Impact of expected price for public sector procurement

Abstract

The contracting authority usually determines its expected price before the start of the procurement process.  This paper examines the public works contracts and explores the influence of the expected price on the tender results. The article investigates the dependence of the award price in a public contract on the predetermined expected price. Next, the dependence of the difference between the award price and the expected price on the amount of the expected price was examined, and lastly, the dependence of the number of bids in the tender on the expected price.  A research sample of 165 public tenders was investigated in order to evaluate research hypothesis. Statistical methods are used for evaluation, specifically correlation and regression analysis.

It has been found that the award price of the public works contracts strongly depends on its expected price. Furthermore, it was found that the difference between the award price and the expected price is strongly dependent on the amount of the predetermined expected price. However, the dependence of the number of bids in the tender on the expected price was found to be moderately strong.