Cost overrun and auction format in small size public works

We study the effect on cost overruns of two different auction formats, the first price sealed bid and the average bid, conditional on whether entry is open or restricted. The first price format awards the contract to the lowest bid, while the average bid format awards the contract to the bid closest to the average of all the bids. This latter format is supposed to prevent an unreliable low bidder from winning the auction; as a consequence cost overruns should be lower under the average bid than under the first price format. We test this hypothesis with a panel data set of auctions held in the Italian Veneto region between 2004 and 2006, including small size public projects in sectors such as road works and building maintenance. We find that cost overruns are lower under the average bid format, but only when the entry is restricted. We then speculate on possible explanations for this result.     

The effects of mafia infiltration on public procurement performance

We examine the effects of Mafia infiltration on public procurement performance, based on a sample of 68,063 public work contracts (PWC) awarded by Italian municipalities over the period 2012–2017, of which 687 are identified as Mafia-infiltrated, either because of being awarded by municipal councils subsequently dissolved due to Mafia infiltration, or because of being won by Mafia-owned firms.Our results reveal that Mafia infiltration is positively associated with number of submitted bids, awarding rebates and execution cost overruns, whereas it is negatively associated with delivery delays for PWC. The effect of Mafia infiltration on execution cost overruns and the probability of their occurrence is weaker for larger PWC, and the elections of the new municipal councils, after the dissolution of the previous ones, do not significantly influence the performance of PWC.Our findings suggest the presence of collusive schemes among bidding firms within the Mafia network and provide new insights for the implementation of more sound policies to tackle practices associated with Mafia infiltration in public procurement.     

大数据背景下基于ABC-SVM的建筑工程造价预测

建筑工程项目决策阶段信息量少,精准高效的造价预测是科学决策的关键.为了提高项目前期工程造价预测的精度,探讨如何利用历史项目大数据及机器学习进行新建建筑工程项目的造价预测至关重要.本文首先通过文献研究确定了建筑工程决策阶段造价的主要影响因素,然后利用人工蜂群算法(ABC)对支持向量机(SVM)参数即惩罚因子C和核函数参数g进行优化计算,最终构建了基于ABC-SVM的建筑工程造价预测模型.最后以某工程造价数据平台上的84个建筑工程项目为数据源进行模型验证,结果显示,与GRID-SVM模型和BP神经网络模型相比,本文所提的ABC-SVM模型的预测精度更高,具有更好的适用性.     

Identifying critical success factors in defense development projects: A multivariate analysis

The main goal of this article is to identify managerial variables that are critical to the success of defense projects. This study analyzes 110 defense projects executed in Israel over the last 20 years. Some 400 managerial variables were collected, and 20 measures of success derived for each project. Multivariate analysis is employed to account simultaneously for the diverse attributes of projects' success.The major results of this study are: (1) in the military environment, the more urgent is the perceived need for the project's output, the greater is the project's chance to succeed; (2) the customer follow-up team has a major role in determining project success—especially important are the team members' professional qualifications and sense of responsibility for project success and the stability of key personnel; (3) defense projects are often technologically challenging; proven technological feasibility at the start of a project is critical to its success; (4) attention to design considerations (produceability, quality, reliability, and design to cost) in the early phases of development are critical to project success; and (5) the professional qualifications and team spirit of the development team are highly correlated with success.     

Estimating the economic benefits of acidic rock drainage clean up using cost shares

This paper reports the results of a stated preference study that estimates the economic value for cleaning up acid rock drainage in Colorado's Snake River watershed. In contrast to much of the existing literature, the present study emphasizes benefit estimation for three implementing projects rather than benefit estimation for general changes in water quality or large scale water quality policy. The focus on implementing projects delivers information that is specifically relevant to current decisions being faced in the watershed. While valuation questions in most stated preference studies present costs that have no relation to actual project costs, this study presents a new cost share approach. Project costs are estimated and then valuation questions present different local cost shares to subjects. This approach facilitates stated cost variation necessary for estimating the mean of the distribution of project values without resorting to experimentally designed, fictitious stated costs. In addition to estimating the mean value, which facilitates benefit cost analysis, the study also provides median value estimates, which provide insights into the political feasibility of these projects. Study results suggest that local cost shares on the order of 20%-40%, depending on the project, are politically feasible.     

