Download or read book Procurement Contracting with Time Incentives written by Patrick Bajari and published by . This book was released on 2009 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In public sector procurement, social welfare often depends on the time taken to complete the contract. A leading example is highway construction, where slow completion times inflict a negative externality on commuters. Recently, highway departments have introduced innovative contracting methods that give contractors explicit time in--centives. We characterize equilibrium bidding and efficient design of these contracts. We then gather a unique data set of highway repair projects awarded by the Minnesota Department of Transportation that includes both innovative and standard contracts. Descriptive analysis shows that for both contract types, contractors respond to the incentives as the theory predicts, both at the bidding stage and after the contract is awarded. Next we build a structural econometric model that endogenizes project completion times, and perform counterfactual policy analysis. Our estimates suggest that switching from standard contracts to designs with socially efficient time incentives would raise commuter surplus relative to the contractor's costs by 19% of the contract value; or in terms of the 2009 Mn/DOT budget, $290 million.
Download or read book Incentives In Procurement Contracting written by Jim Leitzel and published by Routledge. This book was released on 2019-08-19 with total page 225 pages. Available in PDF, EPUB and Kindle. Book excerpt: This volume presents a nontechnical treatment of issues that arise in procurement contracting, with an emphasis on major weapons systems procurement. Employing the economic theory of agency as their analytical framework, contributors assess the incentives that arise, for both buyers and sellers, in different contractual settings. Procurement contra
Download or read book Uncertainty in Procurement Contracting with Time Incentives written by Wenzheng Gao and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies cost-plus-time (A+B) procurement contracting with time incentives in the highway construction industry. In the presence of construction uncertainty, the contractor's actual completion time may deviate from the bid completion time, and the A+B contract design is not ex-post efficient. Using data from highway procurement contracts in California, we show that an ex-post efficient lane rental contract would reduce the social cost by $41.39 million (43.11 percent) on average. Moreover, the average commuter cost would decrease by $62.06 million (78.96 percent), suggesting a substantial reduction in the construction externality to commuters from lane rental contracts.
Download or read book Incentives in Procurement Contracting written by Taylor & Francis Group and published by . This book was released on 2021-02-19 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Five essays on incentives in procurrent contracting written by Steinar Vagstad and published by . This book was released on 1994 with total page 178 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Incentives and adaptation evidence from highway procurement in Minnesota written by Gregory B. Lewis and published by . This book was released on 2011 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: Procurement projects often encounter unanticipated problems. Deadlines and penalties are one important instrument used to incentivize contractors to adapt their plans. We develop a theory of highway procurement in which contractors must modify their construction rate following a productivity shock. We model how time incentives affect the work rate and time taken, characterizing the efficient contract design. Using new micro-level data from Minnesota that includes day-by-day information on work plans, actual outcomes and delays, we find strong evidence supporting the theory. As an application, we build an econometric model that endogenizes adaptation, and simulate how different incentive structures affect outcomes and the variance of contractor payments. Accounting for the traffic delays caused by construction, switching to a more efficient design would substantially increase welfare without substantially increasing risk.
Download or read book Handbook of Procurement written by Nicola Dimitri and published by Cambridge University Press. This book was released on 2006-09-28 with total page 562 pages. Available in PDF, EPUB and Kindle. Book excerpt: How can organizations ensure that they can get best value for money in their procurement decisions? How can they stimulate innovations from their dedicated suppliers? With contributions from leading academics and professionals, this 2006 handbook offers expert guidance on the fundamental aspects of successful procurement design and management in firms, public administrations, and international institutions. The issues addressed include the management of dynamic procurement; the handling of procurement risk; the architecture of purchasing systems; the structure of incentives in procurement contracts; methods to increase suppliers' participation in procurement contests and e-procurement platforms; how to minimize the risk of collusion and of corruption; pricing and reputation mechanisms in e-procurement platforms; and how procurement can enhance innovation. Inspired by frontier research, it provides practical recommendations to managers, engineers and lawyers engaged in private and public procurement design.
