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Type: Journal Articles Authors: Paul H. Jensen and Robin E. Stonecash ISSN: Print 0143-5671 Online: 1475-5890
Published in: Fiscal Studies, Vol. 30, No. 2, June 2009
Volume, issue, pages: Vol. 30, No. 2, pp. 279 - 296
JEL classification: D82, H11, L33 Keywords: contract efficiency, incentives, moral hazard, procurement, contracting out
More than half a billion dollars are spent each year on the maintenance of Australia's urban water and sewerage networks. Expenditure is governed through a mix of in-house and outsourced maintenance service contracts. We re-examine issues relating to the relationship between the cost of maintenance service provision and the type of contract used. We take advantage of the fact that water retailers in Melbourne use a mix of contract types - including fixed-price (FP) and cost-plus (C+) contracts - for the provision of water and sewerage network maintenance services. Our results suggest that the C+ contract results in substantial savings. Search |
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