IDEAS home Printed from https://ideas.repec.org/a/eee/jpolmo/v45y2023i5p994-1014.html
   My bibliography  Save this article

“One-size-fits-all” public works contract does it better? An assessment of infrastructure provision in Italy

Author

Listed:
  • Finocchiaro Castro, Massimo
  • Guccio, Calogero
  • Rizzo, Ilde

Abstract

Public infrastructure procurement is a crucial policy tool, a prerequisite for public and private investments and for economic and social capital growth. Low performance in execution severely hinders infrastructure provision and benefits delivery. One of the most sensitive phases in public infrastructure procurement is the design because of the strategic relationship that it potentially creates between procurers and contractors in the execution stage, affecting the costs and the duration of the contract. In this paper, using recent developments in non-parametric frontiers and propensity score matching, we evaluate the performance in the execution of public works in Italy. The analysis provides robust evidence of significant improvement of performance where procurers opt for design and build contracts, which lead to lower transaction costs, allowing contractors to better accommodate the project in the execution. Our findings bear considerable policy implications.

Suggested Citation

  • Finocchiaro Castro, Massimo & Guccio, Calogero & Rizzo, Ilde, 2023. "“One-size-fits-all” public works contract does it better? An assessment of infrastructure provision in Italy," Journal of Policy Modeling, Elsevier, vol. 45(5), pages 994-1014.
    • Handle: RePEc:eee:jpolmo:v:45:y:2023:i:5:p:994-1014
    DOI: 10.1016/j.jpolmod.2023.07.003
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0161893823000649
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jpolmod.2023.07.003?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Massimo Finocchiaro Castro & Calogero Guccio & Ilde Rizzo, 2014. "An assessment of the waste effects of corruption on infrastructure provision," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 21(4), pages 813-843, August.
    2. Dave Donaldson, 2018. "Railroads of the Raj: Estimating the Impact of Transportation Infrastructure," American Economic Review, American Economic Association, vol. 108(4-5), pages 899-934, April.
    3. Massimo Finocchiaro Castro & Calogero Guccio & Giacomo Pignataro & Ilde Rizzo, 2018. "Is competition able to counteract the inefficiency of corruption? The case of Italian public works," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 45(1), pages 55-84, March.
    4. Marina Cavalieri & Calogero Guccio & Ilde Rizzo, 2018. "Does corruption and the institutional characteristics of the contracting authorities affect the execution of healthcare infrastructures?," Journal of Public Procurement, Emerald Group Publishing Limited, vol. 18(2), pages 148-164, June.
    5. Taylor, Travis K., 2003. "Modeling offset policy in government procurement," Journal of Policy Modeling, Elsevier, vol. 25(9), pages 985-998, December.
    6. Decarolis, Francesco & Palumbo, Giuliana, 2015. "Renegotiation of public contracts: An empirical analysis," Economics Letters, Elsevier, vol. 132(C), pages 77-81.
    7. Mamatzakis, E.C., 2007. "EU infrastructure investment and productivity in Greek manufacturing," Journal of Policy Modeling, Elsevier, vol. 29(2), pages 335-344.
    8. Grossman, Sanford J & Hart, Oliver D, 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 691-719, August.
    9. Léopold Simar & Paul W. Wilson, 2020. "Hypothesis testing in nonparametric models of production using multiple sample splits," Journal of Productivity Analysis, Springer, vol. 53(3), pages 287-303, June.
    10. Wigren, Rune & Wilhelmsson, Mats, 2007. "Construction investments and economic growth in Western Europe," Journal of Policy Modeling, Elsevier, vol. 29(3), pages 439-451.
    11. Marco Caliendo & Sabine Kopeinig, 2008. "Some Practical Guidance For The Implementation Of Propensity Score Matching," Journal of Economic Surveys, Wiley Blackwell, vol. 22(1), pages 31-72, February.
    12. Williamson, Oliver E, 1999. "Public and Private Bureaucracies: A Transaction Cost Economics Perspective," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 15(1), pages 306-342, April.
    13. Bogetoft, Peter & Kromann, Lene, 2018. "Evaluating treatment effects using data envelopment analysis on matched samples: An analysis of electronic information sharing and firm performance," European Journal of Operational Research, Elsevier, vol. 270(1), pages 302-313.
    14. Williamson, Oliver E., 2005. "Transaction cost economics and business administration," Scandinavian Journal of Management, Elsevier, vol. 21(1), pages 19-40, March.
    15. Hart, Oliver, 1995. "Firms, Contracts, and Financial Structure," OUP Catalogue, Oxford University Press, number 9780198288817.
    16. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    17. Cavalieri, Marina & Cristaudo, Rossana & Guccio, Calogero, 2019. "On the magnitude of cost overruns throughout the project life-cycle: An assessment for the Italian transport infrastructure projects," Transport Policy, Elsevier, vol. 79(C), pages 21-36.
