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Quantity choice in unit price contract procurements
Swedish National Road and Transport Research Institute, Society, environment and transport, Transport economics Stockholm.
Kungliga Tekniska Högskolan.
2011 (English)Report (Other (popular science, discussion, etc.))
Abstract [en]

A common approach for procuring large construction projects is through Unit Price Contracts. By the means of a simple model, we study the optimal quantity to procure under uncertainty regarding the actual required quantity given that the procurer strives to minimize expected total costs. The model shows that the quantity to procure in optimum follows from a trade-off between the risk of having to pay for more units than actually necessary and of having to conduct costly renegotiations. The optimal quantity increases in costs associated with possible renegotiations, decreases in expected per unit price, and, if a renegotiation does not increase per unit price too much, decreases in the uncertainty surrounding the actual quantity required.

Older version: http://swopec.hhs.se/vtiwps/abs/vtiwps2011_004.htm

Place, publisher, year, edition, pages
Stockholm: Centre for Transport Studies Stockholm, Swedish National Road & Transport Research Institute (VTI), KTH Royal Institute of Technology, S-WoPEc, Scandinavian Working Papers in Economics , 2011. , p. 17
Series
CTS Working Paper ; 2011:4
Keywords [en]
Price, Mathematical model, Transport infrastructure, Construction, Road construction
Keywords [sv]
Priser, Matematiska modeller, Transportinfrastruktur, Byggande, Vägbyggnad
National Category
Economics
Research subject
Road: General works, surveys, comprehensive works, Road: Economics
Identifiers
URN: urn:nbn:se:vti:diva-638OAI: oai:DiVA.org:vti-638DiVA, id: diva2:669333
Available from: 2013-12-03 Created: 2013-12-03 Last updated: 2014-07-08Bibliographically approved

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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf