Project Delivery
- Publication no: AP-R624-20
- ISBN: 978-1-922382-05-4
- Published: 26 June 2020
- PDF (free) Download
The procurement decision tool (“the Tool”) is developed, empirically tested and successfully trialled to significantly advance Value-for-Money in the delivery of infrastructure.
The development and empirical testing of the Tool occurred as part of an Australian Research Council grant (ARC Major Infrastructure Procurement 2009-2013). The Tool is cited by Australia’s Productivity Commission (in their final report on Public Infrastructure in 2014) and cited by the International Transport Forum (ITF) at the OECD, as part of the “way forward” (in the biggest ever inter-governmental report on infrastructure in 2018). Additionally, the Tool is highlighted as part of a review of procurement choices in an upcoming publication by the National Bureau of Economic Research, USA.
The Tool is also trialled and validated on two major infrastructure projects, comprising a case study of a major road project (this report) and a major hospital. These case studies form the basis of the Tool’s forthcoming user guide to be published by Infrastructure Australia.
This research report presents the case study application and validation of the Tool on a major road, namely, the Toowoomba Second Range Crossing, Queensland, Australia.
- Summary
- 1. Introduction
- 1.1 Background
- 1.1.1 Overview of the Procurement Decision Tool
- 1.1.2 Comparing the Guide and the Tool
- 1.2 Aim
- 1.3 Assumptions and Delimitations
- 1.4 Structure
- 1.1 Background
- 2. Outline of Steps in the Tool
- 2.1 Introduction
- 2.1.1 Economic Thought and Microeconomic Theory
- 2.1.2 Development, Empirical Testing and Trials
- 2.2 Step 1. Activity Analysis
- 2.3 Step 2. Project Specific-or-Network Analysis
- 2.4 Step 3. Risk (Make-or-Buy) Analysis
- 2.5 Step 4. Contract Packaging (Bundling) Analysis
- 2.5.1 Resolving the Inconsistent Nature of Bundling and Contract Packaging
- 2.5.2 Treatment of Pattern 8 Activities and Avoiding a Lack of Competition/Pre-Contract Market Failure
- 2.5.3 Treatment of Pattern 5 Activities and Avoiding Hold-up/Post-Contract Market Failure
- 2.5.4 Treatment of Pattern 6 and 7 Activities (Including Suitability of Private Finance)
- 2.5.5 Road Project (in Figure 1.3)
- 2.6 Step 5. Competitive-or-Collaborative Contracting (Exchange Relationship) Analysis
- 2.7 Validation and Discussion
- 2.1 Introduction
- 3. Case Study of Tool on TSRC
- 3.1 Introduction
- 3.2 Step 1. Activity Analysis
- 3.3 Step 2. Project Specific-or-Network Analysis
- 3.4 Step 3. Risk (Make-or-Buy) Analysis
- 3.5 Step 4. Contract Packaging (Bundling) Analysis
- 3.6 Step 5. Collaborative-or-Competitive (Exchange Relationship) Analysis
- 3.7 Validation and Discussion
- 4. Conclusions and Recommendations
- 4.1 Conclusions
- 4.2 Recommendations
- References
- Appendix A Questions for Step 3. Risk (Make-or-Buy) Analysis
- A.1 General Notes
- A.2 Question 1. Asset Specificity (Transaction Costs Economics)
- A.3 Question 2. Uncertainty (Transaction Costs Economics)
- A.4 Question 3. Frequency (Transaction Costs Economics)
- A.5 Question 4. Value (Resource-Based Theory)
- A.6 Question 5. Rarity (Resource-Based Theory)
- A.7 Question 6. Costly to Imitate (Resource-Based Theory)