(Un)bundling Infrastructure Procurement: Evidence from Water Supply and Sewage Projects

Public infrastructure has long been faced with difficulty in financing. Available public resources are often limited in many countries. Competitive bidding in public procurement systems is an important instrument to contain the public investment costs. But competition is often limited in the infrast...

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Main Authors:	Estache, Antonio, Iimi, Atsushi
Format:	Journal Article
Language:	EN
Published:	2012
Subjects:	Production Cost Capital, Total Factor, and Multifactor Productivity Capacity D240 National Government Expenditures and Related Policies: Infrastructures Other Public Investment and Capital Stock H540 Production, Pricing, and Market Structure Size Distribution of Firms L110 Renewable Resources and Conservation: Water Q250 Air Pollution Water Pollution Noise Hazardous Waste Solid Waste Recycling Q530
Online Access:	http://hdl.handle.net/10986/5701

id	okr-10986-5701
recordtype	oai_dc
spelling	okr-10986-57012021-04-23T14:02:23Z (Un)bundling Infrastructure Procurement: Evidence from Water Supply and Sewage Projects Estache, Antonio Iimi, Atsushi Production Cost Capital, Total Factor, and Multifactor Productivity Capacity D240 National Government Expenditures and Related Policies: Infrastructures Other Public Investment and Capital Stock H540 Production, Pricing, and Market Structure Size Distribution of Firms L110 Renewable Resources and Conservation: Water Q250 Air Pollution Water Pollution Noise Hazardous Waste Solid Waste Recycling Q530 Public infrastructure has long been faced with difficulty in financing. Available public resources are often limited in many countries. Competitive bidding in public procurement systems is an important instrument to contain the public investment costs. But competition is often limited in the infrastructure sector. In such circumstances, better public procurement design can save a lot of public resources. There is a general tradeoff between the competition effect and economies of scale and scope; large contracts can benefit from the scale and scope effects but have to compromise competition. The unbundling approach can foster competition but may suffer from diseconomies of scale and scope. Using procurement data from water supply and sewage projects in developing countries, the paper analyzes the effects of the (un)bundling strategy on bidders' entry and bidding behavior. It shows that the bidder cost structure exhibits significant diseconomies of scope between two main public works in this sector, i.e., treatment plant construction and distribution network installation. There is no clear evidence of the competition effect. Therefore, there is no rationale of bundling these two works into a single contract. Unbundling can help governments to contain public infrastructure costs. 2012-03-30T07:34:07Z 2012-03-30T07:34:07Z 2011 Journal Article Utilities Policy 09571787 http://hdl.handle.net/10986/5701 EN http://creativecommons.org/licenses/by-nc-nd/3.0/igo 3922 World Bank Journal Article
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	EN
topic	Production Cost Capital, Total Factor, and Multifactor Productivity Capacity D240 National Government Expenditures and Related Policies: Infrastructures Other Public Investment and Capital Stock H540 Production, Pricing, and Market Structure Size Distribution of Firms L110 Renewable Resources and Conservation: Water Q250 Air Pollution Water Pollution Noise Hazardous Waste Solid Waste Recycling Q530
spellingShingle	Production Cost Capital, Total Factor, and Multifactor Productivity Capacity D240 National Government Expenditures and Related Policies: Infrastructures Other Public Investment and Capital Stock H540 Production, Pricing, and Market Structure Size Distribution of Firms L110 Renewable Resources and Conservation: Water Q250 Air Pollution Water Pollution Noise Hazardous Waste Solid Waste Recycling Q530 Estache, Antonio Iimi, Atsushi (Un)bundling Infrastructure Procurement: Evidence from Water Supply and Sewage Projects
relation	http://creativecommons.org/licenses/by-nc-nd/3.0/igo
description	Public infrastructure has long been faced with difficulty in financing. Available public resources are often limited in many countries. Competitive bidding in public procurement systems is an important instrument to contain the public investment costs. But competition is often limited in the infrastructure sector. In such circumstances, better public procurement design can save a lot of public resources. There is a general tradeoff between the competition effect and economies of scale and scope; large contracts can benefit from the scale and scope effects but have to compromise competition. The unbundling approach can foster competition but may suffer from diseconomies of scale and scope. Using procurement data from water supply and sewage projects in developing countries, the paper analyzes the effects of the (un)bundling strategy on bidders' entry and bidding behavior. It shows that the bidder cost structure exhibits significant diseconomies of scope between two main public works in this sector, i.e., treatment plant construction and distribution network installation. There is no clear evidence of the competition effect. Therefore, there is no rationale of bundling these two works into a single contract. Unbundling can help governments to contain public infrastructure costs.
format	Journal Article
author	Estache, Antonio Iimi, Atsushi
author_facet	Estache, Antonio Iimi, Atsushi
author_sort	Estache, Antonio
title	(Un)bundling Infrastructure Procurement: Evidence from Water Supply and Sewage Projects
title_short	(Un)bundling Infrastructure Procurement: Evidence from Water Supply and Sewage Projects
title_full	(Un)bundling Infrastructure Procurement: Evidence from Water Supply and Sewage Projects
title_fullStr	(Un)bundling Infrastructure Procurement: Evidence from Water Supply and Sewage Projects
title_full_unstemmed	(Un)bundling Infrastructure Procurement: Evidence from Water Supply and Sewage Projects
title_sort	(un)bundling infrastructure procurement: evidence from water supply and sewage projects
publishDate	2012
url	http://hdl.handle.net/10986/5701
_version_	1764396007804633088

(Un)bundling Infrastructure Procurement: Evidence from Water Supply and Sewage Projects

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