem os métodos analisados nem as prescrições da Lei nº 8.666 (Lei nº 8.666, de 21 de junho de 1993) e do projeto da nova lei de licitações -o então Projeto de Lei nº 4.253, de 2020 -conseguiram antever os contratos problemáticos em licitações de obras de uma universidade.…”

Section: O Caso Brasileirounclassified

A nova lei de licitações como promotora da maldição do vencedor

et al. 2022

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Resumo Evitar sobrepreços e preços manifestamente inexequíveis são dois objetivos principais da recém-promulgada Lei nº 14.133, de 1º de abril de 2021. O presente artigo demonstra que, ao tentar alcançar o primeiro objetivo, a nova lei de licitações promove o segundo, pois um comando específico tende a reduzir os preços até congelá-los nos menores valores possíveis, conduzindo os contratados à maldição do vencedor. Alerta-se os agentes públicos sobre o fato de que a manutenção desse comando levará a descumprimentos generalizados de contratos e a uma eventual falência de competidores. O método Monte Carlo é utilizado para demonstrar que um mecanismo abrangente de pesquisa de preços evitará o problema e garantirá o efeito pretendido pela lei.

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“…There is a complex legal framework for estimating and contracting parties for public sector projects in Brazil, which places significant emphasis on the development of a reference estimate (BRAZIL, 2013). A pre-tender estimate that is inaccurate due to omissions from underestimated quantities or incorrect prices may result in opportunistic bids being received from contractors (SIGNOR et al, 2020). Moreover, the ability to detect collusive tendering, which has plagued Brazil, is stymied (SIGNOR et al, 2017).…”

Section: Cost Estimation Of Public Infrastructure Projectsmentioning

confidence: 99%

BIM cost estimation guidelines for Brazilian public sector infrastructure

Felisberto¹,

Marchiori

Love³

et al. 2021

PARC Pesq. em Arquit. e Constr.

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The cost estimation of public sector projects in Brazil must observe the prevailing legislative framework to reduce the likelihood of under-and-over pricing of construction works and potential corruption. Therefore, initial estimates for projects must be prepared using the National System of Costs and Civil Construction Indices (SINAPI). This is a labor-intensive process, and the result estimates produced may be inaccurate. Therefore, it becomes difficult to determine if the under-or-over pricing of works has arisen during the tendering process. The problem is approached with new guidelines for improving the accuracy of estimates that utilizes SINAPI methodology with Building Information Modelling cost estimation. The research method used was Design Science Research (DSR) developing: problem diagnosis, solution proposition, implementation, and evaluation of contributions. The proposed guidelines were tested in two projects: a multi-family residential building and a Reference Center for Social Assistance (CRAS) using a BIM authoring platform. It has been demonstrated that text parameters can be used to identify material specifications, the geometry of elements, and specify substrates, improving the process to generate an estimate following ‘SINAPI factors’ tree’ elemental costs. The guidelines comply with prevailing Brazilian legislation and can improve the process and accuracy of the pre-tender estimate.

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Underpricing in Social Infrastructure Projects: Combating the Institutionalization of the Winner’s Curse

Cited by 8 publications

References 18 publications

Standard Deviation of Bids for Construction Contract Auctions

Standard Deviation of Bids for Construction Contract Auctions

A nova lei de licitações como promotora da maldição do vencedor

BIM cost estimation guidelines for Brazilian public sector infrastructure

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