    18. Hensher, David A. & Stanley, John, 2008. "Transacting under a performance-based contract: The role of negotiation and competitive tendering," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(9), pages 1143-1151, November.
    19. Simar, Leopold & Wilson, Paul W., 2007. "Estimation and inference in two-stage, semi-parametric models of production processes," Journal of Econometrics, Elsevier, vol. 136(1), pages 31-64, January.
    20. Alexis Diamond & Jasjeet S. Sekhon, 2013. "Genetic Matching for Estimating Causal Effects: A General Multivariate Matching Method for Achieving Balance in Observational Studies," The Review of Economics and Statistics, MIT Press, vol. 95(3), pages 932-945, July.
    21. Wilson, Paul W., 2008. "FEAR: A software package for frontier efficiency analysis with R," Socio-Economic Planning Sciences, Elsevier, vol. 42(4), pages 247-254, December.
    22. Sekhon, Jasjeet S., 2011. "Multivariate and Propensity Score Matching Software with Automated Balance Optimization: The Matching package for R," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 42(i07).
    23. Cavalieri, Marina & Guccio, Calogero & Rizzo, Ilde, 2017. "On the role of environmental corruption in healthcare infrastructures: An empirical assessment for Italy using DEA with truncated regression approach," Health Policy, Elsevier, vol. 121(5), pages 515-524.
    24. Zolfaghari, Mehdi & Kabiri, Mahbobe & Saadatmanesh, Hamideh, 2020. "Impact of socio-economic infrastructure investments on income inequality in Iran," Journal of Policy Modeling, Elsevier, vol. 42(5), pages 1146-1168.
    25. Elekdag, Selim & Muir, Dirk & Wu, Yiqun, 2022. "Das Public Kapital: How much would higher German public investment help Germany and the euro area?," Journal of Policy Modeling, Elsevier, vol. 44(2), pages 223-251.
    26. Audinga Baltrunaite & Tommaso Orlando & Gabriele Rovigatti, 2021. "The implementation of public works in Italy: institutional features and regional characteristics," Questioni di Economia e Finanza (Occasional Papers) 659, Bank of Italy, Economic Research and International Relations Area.
    27. Marina Cavalieri & Rossana Cristaudo & Livio Ferrante & Calogero Guccio, 2019. "Does the Project Design Matter for the Performance of Infrastructure Execution? An Assessment for Italy," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 5(1), pages 39-77, March.
    28. Steven Tadelis, 2009. "Auctions Versus Negotiations in Procurement: An Empirical Analysis," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 25(2), pages 372-399, October.
    29. Papagni, Erasmo & Lepore, Amedeo & Felice, Emanuele & Baraldi, Anna Laura & Alfano, Maria Rosaria, 2021. "Public investment and growth: Lessons learned from 60-years experience in Southern Italy," Journal of Policy Modeling, Elsevier, vol. 43(2), pages 376-393.
    30. Wang, Eric C., 2002. "Public infrastructure and economic growth: a new approach applied to East Asian economies," Journal of Policy Modeling, Elsevier, vol. 24(5), pages 411-435, August.
    31. Calogero Guccio & Giacomo Pignataro & Ilde Rizzo, 2012. "Measuring the efficient management of public works contracts: A non-parametric approach," Journal of Public Procurement, Emerald Group Publishing Limited, vol. 12(4), pages 528-546, March.
    32. Bent Flyvbjerg, 2014. "What You Should Know About Megaprojects, and Why: An Overview," Papers 1409.0003, arXiv.org.
    33. Francesco Decarolis & Giancarlo Spagnolo & Riccardo Pacini, 2016. "Past Performance and Procurement Outcomes," NBER Working Papers 22814, National Bureau of Economic Research, Inc.
    34. Patrick Bajari & Stephanie Houghton & Steven Tadelis, 2014. "Bidding for Incomplete Contracts: An Empirical Analysis of Adaptation Costs," American Economic Review, American Economic Association, vol. 104(4), pages 1288-1319, April.
    35. Christopher McCrudden, 2004. "Using public procurement to achieve social outcomes," Natural Resources Forum, Blackwell Publishing, vol. 28(4), pages 257-267, November.
    36. Lisciandra, Maurizio & Milani, Riccardo & Millemaci, Emanuele, 2022. "A corruption risk indicator for public procurement," European Journal of Political Economy, Elsevier, vol. 73(C).
    37. Ho, Daniel & Imai, Kosuke & King, Gary & Stuart, Elizabeth A., 2011. "MatchIt: Nonparametric Preprocessing for Parametric Causal Inference," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 42(i08).
    38. Sascha O. Becker & Andrea Ichino, 2002. "Estimation of average treatment effects based on propensity scores," Stata Journal, StataCorp LP, vol. 2(4), pages 358-377, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Finocchiaro Castro, Massimo & Guccio, Calogero & Rizzo, Ilde, 2023. "How "one-size-fits-all" public works contract does it better? An assessment of infrastructure provision in Italy," EconStor Preprints 270729, ZBW - Leibniz Information Centre for Economics.
    2. Finocchiaro Castro, Massimo & Guccio, Calogero, 2021. "Does greater discretion improve the performance in the execution of public works? Evidence from the reform of discretionary thresholds in Italy," EconStor Preprints 247648, ZBW - Leibniz Information Centre for Economics.
