Auctioning Incentive Contracts: An Experimental Study

In this note, we experimentally examine the relative performance of price-only auctions and multi-attribute auctions. We do so in procurement settings where the buyer can give the winning bidder incentives to exert effort on non-price dimensions after the auction. Both auctions theoretically implement the surplus maximizing mechanism. Our experiment confirms this result. Moreover, we observe that the "pie" is shared the same in both auctions between buyer and suppliers both in theory and in the lab (after accounting for learning effects).Key words: Procurement; Price-only auctions; Multi-attribute auctions; Incentive Contracts; Laboratory Experimen

The predictive ability of Bromilow's time-cost model

Bromilow's log-log time-cost (BTC) model is tested and refitted with a new set of data for Australian construction projects completed between 1991 and 1998. It is shown that, as anticipated by earlier research, different parameter estimates are needed for different project types, with smaller industrial projects taking less time to complete than the smaller educational and residential projects. This results in the development of two separate models, one for industrial projects and one for non-industrial projects. No changes in parameter estimates are needed for projects with different client sectors, contractor selection methods and contractual arrangements. Alternatives to the log-log model failed to produce any improved fit. Finally, the results are compared with previous work to indicate the extent of changes in time-cost relationships in Australian construction projects over the last 40 years. This indicates a clear improvement in construction speed over the period. Furthermore, the 'public' sector group in particular has exhibited a greater variation (up to 132%) over the years.Cost Time Duration Time-COST Bromilow Model Linear Regression Speed Productivity,

Comparative Evaluation of Public-Private Partnerships in Roadway Preservation

In a bid to reduce overall costs, manage risks, and attract private capital, highway agencies worldwide strive to increase private-sector participation in road infrastructure development, particularly at the developmental phases of construction and preservation. A common mechanism for private-sector participation is the concept of a public-private partnership (PPP). As agencies grapple with the decision about whether to adopt a specific PPP or the traditional contracting approach for a specific project, they lack a rational decision-support structure. In addressing this major gap in PPP-related literature, this paper presents a framework by which an agency may assess the performance (relative benefits) of different PPP contracting approaches for highway preservation. For the purposes of this paper, performance is expressed in relation to the likelihood and intensity of cost savings calculated with data from domestic (U.S.) and international projects. In addition, the influence of project and contract attributes (such as the expected project duration, work type, and project size) on PPP project performance is investigated. The framework can be used or duplicated by highway-related agencies and international organizations for identifying the superior contracting option for a given road preservation project on the basis of project characteristics and for quantifying the consequences of such choices for cost savings or other performance criteria