Skip to main content
SpringerLink
Log in

Does the Project Design Matter for the Performance of Infrastructure Execution? An Assessment for Italy

  • Research Paper - Italy and Europe
  • Published:
Italian Economic Journal Aims and scope Submit manuscript

Abstract

This paper aims at analysing the impact of the design phase on performance in public works execution. In the extant literature, the design phase is recognised as one of the possible determinants of inefficiency in public works execution. Despite this, the empirical evidence on the topic remains scarce. Using a large dataset of public works awarded in Italy in 2008–2014, we investigate empirically the relationship between the different choices made in the design phase and performance in public works execution. Our empirical findings show that the presence of an external designer is associated with higher cost and time renegotiations. The issue is especially relevant for small municipalities that rely more heavily on external designers, possibly because of the limited expertise available within their technical offices. Furthermore, regardless of the way the design is managed (in-house or not), we find that design and build contracts do not influence the efficient provision of public works. From a public policy perspective, our findings offer some support to the recent reform of the Italian public procurement regulation that has introduced new accreditation requirements for contracting authorities.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1

Source: Our elaboration on data provided by AVCP

Fig. 2

Source: Our elaboration on data provided by AVCP

Fig. 3

Source: Our elaboration on data provided by AVCP

Similar content being viewed by others

Notes

  1. Indeed, public works do not usually include standardised, homogeneous, and pre-defined goods; rather, they comprise complex goods that are hard to specify exactly ex-ante, and are characterised by an unavoidable degree of uncertainty about events that may occur during the execution of the contract. In such cases, the design of the optimal awarding procedure becomes difficult; thus, the selection process is highly problematic, and contracts are generally long-term and, hence, incomplete (Bajari et al. 2009).

  2. See Klemperer (1999) for an accurate survey of auction theory.

  3. According to Lewis and Bajari (2011), the extra costs owing to time delays represent a social price for the community, and, thus, affect the social welfare negatively. Further, the realisation of public works is often necessary for the realisation of other public and private investments that are likely to foster the accumulation of economic and social capital in local communities.

  4. Since 2014, AVCP has been transformed into the Anticorruption Authority (ANAC).

  5. The authors also found that extra costs were more than 10% of the original cost for about a quarter of all works. Similarly, for about two-thirds of all works, the time delays were more than 20% of the completion time agreed in the contract.

  6. According to the definition provided by Konchar and Sanvido (1998), the DBB is a traditional project delivery system where the owner contracts separately with a designer and a constructor. Once the complete design documents are provided, these are advertised to solicit fixed-price bids from construction firms. The winning firm becomes the general contractor, responsible for overall completion of the project. CMAR refers to the method where the owner contracts separately with a designer and a contractor. The owner contracts with a designer to provide a facility design. The owner selects a contractor to perform construction management services and construction work, in accordance with the plans and specifications, for a fee. The contractor usually has significant input in the design process.

  7. To increase competition and reduce information asymmetry on the characteristics of contractors, the Merloni law introduced a quality certification (certificazione SOA) for the execution of public works. This certification aims at ensuring the firm’s ability (technical, organizational and financial) to carry out a specific category of work for a specific level of value.

  8. The law introduced a (3-years) time planning for the projects and limited the use of variants during the execution of work to a percentage not exceeding 5% of the value.

  9. The preliminary design consists of an analytical and graphic report that explains the reasons for the technical, environmental and economic choices based on the amount that the contracting authority is willing to pay. The detailed design is developed taking into account the indications, the limits and the needs highlighted by the preliminary design. It consists of descriptive reports, graphic works, preliminary studies for structural calculus and economic analysis (computo metrico estimativo). Last but not least, the final design contains in details the technical operations required for the execution of the work and the related costs. It consists of reports, calculus and technical drawings.

  10. According to the law, the contracting authority represented the main project stakeholder whose interests were pursued by introducing the technical figure of the RUP (Responsabile Unico del Procedimento—procedure manager). The task of the RUP was to control the public works execution process and to manage the different project’s phases.

