Selecting Procurement Systems for Capital Projects: A Transaction Cost Perspective pp. 123-135
Authors: (Chen-Yu Chang, Graham Ive, Bartlett School of Construction and Project Management, University College London, United Kingdom)
Abstract: How to select a right procurement system is an essential decision in project management. The purpose of this article to to provide a concise review of the recent advances in understanding the selction of procurement systems and make suggestions on the future direction of research. From the perspective of transaction cost economics, construction procurers need to take into account the efficiency implications of bargaining power reversal in procuring a project. As three three main types of procurement systems differ in their ability to shorten delivery time, adaptability to requirement changes and ability to identify liabilities, aligning procurement systems with project conditions would help mitigate the holdup threat and improve the overall efficiency of procurement. It is also suggested that, in the future, researchers in this field should seek to broaden the TCE framework to accommodate other important pcoruement decisions, particularly with respect to the handling of project risks.