Delivering value for money in the procurement of public sector major infrastructure : a new first-order decision making model

Teo, Pauline, Bridge, Adrian, & Jefferies, Marcus C. (2010) Delivering value for money in the procurement of public sector major infrastructure : a new first-order decision making model. In Wang, Yaowu, Yang, Jay, Shen, Geoffrey, & Wong, Johnny (Eds.) Proceedings of 2010 International Conference On Construction & Real Estate Management, China Architecture & Building Press, Queensland University of Technology, Brisbane, Queensland, pp. 306-311.

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The significant challenge faced by government in demonstrating value for money in the delivery of major infrastructure resolves around estimating costs and benefits of alternative modes of procurement. Faced with this challenge, one approach is to focus on a dominant performance outcome visible on the opening day of the asset, as the means to select the procurement approach. In this case, value for money becomes a largely nominal concept and determined by selected procurement mode delivering, or not delivering, the selected performance outcome, and notwithstanding possible under delivery on other desirable performance outcomes, as well as possibly incurring excessive transaction costs. This paper proposes a mind-set change in this particular practice, to an approach in which the analysis commences with the conditions pertaining to the project and proceeds to deploy transaction cost and production cost theory to indicate a procurement approach that can claim superior value for money relative to other competing procurement modes. This approach to delivering value for money in relative terms is developed in a first-order procurement decision making model outlined in this paper. The model developed could be complementary to the Public Sector Comparator (PSC) in terms of cross validation and the model more readily lends itself to public dissemination. As a possible alternative to the PSC, the model could save time and money in preparation of project details to lesser extent than that required in the reference project and may send a stronger signal to the market that may encourage more innovation and competition.

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ID Code: 39578
Item Type: Conference Paper
Refereed: Yes
Keywords: Infrastructure, Procurement, Transaction and Production Cost Theory, Value-for-money
ISBN: 9787112126125
Subjects: Australian and New Zealand Standard Research Classification > BUILT ENVIRONMENT AND DESIGN (120000) > BUILDING (120200) > Quantity Surveying (120203)
Divisions: Past > QUT Faculties & Divisions > Faculty of Built Environment and Engineering
Past > Schools > School of Urban Development
Copyright Owner: Copyright 2010 please consult the authors
Deposited On: 20 Jan 2011 22:54
Last Modified: 17 Jun 2015 04:09

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