  11. Before the Merloni quater, other laws in the public procurement sector were: the Law no. 216/1995 (so-called Merloni bis) and the Law no. 415/1998 (so-called Merloni ter). The legal framework also included other enforcement measures: the DPR 554/1999—Regulation for the implementation of Merloni law; the DPR 34/2000—Discipline of the qualification system of the subjects executing public works; the DM 143/2000—Details and schemes for the preparation of the 3-year plan and the list of works; the DM 145/2000—General terms of contract of public works.

  12. It corresponds to the D&B contract stated by the Article 19, paragraph 1, letter b) of the first Merloni law.

  13. The Code recognized an extra payment not exceeding 2% of the value of the work when an in-house designer was selected.

  14. The European policy regarding public procurement aims at: (i) ensuring competition in the market, (ii) reducing public spending, (iii) fighting corruption, collusion and fraud through transparency and traceability of operations. The new EU Directives are also aimed at increasing the discretion of contracting authorities, changing their role and assigning them more responsibilities.

  15. The use of D&B contracts was no longer permitted except when the innovative or technological part prevails in the value of work and in the case of a general contractor agreement, a project financing, a concession and a public–private partnership. In such cases, the object of the contract concerns exclusively the final design and the execution of the project (Legislative Decree. 56/2017).

  16. According to the Art. 23, the design levels are: (i) the technical and economic feasibility project, which replaces the preliminary design; (ii) the detailed design; (iii) the final design. The article establishes a simpler design for those ordinary maintenance works with a value of up to 2,500,000 euros. It also specifies that both the detailed and the final design should preferably be awarded to the same subject for reasons of homogeneity and consistency. Finally, projects with relevant archaeological, historical, artistic, environmental and technological importance must be designed by internal designers. The only exception is the absence of adequate skills from the technical offices. In such a case, either design or ideas contests can be used.

  17. The final sample was selected on the basis of completeness of the records included in the database and checked for the presence of outliers and anomalous data. More specifically, we drop, as outliers, observations in the first and last centile of the distribution of cost overruns and time delays values, as well as those public works with a reserve price less than 150,000 euros. The latter choice was owing to the marked differences in the Italian regulation in the case of public works above this threshold; contracting firms wishing to participate in public tenders have to meet special accreditation requirements (e.g. the already-mentioned SOA certificate).

  18. In “Appendix”, the descriptive statistics for the full sample are provided (Table 13). The summary statistics for the two samples are quite similar, except for the means of the dependent variables, extra_cost and extra_time that, in the full sample, are affected by the presence of many outlier values. Nevertheless, the median values are almost the same across the samples. This provides evidence that the study sample, though comprising a lower number of observations, is as representative of the universe as the full sample.

  19. For the meaning of the category designer:other, see Sect. 4.2.

  20. Univariate kernel smoothing distribution (Wand and Jones 1995) is estimated through the reflection method. The criterion for bandwidth selection followed the plug-in method proposed by Sheather and Jones (1991).

  21. A small difference seems to occur for extra_cost.

  22. Indeed, the latter case includes a very limited number of our observations—about 2% of the study sample.

  23. Among the limitations of our empirical findings, it is worth mentioning here those owing to the lack of data on other potentially useful controls, such as the number of renegotiations or the number of past interactions between the contracting authority and procurer.

  24. We employ the Italian classification of public works (i.e., general works [OG], specialised works (OS), and their subcategories).

  25. Regional fixed effects are employed to control for unobservable factors at the regional level that might potentially bias the results. Among these, there are differences in local procurement regulations (e.g. regional price lists).

  26. To avoid problems of multicollinearity, we check for correlation between our covariates. Results of the Pearson correlation matrix, which are provided in Appendix (Table 14), show that the covariates are weakly correlated.

  27. The geographic distributions of the regional fixed effects coefficients are provided in Appendix (Fig. 4).

  28. We would like to thank an anonymous reviewer for this suggestion.

  29. This assumption is consistent with what is foreseen by the Italian regulation (i.e., Merloni quarter—Law n. 166/2002). For further details, see Sect. 3.

