Innovative contracting in infrastructure design and maintenance
This paper describes the results of research into the contract arrangements and design processes for contractors in the road infrastructure industry. The changing institutional environment has led the industry to believe that more opportunities can be realised to the benefit of society (lower cost, higher quality, more efficient design and design process) when contractors are allowed more 'design freedom' in their contracts with governments. We have explored the technical design space, and developed a framework to structure this space. Next, we identified, through many indepth interviews and case studies, a number of technical, organisational and institutional opportunities, threats and barriers for granting more design space. Finally, the paper discusses the conclusions that could be drawn from the mapping of the opportunities onto the bottlenecks, and it shows that much can indeed be gained, but that many of these opportunities for cost reduction or value improvement are hampered by large, inert institutional settings.
A Theory of the Firm: Governance, Residual Claims, and Organizational Forms
This collection examines the forces, both external and internal, that lead corporations to behave efficiently and to create wealth. Corporations vest control rights in shareholders, the author argues, because they are the constituency that bear business risk and therefore have the appropriate incentives to maximize corporate value. Assigning control to any other group would be tantamount to allowing that group to play poker with someone else's money, and would create inefficiencies. The implicit denial of this propositions is the fallacy of the so-called stakeholder theory of the corporation, which argues that corporations should be run in the interests of all stakeholders. This theory offers no account of how conflicts between different stakeholders are to be resolved, and gives managers no principle on which to base decisions, except to follow their own preferences. In practice, shareholders delegate their control rights to a board of directors, who hire, fire and set the compensation of the chief officers of the firm. However, because agents have different incentives than the principals they represent, they can destroy corporate value unless closely monitored. This happened in the 1960s and led to hostile takeovers in the market for corporate control in the 1970s and 1980s. The author argues that the takeover movement generated increases in corporate efficiency that exceede $1.5 trillion and helped to lay the foundation for the great economic boom of the 1990s.
An Approach to Improving the Performance of Rail Systems in a Design Phase A practical example from the High Speed Line South tender *
In the last few years the importance of maintenance in Design and Construct contracts for railway infrastructure has increased. Managing bodies put increasingly higher requirements to contractors for delivering availability, reliability and low costs of ownership. With regard to the Dutch highspeed line (HSL South), a so-called Infrastructure Provider Contract encompasses the design, construction, and financing of the total rail system, including a maintenance period of 25 years. Due to the fact that maintenance used to play a minor role in infrastructure projects, successful examples of optimising investment, maintenance costs, availability and reliability as a whole are almost absent. In this paper an approach to deal with the requirements is discussed.