Delay Fees in the Procurement of Construction Projects

Johan Nyström, Jan-Eric Nilsson and Maria Börjesson

Journal of Transport Economics and Policy, 2019, vol. 53, issue 4, 348--363

Abstract: This paper suggests Delay Fees (DF) to handle temporary congestion during road works. The DF is paid by the contractor based on road users' loss of travel time due to construction. This decentralises the trade-off between construction costs and user time to the contractor, increasing social welfare. The contractor not only will account for user time during each single project, but also is incentivised to develop innovative construction techniques. Compared to other means in the literature for reducing temporary construction, the DF is more general in its focus on user time rather than lane closure.

Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:tpe:jtecpo:2019:53:4:348--363

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