Infrastructure transitions toward sustainability: a complex adaptive systems perspective

To ensure infrastructure assets are procured and maintained by government on behalf of citizens, appropriate policy and institutional architecture is needed, particularly if a fundamental shift to more sustainable infrastructure is the goal. The shift in recent years from competitive and resource-intensive procurement to more collaborative and sustainable approaches to infrastructure governance is considered a major transition in infrastructure procurement systems. In order to better understand this transition in infrastructure procurement arrangements, the concept of emergence from Complex Adaptive Systems (CAS) theory is offered as a key construct. Emergence holds that micro interactions can result in emergent macro order. Applying the concept of emergence to infrastructure procurement, this research examines how interaction of agents in individual projects can result in different industry structural characteristics. The paper concludes that CAS theory, and particularly the concept of ‘emergence’, provides a useful construct to understand infrastructure procurement dynamics and progress towards sustainability

Construction costs and value management: study of multinational practices in Nigeria

The practice of multinational construction corporations (MCC) in Nigeria construction industry has been viewed as a value for money approach through construction cost management. Assessment of the opportunity cost of the initiatives is equally important in order to gauge the progress of millennium development goals (MDGs), set up by the United Nations in 2000 on human development in developing countries. The study is aimed at the evaluation of current infrastructure procurement framework, introducing novel sustainable infrastructure delivery (SID) model as a holistic value management methodology and a decision making technique. Key components of the model are Checkland’s soft system methodology (SSM) and analytic network process (ANP) by Saaty. SID input data is collected from the pilot questionnaire with the professionals in Nigeria’s construction industry, reinforced by a thorough literature review. Questions sought paired comparison judgements on key aspects of project management and implications on sustainable infrastructure procurement. The concept is discussed in the methodology section. Preliminary findings reveal that current practice lacks a holistic decision making technique, reflected in divergent value interests among stakeholders on infrastructure procurement through different views on the constitution of values. Though there is practical evidence regarding the growth in the construction sector, quantification of the implications on local economy and human development are less visible and require further investigations

Analisis Permasalahan Pengadaan Infrastruktur Ti Instansi Pemerintah: Pengalaman dari Pendampingan Bpkp

Considering on the amount of money expenses, the Procurement of government IT Infrastucture is significantlyincreased. But, the increased of IT infrastructure expenses has not been supported by a good procurement process.Whereas, procurement process of IT infrastructure is one of IT governance parts, that is a system realization processaccording to Panduan Umum Tata Kelola Teknologi Informasi dan Komunikasi Nasional that published by Communicationand Information Ministry. Article discusses problem analysis on the procurement of government IT infrastructure. Theproblem analysis refer to framework ideal process of procurement of IT infrastructure that published by Cluster Consultant.From the framework, some problems are found on the whole level process of procurement of government IT infrastructurethat needs to be fixed

Auctions with endogenous participation and quality thresholds : evidence from ODA infrastructure procurement

Infrastructure projects are often technically complicated and highly customized. Therefore, procurement competition tends to be limited. Competition is the single most important factor toward auction efficiency and anti-corruption. However, the degree of competition realized is closely related to bidders'entry decision and the auctioneer's decision on how to assess technical attributes in the bid evaluation process. This paper estimates the interactive effects among quality, entry, and competition. With data on procurement auctions for electricity projects in developing countries, it is found that large electricity works are by nature costly and can attract only a few participants. The limited competition would raise government procurement costs. In addition, high technical requirements are likely to be imposed for these large-scale projects, which will in turn add extra costs for the better quality of works and further limit bidder participation. The evidence suggests that quality is of particular importance in large infrastructure projects and auctioneers cannot easily substitute price for quality.Government Procurement,Investment and Investment Climate,E-Business,Markets and Market Access,Economic Theory&Research

