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Framework for Structuring Procurement Contracts

Author

Listed:
  • Borg, Lena

    (Department of Real Estate and Construction Management, Royal Institute of Technology)

  • Lind, Hans

    (Department of Real Estate and Construction Management, Royal Institute of Technology)

Abstract

The aim of this paper is to propose a new structure for classifying contract types and payment methods. Concerning the procurement contract types the first important feature is the stepwise structure with three main steps in the contract design: (1) should the contract only include construction or both construction and operation/maintenance? (2) Who should do the detailed design of the premise? (3) How many contractors should the client use? An important new feature of the structure is that in both step 2 and step 3 there is a continuum of alternatives. Concerning the payment methods the structure is primarily based on how the project specific risks are shared.

Suggested Citation

  • Borg, Lena & Lind, Hans, 2014. "Framework for Structuring Procurement Contracts," Working Paper Series 14/9, Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance.
    • Handle: RePEc:hhs:kthrec:2014_009
    as

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    References listed on IDEAS

    as
    1. S. Thomas Ng & Yoki Wong, 2007. "Payment and audit mechanisms for non private-funded PPP-based infrastructure maintenance projects," Construction Management and Economics, Taylor & Francis Journals, vol. 25(9), pages 915-923.
    2. Brunes, Fredrik & Lind, Hans, 2014. "Explaining cost overruns in infrastructural projects: A new framework with applications to Sweden," Working Paper Series 14/1, Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance.
    3. Hans Lind & Lena Borg, 2010. "Service-led construction: is it really the future?," Construction Management and Economics, Taylor & Francis Journals, vol. 28(11), pages 1145-1153.
    4. M Skitmore & D Cattell, 2013. "On being balanced in an unbalanced world," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 64(1), pages 138-146, January.
    5. Mandell, Svante & Nilsson, Jan-Eric, 2010. "A Comparison of Unit Price and Fixed Price Contracts for Infrastructure Construction Projects," Working Papers 2010:13, Swedish National Road & Transport Research Institute (VTI).
    6. Per Erik Eriksson, 2010. "Partnering: what is it, when should it be used, and how should it be implemented?," Construction Management and Economics, Taylor & Francis Journals, vol. 28(9), pages 905-917.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Procurement; Contract; Construction sector; Infrastructure projects;
    All these keywords.

    JEL classification:

    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
    • L74 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Construction
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General

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