Download or read book Procurement Incentives and Bargaining Friction written by John J. Horton and published by . This book was released on 2010 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: A transaction cost theory of procurement developed by Bajari and Tadelis (2001) models the buyer's choice of incentive structure as endogenous, with buyers trading off the efficiency of high-powered incentives against the ex post bargaining friction these incentives can create. The source of the bargaining friction is assumed to be asymmetric information between the buyer and seller about the true costs of adapting the project to changed conditions. Using government contract data and an instrument based on contracting-office idiosyncratic variation in preference for various contractual forms, I estimate the effect of a buyer choosing a fixed-price (i.e., high-powered) contract on the probability that the contract will lead to litigation, which proxies for bargaining failure and friction. I find that (a) fixed-price contracts are far more likely to be litigated that cost-plus contracts and (b) the instrumental variables estimate of the effect of choosing a fixed-price structure is almost twice as larges as the biased, OLS estimate. These results are consistent with the main predictions of the Bajari and Tadelis model.
Download or read book Contract Types written by Kate M. Manuel and published by DIANE Publishing. This book was released on 2011-05 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: Federal procurement contracts are divided into 2 types fixed-price and cost reimbursement -- that differ as to whether the gov't. or the contractor assumes the risk of increases in costs (e.g., wages, materials). There was an increase in the use of cost-reimbursement contracts during the George W. Bush Admin. The Obama Admin. wants to reduce by at least 10% the funds obligated in FY 2010 by "high risk-contracting authorities," such as cost-reimbursement, time-and-materials, and labor-hour contracts. Contents of this report: Intro.; Selecting the Contract Type; Types of Contracts; Recently Enacted and Proposed Legislation; Executive Branch Initiatives; Developments Re: Contract Types, 107th-110th Cong. A print on demand report.
Download or read book Incentive Contracts Adverse Selection and Risk Transfer written by Meng Liu and published by . This book was released on 2018 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: Multi-attribute auctions, designed to address multi-dimensional preference, make a good casestudy where incentive provisions interact with competition. By studying "Cost Time" highwayprocurement that aims to incentivize timely project delivery, we show that awarding incentivecontracts by bidding mechanisms can yield sub-optimal outcomes. Our theory demonstratesthat bidders, facing high-powered incentives and production uncertainty, optimally skew theirtime bids while transferring production risk to buying agencies. This gaming behavior leads toadverse selection and efficiency loss, in that a less-efficient bidder can outbid the efficient bidderdue to the misalignment between bidder types and the auction rule that determines winners.We estimate our model using data from the California Department of Transportation and findthat 18% of auctions are allocated to inefficient bidders. Counterfactual analyses suggest thatprocurement schemes with lower incentives can yield less mis-allocation with lower productioncosts and less buyer budget pressure.
Download or read book The Complete Guide to Government Contract Types written by Kenneth R. Segel and published by Berrett-Koehler Publishers. This book was released on 2016-04-01 with total page 270 pages. Available in PDF, EPUB and Kindle. Book excerpt: Everything You Need to Know About Government Contract Types As the world's single largest buyer of goods and services, the federal government has many ways to structure its procurements. Different situations and conditions often determine the best vehicle for a particular purchase. Contracting officers must assess a wide range of factors to determine which contract type will provide the government the best value and the least risk. The Complete Guide to Government Contract Types provides a comprehensive overview of the key government contract vehicles and types: fixed-price, cost-reimbursement, incentive, and other (which includes letter, indefinite-delivery/indefinite-quantity, and time-and-material contracts). The author first explains the selection process for contract vehicles, which is the basis for selecting the appropriate contract type for the work in question. He then presents a comprehensive, in-depth analysis of each contract type, explaining how each works best to meet certain types of requirements and conditions. This is an essential resource for both contracting officers and contractors seeking to understand and work effectively within the nuances of contract selection and compliance.
