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The impact of procurement method on costs of procurement

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Hughes, W., Hillebrandt, P. and Greenwood, D. (2005) The impact of procurement method on costs of procurement. In: Combining Forces, Advancing Facilities Management and Construction through Innovation, Helsinki, pp. 214-226.

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Abstract/Summary

Collaborative working methods offer the hope of reduced waste, lower tendering costs and improved outputs. The costs of tendering may be influenced by the introduction of different working methods. Transaction cost economics appears to offer an analytical framework for studying the costs of tendering, but it is more to do with providing explanations at the institutional/industry level, not at the level of individual projects. Surveys and interviews were carried out with small samples in UK. The data show that that while tendering costs are not necessarily higher in collaborative working arrangements, there is no correlation between costs of tendering and the way the work is organized. Practitioners perceive that the benefits of working in collaborative procurement routes far outweigh the costs. Tendering practices can be improved to avoid waste, and the suggested improvements include restricting selective tendering lists to 23 bidders, letting bidders know who they are competing with, reimbursing tendering costs for aborted projects and ensuring that timely and comprehensive information is provided to bidders.

Item Type:Conference or Workshop Item (Paper)
Refereed:Yes
Divisions:Faculty of Science > School of Construction Management and Engineering > Business Innovation in Construction
ID Code:12125
Uncontrolled Keywords:procurement, cost of tendering, bidding cost, transaction cost economics
Additional Information:Editors of proceedings: Kähkönen, K & Porkka, J

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