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

Teo, Pauline, Brige, Adrian, Gray, Jason, & Rowlinson, Steve (2012) Towards testing a new first-order decision making model for the procurement of public sector major infrastructure. In Akintoye, Akintola S. & Rowlinson, Steve (Eds.) Proceedings of the 2012 Joint CIB W070, W092 and TG72 International Conference on Facilities Management, Procurement Systems and Public Private Partnership, Department of Construction Economics and Management, University of Cape Town, University of Cape Town, Cape Town, pp. 136-142.

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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. Finally, the paper previews the next steps in the research with regard to collection and analysis of data concerning theoretical/predicted procurement and optimum competition.

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ID Code: 47225
Item Type: Conference Paper
Refereed: Yes
Keywords: decision making model, infrastructure, procurement, value for money
ISBN: 978-0-620-50759-2
Subjects: Australian and New Zealand Standard Research Classification > BUILT ENVIRONMENT AND DESIGN (120000) > DESIGN PRACTICE AND MANAGEMENT (120300)
Divisions: Past > QUT Faculties & Divisions > Faculty of Built Environment and Engineering
Past > Schools > School of Urban Development
Copyright Owner: Copyright 2012 [please consult the author]
Deposited On: 24 Nov 2011 22:32
Last Modified: 22 Jun 2015 04:37

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