To bid or not to bid: That is the question: Public procurement,project complexity and corruption

The main aim of this study is to improve our comprehension of the role played by project complexity and institutional quality as possible drivers of the choice between open auctions and negotiations in a sample of Italian municipalities. Controlling for project characteristics, for observed and unobserved heterogeneity at municipality level, our main results suggest that projects that are more complex are more likely to be procured with negotiated procedures. On average, a rise in the project complexity index from the 25th to the 75th percentile of its distribution increases the probability of procuring the project with a negotiated procedure by about 6%–8%. However, our results also suggest that the impact of complexity might be more relevant in the case of projects procured by municipalities located in provinces characterized by low levels of corruption. Moreover, we also find that complex projects are associated to longer delays in their execution, larger rebates and to higher probabilities to be awarded to local firms.     

石化建设项目工期与成本的均衡决策研究

石化建设项目工期与成本的矛盾冲突在我国石化工程建设实践中是十分常见的,这反映出二者均衡决策由于在理论研究上的缺失而导致的在实际决策中的非理性。为此,有必要从系统优化的角度出发通过对项目资源配置、工期、成本等相互间决定机理的探讨,确定项目工期与成本均衡决策的科学原理和相关决策模型,以指导实际管理决策过程,提高项目管理水平。     

Large time and small noise asymptotic results for mean reverting diffusion processes with applications

Summary. We use the theory of large deviations to investigate the large time behavior and the small noise asymptotics of random economic processes whose evolutions are governed by mean-reverting stochastic differential equations with (i) constant and (ii) state dependent noise terms. We explicitly show that the probability is exponentially small that the time averages of these process will occupy regions distinct from their stable equilibrium position. We also demonstrate that as the noise parameter decreases, there is an exponential convergence to the stable position. Applications of large deviation techniques and public policy implications of our results for regulators are explored. Received: December 7, 1998; revised version: October 25, 1999     

基于成本控制的工程项目划分

根据建筑工程项目成本控制管理和工程预算定额计价模式，运用遗传全局优化计算方法，分析了基于成本优化控制下的工程项目划分的可操作性。依据问卷调查资料，获取优化计算参数，并综合计算得到了建筑工程分部工程的划分，重点为基础工程、梁柱工程、墙体工程、土石方工程、屋盖工程等工程实施项目，这种划分方法对建筑工程建设与管理提供一定的借鉴。     

Patents and R&D as Real Options

This article develops and implements a simulation approach to value patents and patent‐protected R&D projects based on the Real Options approach. It takes into account uncertainty in the cost‐to‐completion of the project, uncertainty in the cash flows to be generated from the project, and the possibility of catastrophic events that could put an end to the effort before it is completed. It also allows for the possibility of abandoning the project when costs turn out to be larger than expected or when estimated cash flows turn out to be smaller than anticipated. This abandonment option represents a very substantial part of the project's value when the project is marginal or/and when uncertainty is large. The model presented can be used to evaluate the effects of regulation on the cost of innovation and the amount on innovative output. The main focus of the article is the pharmaceutical industry. The framework, however, applies just as well to other research‐intensive industries such as software or hardware development.
(J.E.L.:G31, O22, O32).     

CONSUMER SEARCH,PRICE DISPERSION,AND INTERNATIONAL RELATIVE PRICE FLUCTUATIONS*

This article develops a model of consumer search consistent with the evidence of substantial price dispersion and time spent shopping within countries to study international deviations from the law of one price (LOP) and relative price fluctuations. Search frictions lead firms to price discriminate across markets based on the opportunity cost of search, which depends on the local wage. With productivity and taste shocks estimated from the data, deviations from the LOP are as volatile and persistent as in the data. Fluctuations in relative wages, real exchange rates, and the terms of trade are also consistent with the data.     

农村公共工程的扶贫效益——基于联立方程的分析

个人和家庭特征对贫困的影响相对较小是中国农村贫困的一个显著特点。因此针对公共利益的公共投资对消除贫困和缩小地区差距具有重要意义。公共投资也需要讲究效益,本文在分析贫困者参与农村公共工程的成本收益和农村公共工程扶贫效益影响因素的基础上,总结出农村公共工程扶贫效益的总方程式。农村公共工程的效益从成本收益上看,是由贫困者参与农村公共工程的收益和成本来决定的;从影响因素上看。农村公共工程扶贫效益是农村公共工程的目标选择、位置效应、时间效应、覆盖面、漏出效应、挤出效应、资金使用效率及其他因素共同起作用的结果。可以通过提高公共投资资源的使用效率、增强贫困人口的脱贫意识等途径提高农村公共工程的效益。     

Getting the Ball Rolling: Voluntary Contributions to a Large-Scale Public Project

This paper examines dynamic voluntary contributions to a large‐scale project. In equilibrium, contributions are influenced by the interplay of two opposing incentives. While agents prefer to free ride on others for contributions, they also prefer to encourage others to contribute by increasing their own. Main findings of the paper are that (1) agents increase their contributions as the project moves forward; (2) as additional agents join the group, existing agents increase their contributions in the initial stages of the project while reducing them in the stages close to completion; (3) groups that are formed by more patient agents and that undertake larger projects tend to be larger; and (4) groups that rely on voluntary contributions tend to be too small compared to the social optimum. The empirical evidence on contributions to open‐source software projects provides partial support for these findings.     

