Smoothing the Procurement Process

In large, complex infrastructure projects, problems can arise from the common approaches of the public sector to contracting and award procedures. The rationale underlying contracts and award mechanisms of public procurement processes can lead to cost overruns and project delays. To avoid problems in the procurement of goods and services, the author analyzes the various factors at play with regard to contract types, incentives and the award process. He recommends four steps that both sides can take to optimize the benefits and mitigate the risks when negotiating a cost-plus contract between public buyers and private suppliers. The goal is to adopt greater flexibility and gain efficiency in the procurement process.