Measurement of the cost of a public works project: the case of Greece

In Greece, the overall procedure of producing public works is defined in detail by juridical rules. This has the effect of reducing the purchaser-commissioner of the technical merchandise to a determinative factor in the manner of construction of the merchandise in question, given that intervention extends even to description of the individual works to be performed if the study for the technical project is to be transmuted into a material construction. Because of this, there is no relevant bibliography or relevant references which could be used to document the subject matter of this paper. According to Greek legislation, the value of a Greek private sector project functions as an independent variable for determining the value of a Greek public sector project. In this way it can be proved that Greek public works are overpriced. Prior to 2004, to be specific, the contracting agent had secured a profit even before he enters the production process, because of the difference between the exchange value asked by its seller and the exchange value which he would have asked if the buyer were not the state but a private citizen. This fact is demonstrated in this paper by a mathematical model. After 2004, however, with a view to reducing the relevant overprofit, the Greek legislator changed the method of costing for public works projects, with the result that the cost of each project now tended to approximate what it would have been if the project had been constructed for a private individual. Copyright Springer Science+Business Media, LLC 2014