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Oversight and Efficiency in Public Projects: A Regression Discontinuity Analysis

42 Pages Posted: 30 Nov 2016 Last revised: 31 Jul 2017

Eduard Calvo

IESE Business School, University of Navarra

Ruomeng Cui

Goizueta Business School, Emory University

Juan Camilo Serpa

McGill University - Desautels Faculty of Management

Date Written: September 1, 2016

Abstract

In the U.S., four in ten public infrastructure projects report delays or cost overruns. To tackle this problem, regulators often scrutinize the project contractor’s operations. We investigate the causal effect of government oversight on project efficiency by gleaning 262,857 projects that span seventy-one U.S. federal agencies and 54,739 contractors. Our identification strategy exploits a regulatory bylaw: if a project’s anticipated budget exceeds a threshold value, the contractor’s operations are subject to surveillance from independent procurement officers; otherwise, these operational checks are waived. Using a regression discontinuity design, we find that oversight is obstructive to the project’s operations, especially when the contractor (i) has no prior experience in public projects, (ii) is paid with a fixed-price contract that includes performance-based incentives, and (iii) performs a labor-intensive task. In contrast, oversight is least obstructive — or beneficial — when the contractor (i) is experienced, (ii) is paid with a time-and-materials contract, and (iii) performs a machine-intensive task.

Keywords: Project Management, Vertical Contracting, Regression Discontinuity Design, Service Supply Chains, Government Operations

Suggested Citation

Calvo, Eduard and Cui, Ruomeng and Serpa, Juan Camilo, Oversight and Efficiency in Public Projects: A Regression Discontinuity Analysis (September 1, 2016). Available at SSRN: https://ssrn.com/abstract=2876840

Eduard Calvo

IESE Business School, University of Navarra ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

Ruomeng Cui

Goizueta Business School, Emory University ( email )

1300 Clifton Road
Atlanta, GA 30322
United States

HOME PAGE: http://www.ruomengcui.com

Juan Camilo Serpa (Contact Author)

McGill University - Desautels Faculty of Management ( email )

1001 Sherbrooke St. West
Montreal, Quebec H3A1G5 H3A 2M1
Canada

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