Procurement of
PPP projects is often characterised by lengthy tendering periods (between
contract notice and financial close).
This has implications for the efficiency of investment under PPP by
deterring bidders and reducing competition for contracts. This paper examines tendering periods in the
case of PPP procurement in the United Kingdom.
We adopt a Duration Analysis model and use data on 670 PPP projects to
identify the factors that have a significant effect on the length of the
tendering periods. Our results show that
there
is significant variation across sectors and regions. Interestingly, we find that when we control
for other variables, project size (measured by capital value of PPP projects)
is associated with longer tendering periods especially when capital value
exceeds £16.9 million. We examine the
impact of the introduction of the competitive dialogue approach to procurement
and fail to find evidence of shorter tendering periods (on average) since this
form of procurement was introduced.
There has however been a significant reduction in the duration of the
period between appointment of preferred bidder and financial close. This finding is in line with expectations and
indicates that the competitive dialogue has proved effective in reducing the
scope for negotiations by preferred bidders that hold quasi-monopoly advantages.