  30. For further details on this design, see Decarolis and Palumbo (2015).

References

  • Abadie A, Imbens G (2002) Simple and bias-corrected matching estimators. Technical report, Department of Economics, University of California, Berkeley. https://eml.berkeley.edu/~mcfadden/e242_f01/imbens.pdf. Accessed 12 Sept 2018

  • Acconcia A, Cantabene C (2008) A big push to deter corruption: evidence from Italy. Giornale degli Economisti e Annali di Economia 67(121):75–102

    Google Scholar 

  • AVCP (2008) Relazione al Parlamento per l’anno 2007. Autorità di Vigilanza sui Contratti Pubblici di Lavori, Servizi e Forniture, Roma

    Google Scholar 

  • Bajari P, Tadelis S (2001) Incentives versus transaction costs: a theory of procurement contracts. RAND J Econ 32(3):387–407

    Article  Google Scholar 

  • Bajari P, McMillan R, Tadelis S (2009) Auctions versus negotiations in procurement: an empirical analysis. J Law Econ Organ 25:372–399

    Article  Google Scholar 

  • Bucciol A, Chillemi O, Palazzi G (2013) Cost overrun and auction format in small size public works. Eur J Polit Econ 30:35–42

    Article  Google Scholar 

  • Cavalieri M, Guccio C, Rizzo I (2017) On the role of environmental corruption in healthcare infrastructures: an empirical assessment for Italy using DEA with truncated regression approach. Health Policy 121(5):515–524

    Article  Google Scholar 

  • Cavalieri M, Guccio C, Rizzo I (2018) Does corruption and the institutional characteristics of the contracting authorities affect the execution of healthcare infrastructures? An empirical investigation for Italy. J Public Procure 18(2):148–164

    Article  Google Scholar 

  • Coase RH (1937) The nature of the firm. Economica 4(November):386–405

    Article  Google Scholar 

  • Coviello D, Gagliarducci S (2010) Tenure in office and public procurement. CEIS Tor Vergata Research paper series, no. 179

  • Coviello D, Guglielmo A, Spagnolo G (2017) The effect of discretion on procurement performance. Manag Sci 64(2):715–738

    Article  Google Scholar 

  • Coviello D, Moretti L, Spagnolo G, Valbonesi P (2018) Court efficiency and procurement performance. Scand J Econ 120(3):826–858

    Article  Google Scholar 

  • D’Alpaos C, Moretto M, Valbonesi P, Vergalli S (2009) It is never too late: optimal penalty for investment delay in Italian public procurement contracts. Nota di Lavoro 78.2009. Fondazione Eni EnricoMattei, Institutions and Markets Series, Milan. https://www.feem.it/m/publications_pages/20091118174852478-09.pdf. Accessed 15 July 2018

  • Decarolis F (2014) Awarding price, contract performance, and bids screening: evidence from procurement auctions. Am Econ J Appl Econ 6(1):108–132

    Article  Google Scholar 

  • Decarolis F, Giorgiantonio C (2015) Local public procurement regulations: the case of Italy. Int Rev Law Econ 43:209–226

    Article  Google Scholar 

  • Decarolis F, Palumbo G (2011) La rinegoziazione dei contratti di lavori pubblici: un’analisi teorica e empirica. Banca d’Italia, Le infrastrutture in Italia: dotazione, programmazione, realizzazione. In: Workshops and conferences, Banca d’Italia, Rome, No. 7, pp 489–518. https://www.bancaditalia.it/pubblicazioni/collana-seminari-convegni/2011-0007/7_infrastrutture_italia.pdf. Accessed 18 Sept 2018

  • Decarolis F, Palumbo G (2015) Renegotiation of public contracts: an empirical analysis. Econ Lett 132:77–81

    Article  Google Scholar 

  • Di Giovanni L (2017) Recent Italian public law reforms. Eur Public Law 23(3):471–486

    Google Scholar 

  • Finocchiaro Castro M, Guccio C, Rizzo I (2014) An assessment of the waste effects of corruption on infrastructure provision. Int Tax Public Financ 21(4):813–843

    Article  Google Scholar 

  • Flyvberg B (2005) Policy and planning for large infrastructure projects: problems, causes, cures. World Bank Policy Research Working Paper No. 3781, World Bank, Washington, DC

