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Efficiency measurement in the tendering of road surface renewal contracts
Institute for Transport Studies, University of Leeds, Leeds, UK.ORCID iD: 0000-0003-3668-5593
Swedish National Road and Transport Research Institute, Society, environment and transport, Transport economics.ORCID iD: 0000-0002-5814-917X
Swedish National Road and Transport Research Institute, Society, environment and transport, Transport economics. Department of Industrial Economics and Management, KTH, Sweden .ORCID iD: 0000-0002-2876-6505
Swedish National Road and Transport Research Institute, Society, environment and transport, Transport economics.ORCID iD: 0000-0001-5685-7386
2023 (English)In: Journal of Productivity Analysis, ISSN 0895-562X, E-ISSN 1573-0441, Vol. 60, no 2, p. 189-202Article in journal (Refereed) Published
Abstract [en]

The problem of slow productivity growth in the road construction (and wider construction) industry is well known. The present paper suggests a means for efficiency analysis in one part of this industry, namely road surface renewal in Sweden, built upon the application of Stochastic Frontier Analysis (SFA) techniques. The paper is novel in that it focuses on project level rather than firm or contractor level performance and takes the perspective of the inefficiency that may result from the way the contracts are specified by the highway agency’s pavement engineers (client side). We compare 233 renewal contracts tendered over a four-year period via the estimation of a cost frontier, with controls for heterogeneity between projects. Our results produce first estimates that expose substantive differences in the relative efficiency performance of different engineers within the Swedish highways procurement organisation (Trafikverket); with indicative savings of around €40 m out of a total road renewals budget in Sweden of €200 m. We also find substantial economies of scale that could, in principle, point to further cost savings if road renewal projects can be packaged up as larger projects. These client-side savings represent potentially important sources of savings in addition to those that can be achieved through the pressure of competitive tendering on the supplier side. The paper therefore illustrates how disaggregate analysis of project level information can readily be used for revealing important information about how best to frame the procurement process and thus deliver productivity and unit cost improvements over time. © 2023, The Author(s).

Place, publisher, year, edition, pages
Springer, 2023. Vol. 60, no 2, p. 189-202
Keywords [en]
Construction, D25, Efficiency, Highways, L25, Procurement, Productivity, R42, Tendering
National Category
Economics
Identifiers
URN: urn:nbn:se:vti:diva-19786DOI: 10.1007/s11123-023-00678-zISI: 001008448800001Scopus ID: 2-s2.0-85161886230OAI: oai:DiVA.org:vti-19786DiVA, id: diva2:1777219
Available from: 2023-06-29 Created: 2023-06-29 Last updated: 2025-09-11Bibliographically approved
In thesis
1. Improving the Efficiency of Public Procurement: Empirical evidence using micro-level contract data
Open this publication in new window or tab >>Improving the Efficiency of Public Procurement: Empirical evidence using micro-level contract data
2023 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

The aim of this thesis is to provide new insights into how public procurers can achieve more for the money by improving the design of their auctions and contracts. Specifically, the thesis examines how the efficiency can be influenced by the following three aspects: the method of bid evaluation (the award mechanism), whether items are procured separately or grouped into larger contracts, and variations among procurers in the activities and quantities they specify in a given case.

The thesis includes four essays that analyze detailed contract information from Swedish procurements of road reinvestments and public bus services. For a comprehensive sample of the examined contracts, information has been collected from procurement documents and compiled into rich microdata sets. The use of microdata has enabled detailed reviews of how the procurements have been designed as well as statistical analysis of associations between the procurer’s choices and the outcome. While the essays primarily focus on results and implications regarding their respective research questions, the kappa provides a more general discussion about quantitative microanalysis in the field of procurement. This reflects a complementary aim of the thesis, which is to contribute to well-informed decisions regarding whether and how contracting authorities should facilitate analyses of this kind.

The kappa highlights how microdata at the contract level enable research that considers both the ‘uniqueness’ of each procurement and random variation. In the analyses of road reinvestments, the detailed data allows us to consider several important characteristics of the contracts and the treated road segments. Similarly, the analysis of bus punctuality considers several aspects of the traffic assignment. In this way, quantitative microanalysis can provide reliable quantifications of how costs and quality are affected by both the procurer's actions, while considering the external conditions. Many of these associations are too complex to be reliably assessed by an individual civil servant, even if it is highly knowledgeable and experienced. However, the thesis emphasizes that even quantitative analysis can yield misleading results if the data material is not good enough, for example, if the sample is too small or relevant aspects are not captured.

Abstract [sv]

Denna avhandling syftar till att ge nya insikter om hur offentliga upphandlare kan uppnå mer för pengarna genom förbättringar av hur de utformar sina kontrakt och auktioner. I synnerhet undersöks hur effektiviteten kan påverkas av följande tre aspekter: metoden för anbudsutvärdering (tilldelningsmekanismen), om objekt upphandlas separat eller är grupperade till större kontrakt, samt skillnader i hur olika upphandlare specificerar aktiviteter och mängder i ett givet fall.

I avhandlingen ingår fyra artiklar som analyserar detaljerad kontraktsinformation från svenska upphandlingar av vägreinvesteringar och kollektiv busstrafik. Denna information har samlats in från förfrågningsunderlag för ett stort antal kontrakt inom respektive verksamhet. Det sammanställda mikrodatamaterialet har möjliggjort såväl detaljerade kartläggningar av hur upphandlingarna har utformats som statistisk analys av samband mellan upphandlarens agerande och utfallet. Medan artiklarna främst är fokuserade på resultat och implikationer angående deras respektive forskningsfråga, förs i avhandlingens kappa en mer generell diskussion om kvantitativ mikroanalys inom upphandlingsområdet. Detta svarar mot ett kompletterande syfte med avhandlingen, vilket är att bidra till välinformerade beslut angående om och hur upphandlande myndigheter bör främja analyser av detta slag.

Avhandlingens kappa belyser hur mikrodata på kontraktsnivå möjliggör för analyser som beaktar skillnader i förutsättningar mellan olika upphandlingar och slumpmässig variation. I analyserna av vägreinvesteringar beaktas kontraktens och de åtgärdade vägsegmentens karaktär, och i analysen av busstrafikens punktlighet beaktas flertalet aspekter av det specifika trafikuppdraget. På så vis kan kvantitativ mikroanalys ge tillförlitliga kvantifieringar av hur kostnader och kvalitet påverkas av upphandlarens agerande, med hänsyn tagen till de externa förutsättningarna. Många av dessa samband kan antas vara alltför komplexa för att en individuell bedömning ska vara tillförlitlig, även om den individen är mycket kunnig och erfaren. Avhandlingen understryker dock att även kvantitativ analys kan ge vilseledande resultat om datamaterialet inte är tillräckligt bra, exempelvis om urvalet är för litet eller relevanta aspekter inte fångas.

Place, publisher, year, edition, pages
Stockholm: KTH Royal Institute of Technology, 2023. p. 34
Series
TRITA-ITM-AVL ; 2023:21
Keywords
Public procurement, public sector efficiency, auction design, award mechanisms, bundling, transport infrastructure, public transport
National Category
Economics
Identifiers
urn:nbn:se:vti:diva-19930 (URN)978-91-8040-680-2 (ISBN)
Public defence
2023-09-22, F3 / https://kth-se.zoom.us/j/62634423221, Lindstedtsvägen 26, Stockholm, 13:00
Opponent
Supervisors
Available from: 2023-10-04 Created: 2023-10-04 Last updated: 2025-09-11Bibliographically approved

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Nilsson, Jan-EricRidderstedt, IvanJohansson, Oskar

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