Does Multi-Attribute Bidding in Public Construction Projects Prevent Corruption while Tenderers’ Preferences are Open? A Study of China’s Practice

Qing Yang,Jianhong He,Yanrui Gao

doi:10.12973/ejmste/77916

Abstract

This paper establishes a method of supply-chain multi-attribute reverse auction. Presuming the tenderers’ preference is open, the paper proposes a non-cooperative multi-attribute bidding game model about public construction projects and analyzes the bidding strategies of tenderers and bidders. Through the simulation of a case in China, we find that: (1) the more committed of the tenderers to construction quality and schedule, the greater benefits, enthusiasm in bidding, and tenderer’s surplus; (2) the bidder’s benefits have a U-shaped relationship respectively with the bidding quality and the construction period; and (3) the greater the bidder’s construction quality and period cost coefficients, the smaller the tenderer’s surplus. Such conclusions indicate, the improvement of the bidding rules or procedures can contribute to restricting the behavior of tenderer and bidder, furthermore reducing the corruption possibility of public construction projects.

Highlights

The construction sector, whether privately or publicly financed, is characterized by potentially large rents and government intervention, which makes it vulnerable to corruption (Kyriacou, et al 2015)
When measured by ‘‘perceptions of the extent to which public power is exercised for private gain, including both petty and grand forms of corruption, as well as ‘capture’ of the state by elites and private interests’’ during the whole life-circle of project (Kaufmann et al 2010; Andreas, et al 2015), the perceived corruption in public construction is far more significant in Russia, Indonesia and India than that in Scandinavia and New Zealand (Andreas, et al 2015),which is partly caused by continual economic growth and rapid urbanization worldwide (Transparency International 2006, 2008, 2011)
It follows from Equation (38) that the bidder’s profit is an increasing function of the tenderer’s construction period preference coefficient

Summary

Introduction

The construction sector, whether privately or publicly financed, is characterized by potentially large rents and government intervention, which makes it vulnerable to corruption (Kyriacou, et al 2015). It follows from Equation (37) that the bidder’s profit is an increasing function of the tenderer’s quality preference coefficient (it is obvious that qqii > 1, because the rational bidder’s committed bidding quality is better than the lowest national quality standard when it bids adopting the multi-attribute).

Results

Conclusion