Optimal penalty for investment delay in public procurement contracts

Our aim in this paper is to provide a general framework in which to determine the optimal penalty fee inducing the contractor to respect the contracted delivery date in public procurement contracts (PPCs). We do this by developing a real option model that enables us to investigate the contractor's value of investment timing flexibility which the penalty rule - de facto - introduces. We then apply this setting in order to evaluate the range of penalty fees in the Italian legislation on PPCs: according to our calibration analysis, there is no evidence that the substantial delays recorded in the execution times of Italian investments are to be due to incorrectly set penalty fees. This result opens the way for other explanations of delays in PPCs: we thus extend our model to include the probability that the penalty is ineffectively enforced and study how calibration results are accordingly affected. We finally show how our model can be used to investigate both the case of a penalty/premium rule and the one of an optimal penalty fee in a concession contract.public procurement contracts, penalty fee, investment timing flexibility, investment irreversibility, contract incompleteness, enforceability of rules.

Urban quality in the city of the future: A bibliometric multicriteria assessment model

Abstract Assessing the quality of urban areas is considered as a difficult task. The main reason lies in the multidisciplinary nature of the field, and in the complexity of components that must be accounted for. This study aims to identify the most discussed topics in literature by weighing the main themes currently under investigation and defining their potential interdependencies. We provide a theoretical and conceptual framework to analyze contributions in literature on urban quality assessment in the city of the future by combining a bibliographic analysis and a multi-criteria approach. In detail, we reviewed literature and implemented a methodological approach, which combines a bibliometric analysis and the Analytic Hierarchy Process (AHP). According to the principal keywords "urban quality assessment" and "future city", we initially identified in SCOPUS database 1024 articles and a selection of most cited sub-keywords. Then we fine-tuned the research according to a sequential approach. We performed a statistical analysis on preliminary results and implemented a relative AHP model to obtain a priority ranking of the most relevant sub-keywords. This approach allows for analyzing articles, by combining multiple keywords with the identification of the degree of relationship among the different sub-keywords with respect to the main topic

Landfills Sizing in Metropolitan Areas

Abstract Waste managers have often to decide whether to undertake an irreversible one-shot capital outlay and invest in a potentially over-sized facility or to proceed with sequential investments to adapt to changes and reduce potential losses. In this paper, we determine the value of managerial flexibility to decide the capacity sizing of a landfill according to the Real Option Approach. We model the investment decision as the exercise of a compound option, where an earlier investment cost represents the exercise price required to acquire the subsequent option to continue operating the project until the next stage comes due

Decision-Making for Urban Planning and Regional Development

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Guarantees and Collaterals Value in NPLs

Abstract The burst of the subprime mortgage crisis affected on a large scale the Italian real estate industry. The Italian real estate market underwent and is still undergoing a severe stagnancy due to the credit crunch worsened by the banking system and the resulting lack of liquidity. In financing real estate property investments, security packages play an extremely important role and guarantees have become a major tool for risk management and financial innovation in order to facilitate credit enhancement and hedging of risks. In this context the evaluation of guarantees and collaterals becomes extremely important. A robust measure of the value of collaterals is more than a key issue in times of financial crisis, when the value of the guarantees is questioned. Aim of this paper is to investigate, on a sample of 89 foreclosures, whether the collaterals were overestimated and the mortgage lending value represents a robust measure of the mortgage underlying guarantee

Multicriteria Evaluation of Urban Regeneration Processes: An Application of PROMETHEE Method in Northern Italy

The paper illustrates the development of an evaluation model for supporting the decision-making process related to an urban regeneration intervention. In particular, the study proposes an original multi-methodological approach, which combines SWOT Analysis, Stakeholders Analysis and PROMETHEE method for the evaluation of alternative renewal strategies of an urban area in Northern Italy. The article also describes the work carried out within an experts' panel that has been organized for validating the structuring of the decision problem and for evaluating the criteria of the model