  • Flyvbjerg B, Holm MS, Buhl S (2002) Underestimating costs in public works projects: error or lie? J Am Plan Assoc 68(3):279–295

    Article  Google Scholar 

  • Ganuza JJ (2007) Competition and cost overruns in procurement. J Ind Econ 55(4):633–660

    Article  Google Scholar 

  • Golden MA (2003) Electoral connections: the effects of the personal vote on political patronage, bureaucracy and legislation in postwar Italy. Br J Polit Sci 33(2):189–212

    Article  Google Scholar 

  • Guasch JL (2004) Granting and renegotiating: infrastructure concessions: doing it right. The World Bank, Washington, DC

    Book  Google Scholar 

  • Guccio C, Pignataro G, Rizzo I (2008) Adaptation costs in public works procurement in Italy. In: Enhancing best practices in public procurement, proceedings of the 3rd international public procurement conference. NEVI/PIANOo, The Netherlands, pp 28–30

  • Guccio C, Pignataro G, Rizzo I (2009) Selezione dei fornitori e incentivi alla rinegoziazione in contratti incompleti: rilevanza empirica nel settore dei lavori pubblici. Rivista Italiana degli Economisti 14(2):311–344

    Google Scholar 

  • Guccio C, Pignataro G, Rizzo I (2012a) Measuring the efficient management of public works contracts: a non-parametric approach. J Public Procure 12(4):528–546

    Article  Google Scholar 

  • Guccio C, Pignataro G, Rizzo I (2012b) Determinants of adaptation costs in procurement: an empirical estimation on Italian public works contracts. Appl Econ 44(15):1891–1909

    Article  Google Scholar 

  • Guccio C, Pignataro G, Rizzo I (2014a) Evaluating the efficiency of public procurement contracts for cultural heritage conservation works in Italy. J Cult Econ 38(1):43–70

    Article  Google Scholar 

  • Guccio C, Pignataro G, Rizzo I (2014b) Do local governments do it better? Analysis of time performance in the execution of public works. Eur J Polit Econ 34:237–252

    Article  Google Scholar 

  • Hale DR, Shrestha PP, Gibson GE, Migliaccio GC (2009) Empirical comparison of design/build and design/bid/build project delivery methods. J Constr Eng Manag 135(7):579–587

    Article  Google Scholar 

  • Huettner F, Sunder M (2012) Axiomatic arguments for decomposing goodness of fit according to Shapley and Owen values. Electron J Stat 6:1239–1250

    Article  Google Scholar 

  • Ibbs CW, Kwak YH, Ng T, Odabasi AM (2003) Project delivery systems and project change: quantitative analysis. J Constr Eng Manag 129(4):382–387

    Article  Google Scholar 

  • Iimi A (2009) Infrastructure procurement and ex post cost adjustments. Evidence from ODA financed road procurement in Africa. In: The World Bank international conference on infrastructure economics and development, Toulouse, France. http://siteresources.worldbank.org/DEC/Resources/84797-1257266550602/IimiA.pdf. Accessed 12 Sept 2018

  • Klemperer P (1999) Auction theory: a guide to the literature. J Econ Surv 13(3):227–286

    Article  Google Scholar 

  • Konchar M, Sanvido V (1998) Comparison of U.S. project delivery systems. J Constr Eng Manag 124(6):435–444

    Article  Google Scholar 

  • Lewis G, Bajari P (2011) Procurement contracting with time incentives: theory and evidence. Q J Econ 126(3):1173–1211

    Article  Google Scholar 

  • Minchin R Jr, Li X, Issa R, Vargas G (2013) Comparison of cost and time performance of design-build and design-bid-build delivery systems in Florida. J Constr Eng Manag 139(10):04013007

    Article  Google Scholar 

  • Molenaar KR, Songer AD, Barash M (1999) Public-sector design/build evolution and performance. J Manag Eng 15(2):54–62

