Working papers in Transport Economics
Degrees of freedom in road construction
(), Hans Lind
() and Jan-Eric Nilsson
Abstract: One policy that is believed to increase the rate of
innovation and the level of productivity is to move from Design-bid-build
contracts (DBB) to Design-Build contracts (DB). A common view is that the
latter provides the contractor more degrees of freedom to enable
innovation. This hypothesis consists of two steps, first that DB actually
has more degrees of freedom and secondly that more degrees of freedom leads
to more innovation. This paper focuses on the first step and is based on a
review of five road construction projects – two labelled DBB and three DB.
It is demonstrated that there is a gap between the textbook definition of
the two types of contracts and the actual design of the examples. The
degrees of freedom for the contractor are restricted in both DB and DBB
contracting and no significant difference in this dimension could be
established. Based on this lack of difference in the five projects, the
expectation of innovation for the labelled contracts cannot be settled.
Some possible rational reasons for the client to restrict the degrees of
freedom are also suggested.
Keywords: Innovation; Contracting; Design Bid Build (DBB); Design and Build (DB); (follow links to similar papers)
JEL-Codes: D86; H57; L74; (follow links to similar papers)
15 pages, October 24, 2014
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