Public procurement in construction: a critical review

Abstract

Introduction. The first article of the series addresses the main findings of the analysis of regulatory documents governing public procurement in construction in some foreign countries. Methods, that are little known in Russia and not typical for the domestic practice of contractual relations, are successfully used abroad. On the contrary, some of the rules look strange to a foreign bidder. The Auditing Chamber of the Russian Federation emphasizes the instability of competition legislation.
 Materials and methods. The authors address the Russian investment and procurement statistics and study basic principles and methods of public procurement. Basic rules governing relations between customers and contractors are analyzed. The Russian bidding legislation is compared with foreign bidding legislation systems, which are analyzed in the article.
 Results. The author have found that no thorough preparations for design and construction works are made. Little financial resources are invested into feasibility studies. Electronic document management is overemphasized, and features of the construction process are not sufficiently addressed. Competitive negotiations are not used abroad, although auctions, that do not take into account any parameters other than the price, are applied. The contact price is set in advance, without taking into account the contractor’s capabilities, and later this price remains unchanged, even if its initial value is too low. In many cases no contractors join the bidding process, which causes investment programmes to fail. The procurement legislation hardly addresses the contract implementation phase.
 Conclusions. It is advisable to draft and pass an independent federal law on public procurement in construction. At the same time, it is necessary to take into account the international experience and the capabilities of contractors operating in civil and industrial engineering. There is a need to limit indirect costs and profit margins of equipment and construction material producers in the same way as it is done in respect of construction companies within the framework of price control measures.

Uncompleted construction work in the Russian Federation: causes and remedies

“…The issue of increase in uncompleted construction work is among the key issues inherent in public procurement in construction. Russian scholars and researchers are actively working on helping enhance existing mechanisms [1,5,6,7], keeping in mind that the price to pay for poor public procurement is hundreds of millions of rubles in uncommitted, ineffectively spent, or even lost funding [8,9]. As part of state procurement contracts, Russia's constituent regions regularly engage in the construction of properties that have high socio-economic value.…”

Development of an Economic and Mathematical Model for Monitoring the Total Cost of Risks in the Management System of Investment and Construction Projects

“…Модели и методы математического прогнозирования, экономико-математическое моделирование, статистический анализ, методы обоснования управленческих решений в условиях неопределенности [1][2][3][4][5][6][7][8].…”

“…В работе обоснована необходимость увязки допустимой рискоустойчивости предпринимательского решения с конкурентоспособностью и эффективностью деятельности на микроуровне как основополагающее направление с развитием интеллектуального капитала [6]. В работе обоснован вывод о том, что в настоящее время отсутствует единый механизм по управлению рискоустойчивостью и необходимы методы по обучению персонала грамотному реагированию на рисковую ситуацию, обусловленную неопределенностью последствий риска [7]. Характерной особенностью предпринимательской деятельности является её неразрывная связь с рисками, порождаемыми неопределенностью условий ведения этой деятельности.…”