Oversight and Efficiency in Public Projects: A Regression Discontinuity Analysis

Eduard Calvo (), Ruomeng Cui () and Juan Camilo Serpa ()
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Eduard Calvo: IESE Business School, University of Navarra, 08034 Barcelona, Spain
Ruomeng Cui: Goizueta Business School, Emory University, Atlanta, Georgia 3032
Juan Camilo Serpa: Desautels School of Management, McGill University, Montreal, Quebec H3A 0G4, Canada

Management Science, 2019, vol. 65, issue 12, 5651-5675

Abstract: In the United States, 42% of public infrastructure projects report delays or cost overruns. To mitigate this problem, regulators scrutinize project operations. We study the effect of oversight on delays and overruns with 262,857 projects spanning 71 federal agencies and 54,739 contractors. We identify our results using a federal bylaw: if the project’s budget is above a cutoff, procurement officers actively oversee the contractor’s operations; otherwise, most operational checks are waived. We find that oversight increases delays by 6.1%–13.8% and overruns by 1.4%–1.6%. We also show that oversight is most obstructive when the contractor has no experience in public projects, is paid with a fixed-fee contract with performance-based incentives, or performs a labor-intensive task. Oversight is least obstructive—or even beneficial—when the contractor is experienced, paid with a time-and-materials contract, or conducts a machine-intensive task.

Keywords: project management; vertical contracting; regression discontinuity design; service supply chains; public operations (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (19)

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