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Publication
Transaction cost analysis of public infrastructure delivery
Journal Contribution - Journal Article
Purpose: The aim of this article is to offer a systematic assessment of the magnitude of transaction costs of public infrastructure delivery, based on the three attributes of transaction costs, being the asset specificity, uncertainty and frequency of a transaction.
Methodology: Non-parametric tests were used to test the transaction cost differences between different procurement types.
Findings: We find empirical support, based on a sample of 172 public infrastructure projects in Belgium, that construction firms make higher relation specific investments to their transaction partners under a Public-Private Partnership (PPP) than a under a Traditional Public Procurement. In addition, we found that PPP transactions are burdened by a greater uncertainty and a less mature market than that of TPP transactions.
Research limitations: Given the complexity of this research, the scope is limited to: (1) a strict distinction between two procurement types, (2) one geographical area, (3) a limited time scope, and (4) a focus on the private sector. Hence, we suggest that further research broadens the scope of either one of these aspects in order to get a better understanding of the total transaction cost burden of the public infrastructure market.
Policy implications: This study offers policy makers form a better understanding of the transaction cost implications when evaluating different procurement types.
Originality: This paper serves as one of the first systematic comparative analyses of the magnitude and determinants of transaction costs for the delivery of public infrastructure.
Methodology: Non-parametric tests were used to test the transaction cost differences between different procurement types.
Findings: We find empirical support, based on a sample of 172 public infrastructure projects in Belgium, that construction firms make higher relation specific investments to their transaction partners under a Public-Private Partnership (PPP) than a under a Traditional Public Procurement. In addition, we found that PPP transactions are burdened by a greater uncertainty and a less mature market than that of TPP transactions.
Research limitations: Given the complexity of this research, the scope is limited to: (1) a strict distinction between two procurement types, (2) one geographical area, (3) a limited time scope, and (4) a focus on the private sector. Hence, we suggest that further research broadens the scope of either one of these aspects in order to get a better understanding of the total transaction cost burden of the public infrastructure market.
Policy implications: This study offers policy makers form a better understanding of the transaction cost implications when evaluating different procurement types.
Originality: This paper serves as one of the first systematic comparative analyses of the magnitude and determinants of transaction costs for the delivery of public infrastructure.
Journal: International Journal of Managing Projects in Business
ISSN: 1753-8378
Issue: 3
Volume: 8
Pages: 441-456
Publication year:2015
Keywords:Transaction cost economics, PPP, public procurement, statistical analysis