Download or read book Procurement Routes for Partnering written by Jon Broome and published by Thomas Telford. This book was released on 2002 with total page 420 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book is aimed at those who want to apply or improve the application of partnering in the construction and heavy engineering industries to their projects. It focuses on procurement aspects based on the premise that unless the commercial and contractual conditions align objectives, there is little stimulus to change the culture and integrate processes and teams to achieve the outstanding results that can be attained through partnering.This invaluable book presents detailed information about the partnering and procurement process, which will lead to better delivery of construction projects.
Download or read book Procurement Multiple Incentive Contracting Scientific Contracting with Accent on Trade off written by Norman H. Smith and published by . This book was released on 1967 with total page 115 pages. Available in PDF, EPUB and Kindle. Book excerpt: Incentive contracts, those contracts in which the seller is rewarded (or penalized) according to performance achieved, can work to the advantage of the seller or the buyer, to both, or to neither. The report emphasizes the need for a method of analysis of incentive arrangements so that the true relationships between cost and performance and their influence on fee earned may be known in advance of negotiation or signing of a contract. The report is written primarily for management and has little of the technical details. There are many examples with graphs showing the relationship of cost, performance and fee. (Author).
Download or read book Project Procurement Management written by Quentin W. Fleming and published by Project Management Institute. This book was released on 2019-01-28 with total page 377 pages. Available in PDF, EPUB and Kindle. Book excerpt: Not all project procurements are the same. Unless the project carefully makes an assessment of the items it will make, versus the items it will buy, and then adequately plans for these purchases, the risks of performance will increase. Project procurements are simply sub-projects, which need to be managed well, not blindly delegated to an independent organization to buy for the project. Certain procurements, major complexity developments, creating something new, which does not exist, according to the project's unique specification, must be managed by the project team, and supported by the professional procurement organization. The project's team leader must assume the management responsibility. This book zeroes in on the effective management of that portion of the project which will be performed by another organization. It focuses on the procurement of scope from an organization outside of the project. Often, the success or failure of a project is dependent on how well the project can plan, define, solicit, authorize and manage this external relationship. This book has been updated to be consistent with Chapter 12 of the Fourth Edition of the PMBOK ® Guide, released by PMI in December 2008.
Download or read book Procurement written by United States. General Accounting Office and published by . This book was released on 1988 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Management of Procurement written by Denise Bower and published by Thomas Telford. This book was released on 2003-01-08 with total page 288 pages. Available in PDF, EPUB and Kindle. Book excerpt: This invaluable book covers all aspects of procurement, from drafting and using contracts to procurement strategies for privately financed projects. It is written from a construction perspective, and uses examples from other industries where appropriate. This essential book offer presents guidance, explanations and case studies to help the reader comprehend the strengths and weaknesses and realistic meanings and outcomes of the stages in the development of an effective procurement strategy. Bringing together the theory and practice that relates to procurement, the book offers guidance on show the process should be undertaken. It begins by outlining the role of procurement in the construction industry, including the problems it faces and some of the steps that can be taken to overcome these problems. It then goes on to consider contractor selection and raises issues relating to the allocation of risk in contracts and factors to consider when awarding a contract. A brief summary of the relevant legal aspects is also provided. The book also examines contract strategy, major organisational arrangements and payment types and prvides a summary of the key features of the most common standard forms of contract. The relationship between benchmarking, key performance indicators and incentives is explained and a framework for developing incentive mechanisms is provided.
Download or read book On Target written by David Trench and published by Thomas Telford. This book was released on 1991 with total page 176 pages. Available in PDF, EPUB and Kindle. Book excerpt: Describes a new system of target cost building procurement in which there is a more equitable balance between employer's and contractor's risk, the quality of design is improved and there is an incentive to complete the project to an agreed target cost.
