Stanford, M S (2017) Competition and price analysis of indefinite delivery indefinite quantity contracts for construction. PhD thesis, University of Colorado at Boulder, USA.
Abstract
Indefinite delivery-indefinite quantity (IDIQ) construction contracts use an overarching master contract between an owner and contractor for multiple projects over a specified time period. The practice is widespread in the U.S. federal government but its efficacy has been the subject of relatively few studies. This dissertation offers a state-of-practice review of IDIQ construction contracting as well as an empirical analysis of the competition and cost implications of using IDIQ contracts. Content analysis of 90 federal requests for proposal reveals IDIQ contracting use for a wide range of facility types and construction services. Findings suggest that IDIQ contracts reflect the inherent paradoxical organizational tensions in public sector procurements. On one hand, IDIQ contracts reflect a desire for flexibility, simplified procurement processes, and finding the most qualified contractors. On the other hand, public owners must put control mechanisms in place to obtain a fair price, protect the public interest, and comply with regulations. Statistical analysis of 935 U.S. Department of Defense construction projects shows that IDIQ contracting corresponds with lower levels of competition as measured by the number of bids, even when controlling for factors like delivery method and market conditions. A subsequent analysis of 316 U.S. Air Force construction projects shows IDIQ contracting is associated with approximately five percent higher costs, driven by higher bid prices as compared to engineering estimates. However, multiple award IDIQ contracts also appear to be effective at maintaining a minimal level of competition needed to protect the public's interest. Interviews with practitioners reveal that IDIQ contracting may yield reduced transaction costs, better schedule performance, and other benefits that offset the cost premium. For design-build projects in particular, IDIQ contracts may serve as a streamlined alternative to two-step source selection. The findings of this dissertation contribute to bodies of knowledge on IDIQ contracts and framework agreements, neoclassical economic theory and paradox theory as applied to the construction industry, and construction project delivery methods research. It is the largest empirical study of IDIQ construction projects to date. The findings also have practical implications for public owners with large asset portfolios and for contractors interested in pursuing IDIQ contracts.
| Item Type: | Thesis (Doctoral) |
|---|---|
| Thesis advisor: | Molenaar, K R |
| Uncontrolled Keywords: | competition; flexibility; market; market condition; transaction cost; economic theory; construction project; delivery method; government; public sector; public sector procurement; regulation; owner; content analysis; statistical analysis; interview |
| Index terms: | construction project delivery, public owner, market condition, content analysis, procurement process, schedule performance, public sector procurement, transaction cost, proposal, interview, paradox, regulation, practitioner, competition, construction project, economic theory, statistical analysis, public sector, owner, delivery method, public interest, indefinite quantity, framework agreement, construction industry, indefinite delivery, estimate, dissertation, construction contract, empirical study |
| Subjects: | economic analysis, project planning, contractual arrangements, contract type, research dissemination and communication, practitioner, market analysis, financial analysis, research methods, production management, financial and cost management, data analysis and analytics, data science, social theory and frameworks, data collection methods, economic and policy analysis, sociology, delivery method, project controls, payment, political science, industry analysis, administrative law, contractual condition |
| Topics: | Project Management, Procurement, Legal Issues, Research Practice, Cost Management, Business Strategy, Governance, Roles and Professions, Stakeholder Management, Time Control, Contract Administration |
| Descriptive scope: | 5 PCTEA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here