    3. Marina Cavalieri & Calogero Guccio & Domenico Lisi & Ilde Rizzo, 2020. "Does Institutional Quality Matter for Infrastructure Provision? A Non-parametric Analysis for Italian Municipalities," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 6(3), pages 521-562, November.
    4. Lisciandra, Maurizio & Milani, Riccardo & Millemaci, Emanuele, 2022. "A corruption risk indicator for public procurement," European Journal of Political Economy, Elsevier, vol. 73(C).
    5. Calogero Guccio & Domenico Lisi & Ilde Rizzo, 2019. "When the purchasing officer looks the other way: on the waste effects of debauched local environment in public works execution," Economics of Governance, Springer, vol. 20(3), pages 205-236, September.
    6. Wendimu, Mengistu Assefa & Henningsen, Arne & Gibbon, Peter, 2016. "Sugarcane Outgrowers in Ethiopia: “Forced” to Remain Poor?," World Development, Elsevier, vol. 83(C), pages 84-97.
    7. Massimo Finocchiaro Castro & Calogero Guccio & Giacomo Pignataro & Ilde Rizzo, 2018. "Is competition able to counteract the inefficiency of corruption? The case of Italian public works," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 45(1), pages 55-84, March.
    8. Cavalieri, Marina & Cristaudo, Rossana & Guccio, Calogero, 2019. "On the magnitude of cost overruns throughout the project life-cycle: An assessment for the Italian transport infrastructure projects," Transport Policy, Elsevier, vol. 79(C), pages 21-36.
    9. Lindlbauer, Ivonne & Schreyögg, Jonas & Winter, Vera, 2016. "Changes in technical efficiency after quality management certification: A DEA approach using difference-in-difference estimation with genetic matching in the hospital industry," European Journal of Operational Research, Elsevier, vol. 250(3), pages 1026-1036.
    10. Marina Cavalieri & Rossana Cristaudo & Livio Ferrante & Calogero Guccio, 2019. "Does the Project Design Matter for the Performance of Infrastructure Execution? An Assessment for Italy," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 5(1), pages 39-77, March.
    11. Massimo Finocchiaro Castro & Calogero Guccio & Ilde Rizzo, 2014. "An assessment of the waste effects of corruption on infrastructure provision," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 21(4), pages 813-843, August.
    12. Massimo Baldini & Daniele Pacifico & Federica Termini, 2015. "Imputation of missing expenditure information in standard household income surveys," Center for the Analysis of Public Policies (CAPP) 0116, Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi".
    13. Henningsen, Arne & Mpeta, Daniel F. & Adem, Anwar S. & Kuzilwa, Joseph A. & Czekaj, Tomasz G., 2015. "The Effects of Contract Farming on Efficiency and Productivity of Small-Scare Sunflower Farmers in Tanzania," 2015 Conference, August 9-14, 2015, Milan, Italy 212478, International Association of Agricultural Economists.
    14. Desrieux, Claudine & Chong, Eshien & Saussier, Stéphane, 2013. "Putting all one's eggs in one basket: Relational contracts and the management of local public services," Journal of Economic Behavior & Organization, Elsevier, vol. 89(C), pages 167-186.
    15. Jean Beuve & Marian W Moszoro & Pablo T Spiller, 2023. "Doing It by the Book: Political Contestability and Public Contract Renegotiations," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 39(1), pages 281-308.
    16. Cavalieri, Marina & Guccio, Calogero & Rizzo, Ilde, 2017. "On the role of environmental corruption in healthcare infrastructures: An empirical assessment for Italy using DEA with truncated regression approach," Health Policy, Elsevier, vol. 121(5), pages 515-524.
    17. Dejan Makovšek & Adrian Bridge, 2021. "Procurement Choices and Infrastructure Costs," NBER Chapters, in: Economic Analysis and Infrastructure Investment, pages 277-327, National Bureau of Economic Research, Inc.
    18. Daraio, Cinzia & Simar, Léopold & Wilson, Paul W., 2021. "Quality as a latent heterogeneity factor in the efficiency of universities," Economic Modelling, Elsevier, vol. 99(C).
    19. Henningsen, Arne & Mpeta, Daniel F. & Adem, Anwar S. & Kuzilwa, Joseph A. & Czekaj, Tomasz G., 2015. "A Meta-Frontier Approach for Causal Inference in Productivity Analysis: The Effect of Contract Farming on Sunflower Productivity in Tanzania," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 206200, Agricultural and Applied Economics Association.
    20. Ravenda, Diego & Giuranno, Michele G. & Valencia-Silva, Maika M. & Argiles-Bosch, Josep M. & García-Blandón, Josep, 2020. "The effects of mafia infiltration on public procurement performance," European Journal of Political Economy, Elsevier, vol. 64(C).

    More about this item

    Keywords

    Infrastructure provision; Transaction costs economics; Public works procurement; Design and build contracts; Performance; Non-parametric frontiers; Propensity score matching;
    All these keywords.

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jpolmo:v:45:y:2023:i:5:p:994-1014. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505735 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.