Modeling the Evolution of National Road Procurement Strategies

Many transportation agencies have discovered that traditional highway contract administration procedures and project delivery methods do not meet current demands. In response, they are turning to alternative contracting. Four trends are perceived in road management. First, with respect to project delivery, more and more projects are contracted for the whole life cycle of the road. Second, contractors are given increasingly more freedom or design space, as the indicators used for monitoring their work become less operational and more performance based. Third, governments follow a dual track strategy; managing a portfolio of directly and indirectly financed projects; dependent on the project characteristics. Fourth, contracts are granted for longer term. These innovative forms of contracting are expected to yield more flexibility in the road sector; more innovation, higher performance and consequently lower costs while keeping up service levels on public values. This paper presents how by using a combination of institutional economics theory and engineering design theory, our aim is to build a systems dynamics model that can capture the institutional context and is able to indicate what contracting practices are likely to occur and which ones are likely to succeed in view of the meeting the public values and demands. Keywords— System Dynamics, System Analysis, Road contracting, Procurement Strategy of