Determinants of Adaptation Costs in Procurement: An Empirical Estimation on Italian Public Works Contracts

Calogero Guccio (), Giacomo Pignataro and Ilde Rizzo

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Abstract: It is widely agreed that rules governing public procurement should be designed to achieve value for money. However, in the public works sector, "... the good being procured is usually complex and hard to be exactly specified ex ante, ... [and] alterations to the original project might be needed after the contract is awarded. This may result in considerable discrepancies between the lowest winning bid and the actual costs that are incurred by the buyer" (Bajari et al., 2006). There is now a wide body of literature focusing on cost escalation during the execution of contracts and their estimates reveal that it can be often quite large. The paper is aimed at offering an empirical test of the determinants of adaptation costs in the public works procurement. Using a detailed data set on Italian public works contracts, we run an empirical analysis, grounded on the main conclusions reached in the literature, to test for the main drivers of adaptation costs.

Keywords: Social; Sciences; &; Humanities (search for similar items in EconPapers)
Date: 2011-04-14
Note: View the original document on HAL open archive server: https://hal.science/hal-00687731
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Citations: View citations in EconPapers (3)

Published in Applied Economics, 2011, pp.1. ⟨10.1080/00036846.2011.556589⟩

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Journal Article: Determinants of adaptation costs in procurement: an empirical estimation on Italian public works contracts (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00687731

DOI: 10.1080/00036846.2011.556589

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