    Article  Google Scholar 

  • OECD (2013) Discussion paper on public procurement performance measures. In: OECD meeting of leading practitioners on public procurement, GOV/PGC/ETH(2013)1, Organisation for Economic Co-operation and Development, Conference Centre, Paris. http://www.oecd.org/gov/ethics/Discussion%20paper%20on%20public%20procurement%20performance%20measures%20GOV_PGC_ETH_2012_1.pdf. Accessed 20 June 2018

  • OLAF (2013) Identifying and reducing corruption in public procurement in the EU. The European Anti-Fraud Office, European Commission, Bruxelles. https://ec.europa.eu/anti-fraud/sites/antifraud/files/docs/body/identifying_reducing_corruption_in_public_procurement_en.pdf. Accessed 12 June 2018

  • Park J, Kwak YH (2017) Design-bid-build (DBB) vs. design-build (DB) in the U.S. public transportation projects: the choice and consequences. Int J Proj Manag 35(3):280–295

    Article  Google Scholar 

  • Piga G (2011) A fighting chance against corruption in public procurement. In: Rose-Ackerman S, Søreide T (eds) International handbook on the economics of corruption, vol 2. Edward Elgar Publishing, Cheltenham, pp 141–181

    Google Scholar 

  • Rizzo I (2013) Efficiency and integrity issues in public procurement performance. J Public Financ Public Choice XXXI:77–94 (1-3/2013)

    Google Scholar 

  • Rosner JW, Tal Jr, Alfred E, West CJ (2009) Analysis of the design-build delivery method in air force construction projects. J Constr Eng Manag 135(8):710–717

    Article  Google Scholar 

  • Shane J, Bogus S, Molenaar K (2013) Municipal water/wastewater project delivery performance comparison. J Manag Eng 29(3):251–258

    Article  Google Scholar 

  • Sheather SJ, Jones MC (1991) A reliable data-based bandwidth selection method for kernel density estimation. J Roy Statist Soc Ser B 53:683–690

    Google Scholar 

  • Shrestha PP, Fernane JD (2017) Performance of design-build and design-bid-build projects for public universities. J Constr Eng Manage 143(3):04016101

    Article  Google Scholar 

  • Shrestha P, O’Connor T, Gibson G (2012) Performance comparison of large design-build and design-bid-build highway projects. J Constr Eng Manag 138(1):1–13

    Article  Google Scholar 

  • Wand MP, Jones MC (1995) Kernel smoothing. Chapman and Hall Ltd., London

    Book  Google Scholar 

  • Warren P (2014) Contracting officer workload, incomplete contracting, and contractual terms. Rand J Econ 45(2):395–421

    Article  Google Scholar 

  • Williamson O (1979) Transaction-cost economics: the governance of contractual relations. J Law Econ 22(2):233–261

    Article  Google Scholar 

Download references

Acknowledgements

We wish to thank two anonymous referees for their careful review, and the managing editor, Professor Roberta Rabellotti, for her helpful advice. The usual disclaimers apply.

Author information

Authors and Affiliations

  1. Department of Economics and Business, University of Catania, Corso Italia, 55, 95129, Catania, Italy

    Marina Cavalieri, Livio Ferrante & Calogero Guccio

  2. University of Messina, Messina, Italy

    Rossana Cristaudo

Authors
  1. Marina Cavalieri
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Rossana Cristaudo
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Livio Ferrante
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Calogero Guccio
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Calogero Guccio.

Additional information

Publisher’s Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations

Appendix

Appendix

See Tables 13, 14 and Fig. 4.

Table 13 Descriptive statistics for the full data sample.
Full size table
Table 14 Pairwise correlation matrix between covariates.
Full size table
Fig. 4
figure 4

Source: Our elaboration on data provided by AVCP. Note: the figures report the coefficients for regional variables respectively in the estimate in Table 7 (maps 1 and 2) and in Table 9 (maps 3 and 4)

Geographical distribution of the impact of regional fixed effects on public works performance.

Full size image

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Cavalieri, M., Cristaudo, R., Ferrante, L. et al. Does the Project Design Matter for the Performance of Infrastructure Execution? An Assessment for Italy. Ital Econ J 5, 39–77 (2019). https://doi.org/10.1007/s40797-018-00082-9

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s40797-018-00082-9

Keywords

JEL Classification

Search

Navigation