Towards testing a new first-order decision making model for the procurement of public sector major infrastructure

Teo, P, Bridge, A, Gray, J and Rowlinson, S 2012, 'Towards testing a new first-order decision making model for the procurement of public sector major infrastructure', in Proceedings of the 2012 Joint CIB W070, W092 and TG72 International Conference on Facilities Management, Procurement Systems and Public Private Partnership, Cape Town, South Africa, 23-25 January 2012, pp. 136-142.


Document type: Conference Paper
Collection: Conference Papers

Title Towards testing a new first-order decision making model for the procurement of public sector major infrastructure
Author(s) Teo, P
Bridge, A
Gray, J
Rowlinson, S
Year 2012
Conference name Joint CIB W070, W092 and TG72
Conference location Cape Town, South Africa
Conference dates 23-25 January 2012
Proceedings title Proceedings of the 2012 Joint CIB W070, W092 and TG72 International Conference on Facilities Management, Procurement Systems and Public Private Partnership
Publisher University of Cape Town
Place of publication Cape Town, South Africa
Start page 136
End page 142
Total pages 7
Abstract Given global demand for new infrastructure, governments face substantial challenges in funding new infrastructure and simultaneously delivering Value for Money (VfM). As background to this challenge, a brief review is given of current practice in the selection of major public sector infrastructure in Australia, along with a review of the related literature concerning the Multi-Attribute Utility Approach (MAUA) and the effect of MAUA on the role of risk management in procurement selection. To contribute towards addressing the key weaknesses of MAUA, a new first-order procurement decision making model is mentioned. A brief summary is also given of the research method and hypothesis used to test and develop the new procurement model and which uses competition as the dependent variable and as a proxy for VfM. The hypothesis is given as follows: When the actual procurement mode matches the theoretical/predicted procurement mode (informed by the new procurement model), then actual competition is expected to match optimum competition (based on actual prevailing capacity vis-à-vis the theoretical/predicted procurement mode) and subject to efficient tendering. The aim of this paper is to report on progress towards testing this hypothesis in terms of an analysis of two of the four data components in the hypothesis. That is, actual procurement and actual competition across 87 road and health major public sector projects in Australia. In conclusion, it is noted that the Global Financial Crisis (GFC) has seen a significant increase in competition in public sector major road and health infrastructure and if any imperfections in procurement and/or tendering are discernible, then this would create the opportunity, through the deployment of economic principles embedded in the new procurement model and/or adjustments in tendering, to maintain some of this higher level post-GFC competition throughout the next business cycle/upturn in demand including private sector demand.
Subjects Building Construction Management and Project Planning
Keyword(s) decision-making model
infrastructure
procurement
value for money
Copyright notice © 2012 Department of Construction Economics and Management, University of Cape Town.
ISBN 9780620507592
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