Download or read book Uncertainty in Procurement Contracting with Time Incentives written by Wenzheng Gao and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies cost-plus-time (A+B) procurement contracting with time incentives in the highway construction industry. In the presence of construction uncertainty, the contractor's actual completion time may deviate from the bid completion time, and the A+B contract design is not ex-post efficient. Using data from highway procurement contracts in California, we show that an ex-post efficient lane rental contract would reduce the social cost by $41.39 million (43.11 percent) on average. Moreover, the average commuter cost would decrease by $62.06 million (78.96 percent), suggesting a substantial reduction in the construction externality to commuters from lane rental contracts.