Convention Relating to a Uniform law on the Formation of Contracts for the International Sale of Goods

Many infrastructural projects have cost overruns and there has been a lot of research both on whythese cost overruns occur and what can be done to reduce cost overruns. Bent Flyvbjerg is the leadingresearcher in the area and in this article his proposals are also the starting point. Beside a literaturereview a questionnaire was also sent out to experienced Swedish project managers to find out whatthey thought could reduce cost overruns. This has been the foundation for the proposals formulated inthis article. Proposals concerns three areas 1. Organizational macro-structure, e.g. using more PPPprojectsbut also decentralization of budgets where cost-overruns in one project in a region leads toless other projects in the specific region. 2. Organizational quality: It should be easy to see when andwhere cost overruns occur and who was responsible. There should be an well-developed knowledgemanagement system in the organization and an organization culture of openness and a focus onimprovements. 3. Organizational processes, e.g. a systematic use of external reviewers in differentstages of a project.QC 20140819</p

A Note on the Concept of Excess Burden

It is argued that there has been a shift in the meaning of "excess burden" from Pigou to modern economics, related to what is used as a reference point when the effect of a tax is discussed. Is it the situation before the tax was introduced or what would have happened if a lump sum tax had been used instead? This distinction is important for tax policy, since the latter reference point leads to a larger, sometimes much larger, numerical value for the excess burden. However, the distinction is not often clearly made and this has led to risks for misguided political decisions on taxes. It is further argued that when excess burden and efficiency losses are discussed, economists have neglected to discuss the meaning of “can”, or “possible”, when the Pareto principle is formulated. Is it reasonable to say that welfare "can" be improved by a lump sum tax instead of a "distortionary" tax if, as most economists seem to believe, such a tax is not a realistic alternative? Since conceptual clearness about the excess burden of taxes is important, some suggestions for improving the situation are also presented.Excess burden; Pigou, distortion; lump-sum tax

Preference Reversal, Real-World Lotteries, and Lottery-Interested Subjects

Preference reversal, or choice/reservation-price inconsistency, has been documented experimentally for certain types of lotteries. We argue that the relevance of these findings for real-world markets is uncertain because the type of objects used cannot exist on a market and because the extent to which the subjects had any real interest in the objects is unknown. Using real-world lotteries, we have tested choice/price consistency on subjects who prefer lotteries to cash. Preference reversal was observed, but the frequency was much lower than in earlier experiments. There were no differences between subjects who qualify as ""lottery interested"" and those who did not.

Valuing Easements: Some Experimental Evidence

Trefzger and Munneke (1998) present a theoretical model, where the surplus that an easement gives rise to will be split equally between the parties. We provide experimental evidence from Sweden indicating that the split of the surplus depends on the context and what is judged to be reasonable principles of a fair distribution. The dominant estates got a significantly higher share of the surplus because they could start the bargaining with a bid that only included compensation for cost, whereas the servient estate could not find any principle that would give them the whole surplus. After these initial asymmetric bids, the parties usually met halfway.

Experiences from Procurement of Integrated Bridge Maintenance in Sweden

The trend in many countries is to outsource maintenance with competitive tendering. The design of the tender is then a crucial issue. A new type of tendering contract, called "Integrated Bridge Maintenance", was introduced in one experimental area in Sweden. In this case bridge maintenance is separated out from the standard road maintenance contract. A pilot project has been running since 2004 for all bridges in Uppsala County with about 400 bridges. The experiences and lessons from this pilot project are presented here, and analysed from a transaction cost perspective. An important feature of the contract was that it contained a combination of measures that should be carried out and properties of the bridges that the contractor was responsible to maintain. This created a balance between predictability and flexibility for the contractor. The client was satisfied because of increased competence and a low price. The latter can partly be explained by the possibility for the specialised bridge crew to get additional work from other sectors. One problem was that some properties were difficult to measure, which led to some controversies. As information about old bridges always are incomplete a partnering structure need to be built into the contract. Experience has also shown that a conscious policy to maintain long run competition is important. The general conclusion is that the project was seen as successful and as creating more "value for money"

The dune size distribution and scaling relations of barchan dune fields

Barchan dunes emerge as a collective phenomena involving the generation of thousands of them in so called barchan dune fields. By measuring the size and position of dunes in Moroccan barchan dune fields, we find that these dunes tend to distribute uniformly in space and follow an unique size distribution function. We introduce an analyticalmean-field approach to show that this empirical size distribution emerges from the interplay of dune collisions and sand flux balance, the two simplest mechanisms for size selection. The analytical model also predicts a scaling relation between the fundamental macroscopic properties characterizing a dune field, namely the inter-dune spacing and the first and second moments of the dune size distribution.Comment: 6 pages, 4 figures. Submitted for publicatio

Policies to Avoid Cost Overruns in Infrastructure Projects: Critical Evaluation and Recommendations

Many infrastructure projects have cost overruns and there has been a lot of research both on why these cost overruns occur and what can be done to reduce hem. Bent Flyvbjerg is the leading researcher in the area and in this article his proposals are used as the starting point. Besides a literature review, a questionnaire was sent out to experienced Swedish project managers to find out what they thought could reduce cost overruns. The literature review and the questionnaire were the foundation for the proposals formulated in this article. Proposals concerned three areas: (1). Organisational macro-structure, e.g. using more PPP projects but also decentralisation of budgets where cost overruns in one project in a region lead to less alternative projects in the specific region. (2). Organisational quality: It should be easy to see when and where cost overruns occur and who was responsible. There should be a well-developed knowledge management system in the organisation and an organisation culture of openness with a focus on improvements. (3). Organisational processes, e.g. a systematic use of external reviewers in different stages of a project. Keywords: Cost overruns, Infrastructure projects, Policy measure

Framework for Structuring Procurement Contracts

The aim of this paper is to propose a new framework for structuring contract types and payment methods. Concerning procurement contracts, the first important new feature of this framework is a stepwise structure with three main steps in the contract design: (1) what will be procured—should the contract only include construction, or should it include both construction and operation/maintenance (2) who will do the detailed design of the premise and (3) how many contractors will the client use? The second important new feature of this framework is that both step 2 and step 3 include a continuum of alternatives. Concerning payment methods, the new framework is primarily based on how the specific risks of the project are shared. These frameworks can be useful for policy formulation in that they can help to avoid some problematic ways of formulating policies

Compulsory Purchase – Reasonable and Fair Compensation

Swedish law provides that compensation for compulsory purchase – in some cases – shall be decided according to the following general principle: The compensation should correspond to the price that could have been expected if it had been a "normal voluntary transaction". However, in those specific situations where compulsory purchase applies, there is always a lack of empirical data of price levels in voluntary agreements. In this article we enlighten the problem through bargaining experiments with buyers and sellers. We provide experimental evidence from Sweden indicating that the price level – or the profit-sharing between buyer and seller – depends on the context and what is judged to be reasonable principles of fair distribution