Estimation of costs in the Russian public procurement system

Abstract

Abstract:The growing attention of governments, international organisations and NGOs to public procurement issues over the last two decades has been accompanied by many studies on the efficiency of public procurement. However, few researchers have considered the costs of procurement regulation for public customers and private suppliers. This problem is especially acute for the public procurement system in Russia. In this paper we propose an approach to measuring public customers' procurement costs. We test this approach with the data on a large Russian public customer: Voronezh State University. We show that the proposed approach is universal and can be applied at a micro level by other public customers to measure the efficiency of their procurement and to optimise the costs. This approach can also be used as a basis for a larger inquiry into the costs and effectiveness of procurement at the level of regional authorities or sectoral ministries.

Estimation of procurement costs incurred by public customers: a case study of a Russian region

“…We developed the methodologies for estimating public procurement costs at the regional level on the basis of the approach used in the PwC study (PwC, 2011). We also took into account the experience of piloting a cost estimation methodology for an individual public customer using a case study of the Voronezh State University (Balaeva and Yakovlev, 2017).…”

“…The authors tested the proposed model for measuring the additional costs of purchasing using data from a large construction JOPP 18,1 firm in Italy. Balaeva and Yakovlev (2017) used a case study of one organization to evaluate the costs of a public customer throughout the full procurement cycle. The authors showed that the customer's costs vary strongly depending on the type of procedure.…”

“…This paper extends the methodology of procurement costs of the papers PwC (2011) and Balaeva and Yakovlev (2017) and apply it for a large group of public customers operating in one Russian region. Because of simplification of the approach, it may be applied for estimation of procurement costs for both low qualified and high qualified customers as well as for aggregated estimation of costs in any set of customer operating in one region.…”

“…This is connected, first, with the high heterogeneity of the procurement process. The paper by Balaeva and Yakovlev (2017) revealed that specialists find it difficult to make accurate estimations of the labor costs at some stages of the procurement process.…”

“…The purpose of this study is to develop a public procurement cost evaluation methodology for a large group of public customers operating in one region that is based on the approach proposed by PwC (PwC, 2011) and takes into account the Russian-specific method for evaluating the public procurement costs of a single public procurement customer (Balaeva and Yakovlev, 2017).…”