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Mitigating contractual hazards in public procurement: a study of Swedish local authorities

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  • Fredrik Waara

Abstract

Private sector buyers often award construction contracts through negotiation rather than through open competitive tendering. Negotiating with a reputable contractor is a way to mitigate contractual hazards. For many public sector buyers, however, open competitive tendering is required by law. The practices of procurement officers in local authorities are examined in regard to the selection of construction contractors, focusing particularly on their use of scoring-based competitive tendering and ex ante information exchange between procurement officers and the firms competing for contracts. Semi-structured interviews were carried out with 15 procurement officers in 10 local authorities in Sweden. Using the contractor's staffing of the project organization as a contract award criterion allows procurement officers to select reputable contractors. Arranging face-to-face meetings with contractors before the final award decision allows procurement officers to resolve at least some technical problems in complex construction projects. When negotiations are prohibited by law, these practices can be seen as combined responses to hazards of construction contracting.

Suggested Citation

  • Fredrik Waara, 2008. "Mitigating contractual hazards in public procurement: a study of Swedish local authorities," Construction Management and Economics, Taylor & Francis Journals, vol. 26(2), pages 137-145.
    • Handle: RePEc:taf:conmgt:v:26:y:2008:i:2:p:137-145
    DOI: 10.1080/01446190701793696
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    References listed on IDEAS

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    1. Bajari, Patrick & Tadelis, Steven, 2001. "Incentives versus Transaction Costs: A Theory of Procurement Contracts," RAND Journal of Economics, The RAND Corporation, vol. 32(3), pages 387-407, Autumn.
    2. Williamson, Oliver E, 1979. "Transaction-Cost Economics: The Governance of Contractural Relations," Journal of Law and Economics, University of Chicago Press, vol. 22(2), pages 233-261, October.
    3. Eccles, Robert G., 1981. "The quasifirm in the construction industry," Journal of Economic Behavior & Organization, Elsevier, vol. 2(4), pages 335-357, December.
    4. Zedan Hatush & Martin Skitmore, 1997. "Criteria for contractor selection," Construction Management and Economics, Taylor & Francis Journals, vol. 15(1), pages 19-38.
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    2. Nakanishi, Yoshinobu, 2022. "Determinants of the number of bidders and win-reserve ratio in open competitive tendering: Relationship-specific investments and incomplete contracts," Japan and the World Economy, Elsevier, vol. 63(C).
    3. Yang Yang & Albert P. C. Chan & Ming Shan & Ran Gao & Fengyu Bao & Sainan Lyu & Qingwen Zhang & Junfeng Guan, 2021. "Opportunities and Challenges for Construction Health and Safety Technologies under the COVID-19 Pandemic in Chinese Construction Projects," IJERPH, MDPI, vol. 18(24), pages 1-14, December.

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