Uncertainty Analysis of Value for Money Assessment for Public-Private Partnership Projects

In recent years, private sectors are encouraged to take an active part in franchising of urban infrastructure investments and operations, which promotes the rapid development of public-private partnership(PPP)in infrastructure and public service supply. Value for money(VFM) assessment has been officially proposed to provide a reference for selection of projects planning to adopt PPP. Based on the bottlenecks of VFM application in China and the uncertainties for urban infrastructure PPP projects, a discounted cash flow(DCF) model is established for VFM of infrastructure PPP projects. Then, a Monte Carlo simulation model is established on the basis of uncertainty factors for VFM. Through the analysis of Huai'an trams PPP project, coping strategies of uncertainties for VFM are put forward. Findings of the research may propel the establishment of a complete VFM evaluation system for PPP projects. Key instructional functions of VFM during the process of decision-making can be brought into full play and PPP may develop orderly.

INVENTORY REPLENISHMENT POLICY FOR THE DECISION MAKER WITH PRESENT-BIASED PREFERENCE AND TIME-INCONSISTENCY UNDER INFLATION

Due to bounded rationality, people often rush for instantaneous gratification if the decisions involve immediate rewards, but procrastinate if the decisions involve immediate costs. Present-biased preference and time-inconsistency will be more salient when people are making inter-temporal decisions to trade off rewards and costs in the future. People outweigh the present and their preference for the outcome in the furore will decline over time. Incorporating present-biased preference and time-inconsistency under quasi-hyperbolic discounting, time value of money under inflation and time-varying demand with shortages completely backlogged, we develop an inventory replenishment model for a deteriorating item. Inventory replenishment policies that benefit the decision maker are as follows. With the increase of time-inconsistency, one can increase ordering number and decrease fraction of shortages; with the increase of hazard rate within an upper limit, one can increase ordering number and decrease fraction of shortage; with the increase of compounded discount rate, one can increase ordering number and fraction of shortage. Hyperbolic discounting increases the ordering number and decreases the final profit, and the degree of hyperbolic discounting strengthens such outcomes. As a result, the optimal policy for a decision maker is to keep as rational as possible when making inter-temporal decisions.

Tender evaluation through efficiency analysis for public construction contracts

Given the European Public Procurement Directive 2014/24/EU,policymakers have ordered the inclusion of various criteria,such as the price,life-cycle costs,environmental,and social aspects,in the evaluation of tenders for public construction projects.Consequently,the relevance of non-monetary award criteria has gained significant value.However,the established evaluation formulas,which are used to obtain the best value for money procurement,have resulted in legal disputes.The existing evaluation formulas exhibit mathematical weaknesses,wherein scoring indices do not express economic efficiency adequately.Thus,a conflict is observed between the political requirement of non-monetary award criteria and their evaluation by contracting authorities.To overcome such dilemma,an extensive literature review is conducted.Specifically,this study explores the essential problems of existing evaluation formulas and develops a more reliable method.The technique from the field of efficiency analysis,i.e.,Data Envelopment Analysis(DEA),is adopted in this study.For contract awarding,the DEA is extended by introducing a decision theoretical framework.For public procurement,the proposed method combines two advantages.First,the proposed method ensures the derivation of a robust tender ranking given that with respect to clients’preferences,irrelevant and insufficiently tailored tenders do not influence the scoring.Second,the proposed method supports the intention of policy makers to promote public goals,such as sustainable aspects.By disclosing the strengths and weaknesses of bidders with respect to their competitors,all bidders can obtain a precise overview of their performance regarding the award criteria.In sum,the proposed method allows a targeted improvement of certain criteria values in future tenders and consequently leads to an enhancement of public goals.