Wamuziri, S and Seywright, A (2005) Risk sharing and effective incentives in collaborative procurement. In: Khosrowshahi, F (ed.) Proceedings of 21st Annual ARCOM Conference, 7-9 September 2005, London, UK.
Abstract
There are a number of options available for procurement of construction work. The main differences between the options include the payment mechanisms and risk allocation between the project participants. Payment options include fixed price contracts, cost-reimbursable contracts and target cost contracts. Use of collaborative procurement based on target cost contracts is on the increase in UK construction. Other innovative arrangements for procurement include Early Contractor Involvement (ECI) design and build. The key features and risk allocation inherent in different procurement methods are discussed. The characteristics of ECI contracts are assessed including an evaluation of the payment mechanisms in a major rail project. It is concluded that experience of ECI design and build contracts is still limited. As a consequence, further theoretical research and empirical data analysis are required to collate information which will guide industry in designing effective incentives in collaborative procurement.
| Item Type: | Conference Paper (Paper) |
|---|---|
| Uncontrolled Keywords: | contracting; incentives; partnering; procurement; risk |
| Index terms: | construction work, risk allocation, payment mechanism, railway construction, option, design and build, data analysis, procurement method, partnering, target cost, early contractor involvement |
| Subjects: | partnership management, decision analysis, financial risk, economics, civil engineering, data analysis and analytics, contractual arrangements, economic analysis, operations management |
| Topics: | Procurement, Stakeholder Management, Risk Management, Engineering Principles, Project Management, Research Practice, Cost Management, Business Strategy |
| Descriptive scope: | 3 PCA |
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