基于制约理论的超限超载形成机理与治理思路研究

超限超载现象及治理是国内外公路运输管理研究的热点。运用制约理论对超限超载行为的产生、恶化及自加强机制进行分析,认为各利益相关主体对超限超载的支撑作用、监管缺失条件下治理者自由裁量权和选择性执法导致的寻租行为,都加强了运输者超限超载动机。对超限超载行为的治理,不仅要突出对超限超载运输者的治理,也要突出对政府治理行为代理人的治理。提出从超限超载系统的构成入手,从路上治理向源头治理和利益相关者治理转变,从阶段性治理向日常性、程序化治理转变,从行政手段治理为主向制度化治理转变,最终形成公路运输超限超载控制的长效机制。     

Politics and the UK's monetary policy

This paper examines whether politics causes regime shifts in deviations from the optimal monetary policy in the United Kingdom. After using a dynamic stochastic general equilibrium model to construct the welfare-maximizing policy rule and deviations from the optimal Taylor rule, we show that politics does indeed play an important role in explaining these deviations. In addition to politics, unemployment rates account for regime shifts in the Taylor rule deviations.     

Learning,large deviations and rare events

We examine the role of generalized stochastic gradient constant gain (SGCG) learning in generating large deviations of an endogenous variable from its rational expectations value. We show analytically that these large deviations can occur with a frequency associated with a fat-tailed distribution even though the model is driven by thin-tailed exogenous stochastic processes. We characterize these large deviations, driven by sequences of consistently low or consistently high shocks and then apply our model to the canonical asset pricing framework. We demonstrate that the tails of the stationary distribution of the price–dividend ratio will follow a power law.     

The impact of public information on bidding in highway procurement auctions

A number of papers in the theoretical auction literature show that the release of information regarding the seller's valuation of an item can cause bidders to bid more aggressively. This widely accepted result in auction theory remains largely untested in the empirical literature. Recent theoretical work has also shown that this effect can be more pronounced in auctions with larger common cost uncertainty. We examine the impact of a policy change by the Oklahoma Department of Transportation that led to the release of the state's internal estimate of the costs to complete highway construction projects. We perform a differences-in-differences analysis comparing bidding in Texas, a state that had a uniform policy of revealing the same information all throughout the period of analysis, to bidding in Oklahoma. Our results show that, in comparison to Texas auctions, the average bid in Oklahoma fell after the change in engineers’ cost estimate (ECE) policy. This decline in bids was even larger for projects where the common uncertainty in costs is greater. Moreover, the within-auction standard deviation of bids fell after the change in ECE policy with the most significant decline observed again in projects with greater common cost uncertainty.     

The Efficient and Fair Approval of "Multiple-Cost-Single-Benefit" Projects under Unilateral Information

This paper focuses on indivisible " multiple-cost-single-benefit " projects that must be approved by the government. A simple mechanism is proposed that ensures an efficient and fair implementation of such projects. The proposed mechanism is appropriate for a unilateral information structure: the single beneficiary has complete information on the cost and benefit of the project while the government official has no such information and the cost bearers have information only on each other's costs.     

Moral Hazard and Adverse Selection in Procurement Contracting

A model of procurement contracting is developed and tested in laboratory experiments. Market performance results are presented for both fixed-price and cost-sharing contracts. Contracts are awarded with first-price sealed-bid or second-price sealed-bid auctions. The environment contains post-auction cost uncertainty and opportunity for unmonitored effort in contract cost reduction. Cost-sharing contracts are found to reduce procurement expense but also to be inefficient because of their induced moral hazard waste and cost overruns.Journal of Economic LiteratureClassification Numbers: C72, C92, D44, D61, D82, H57, L14.     

Optimal investment sequence

Summary. This paper investigates the optimal order in which a collection of projects should be taken on if only one project can be done at a time. We associate a number called priority value with each project and show that one should order the projects in decreasing priority values. We also show that this priority value rule is equivalent to the replication rule in the literature. Finally, we compare the rankings given by the priority value rule and the ordinary present value rule.