Joint bidding in infrastructure procurement

To utilize public resources efficiently, it is required to take full advantage of competition in public procurement auctions. Joint bidding practices are one of the possible ways of facilitating auction competition. In theory, there are pros and cons. It may enable firms to pool their financial and experiential resources and remove barriers to entry. On the other hand, it may reduce the degree of competition and can be used as a cover for collusive behavior. The paper empirically addresses whether joint bidding is pro- or anti-competitive in Official Development Assistance procurement auctions for infrastructure projects. It reveals the possible risk of relying too much on a foreign bidding coalition and may suggest the necessity of overseeing it. The data reveal no strong evidence that joint bidding practices are compatible with competition policy, except for a few cases. In road procurements, coalitional bidding involving both local and foreign firms has been found pro-competitive. In the water and sewage sector, local joint bidding may be useful to draw out better offers from potential contractors. Joint bidding composed of only foreign companies is mostly considered anti-competitive.Investment and Investment Climate,ICT Policy and Strategies,Markets and Market Access,Public Sector Corruption&Anticorruption Measures,Access to Markets

Bidder asymmetry in infrastructure procurement : are there any fringe bidders ?

Asymmetric auctions are among the most rapidly growing areas in the auction literature. The potential benefits from improved auction efficiency are expected to be enormous in public procurement auctions related to official development projects. Entrant bidders are considered a key to enhance competition in an auction and break potential collusive arrangements among incumbent bidders. Asymmetric auction theory predicts that weak (fringe) bidders would bid more aggressively when they are faced with a strong (incumbent) opponent. Using official development assistance procurement data, this paper finds that in the major infrastructure sectors, entrants submitted systematically aggressive bids in the presence of an incumbent bidder. The findings also show that a high concentration of incumbents in an auction would harm auction efficiency, raising procurement costs. The results suggest that auctioneers should encourage fringe bidders to actively participate in the bidding process while maintaining the quality of the projects. This is conducive to enhancing competitive circumstances in public procurements and improving allocative efficiency.Investment and Investment Climate,Government Procurement,Debt Markets,E-Business,Infrastructure Economics

Sustainable infrastructure procurement in Australia: Standard vs. project practices

The Australian Government and most Australian road authorities have set ambitious greenhouse gas emission (GHGe) reduction targets for the near future, many of which have translated into action plans. However, previous research has shown that the various Australian state road authorities are at different stages of implementing ‘green’ initiatives in construction planning and development, with considerable gaps in their monitoring, tendering, and contracting. This study illustrates the differences between procurement standards and project specific practices that aim to reduce GHGe from road construction projects in three of the largest Australian road construction clients, with a focus on the tools used, contract type and incentives for better performance

The private finance initiative (PFI) and finance capital: A note on gaps in the "accountability" debate

During recent years, a wide spectrum of research has questioned whether public services/infrastructure procurement through private finance, as exemplified by the UK Private Finance Initiative (PFI), meets minimum standard of democratic accountability. While broadly agreeing with some of these arguments, this paper suggests that this debate is flawed on two grounds. Firstly, PFI is not about effective procurement, or even about a pragmatic choice of procurement mechanisms which can potentially compromise public involvement and input; rather it is about a process where the state creates new profit opportunities at a time when the international financial system is increasingly lacking in safe investment opportunities. Secondly, because of its primary function as investment opportunity, PFI, by its very nature, prioritises the risk-return criteria of private finance over the needs of the public sector client and its stakeholders. Using two case studies of recent PFI projects, the paper illustrates some of the mechanisms through which finance capital exercises control over the PFI procurement process. The paper concludes that recent proposals aimed at “reforming” or “democratising” PFI fail to recognise the objective constraints which this type of state-finance capital nexus imposes on political process

Procurement in infrastructure : what does theory tell us ?

Infrastructure has particular challenges in public procurement, because it is highly complex and customized and often requires economic, political and social considerations from a long time horizon. To deliver public infrastructure services to citizens or taxpayers, there are a series of decisions that governments have to make. The paper provides a minimum package of important economic theories that could guide governments to wise decision-making at each stage. Theory suggests that in general it would be a good option to contract out infrastructure to the private sector under high-powered incentive mechanisms, such as fixed-price contracts. However, this holds under certain conditions. Theory also shows that ownership should be aligned with the ultimate responsibility for or objective of infrastructure provision. Public and private ownership have different advantages and can deal with different problems. It is also shown that it would be a better option to integrate more than one public task (for example, investment and operation) into the same ownership, whether public or private, if they exhibit positive externalities.Public Sector Economics&Finance,Debt Markets,Infrastructure Economics,Contract Law,Transport Economics Policy&Planning