nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2023‒10‒02
four papers chosen by
Arvi Kuura, Tartu Ülikool

  1. Regret-Minimizing Project Choice By Yingni Guo; Eran Shmaya
  2. Building State Capacity: What Is the Impact of Development Projects? By Vincenzo Di Maro; David K. Evans; Stuti Khemani; Thiago Scot
  3. Local power: understanding the adoption and design of county wind energy regulation By Lerner, Michael
  4. Using a self-selection mechanism for tendering in the construction industry: A case study of railway renewal contracts By Nilsson, Jan-Eric; Odolinski, Kristofer; Nyström, Johan

  1. By: Yingni Guo; Eran Shmaya
    Abstract: An agent observes the set of available projects and proposes some, but not necessarily all, of them. A principal chooses one or none from the proposed set. We solve for a mechanism that minimizes the principal's worst-case regret. We compare the single-project environment in which the agent can propose only one project with the multiproject environment in which he can propose many. In both environments, if the agent proposes one project, it is chosen for sure if the principal's payoff is sufficiently high; otherwise, the probability that it is chosen decreases in the agent's payoff. In the multiproject environment, the agent's payoff from proposing multiple projects equals his maximal payoff from proposing each project alone. The multiproject environment outperforms the single-project one by providing better fallback options than rejection and by delivering this payoff to the agent more efficiently.
    Date: 2023–08
  2. By: Vincenzo Di Maro (World Bank); David K. Evans (Center for Global Development); Stuti Khemani (World Bank); Thiago Scot (UC Berkeley; World Bank)
    Abstract: Although research has established the importance of state capacity in economic development, less is known about how to build that capacity and the role of external partners in the process. This paper estimates the impact of a typical development project designed to build state capacity in a low-income country. Specifically, it evaluates a multilateral development bank project in Tanzania, which incentivized investments in local state capacity by offering grants conditional on institutional performance scores. The paper uses a difference-in-differences methodology to estimate the project impact, comparing outcomes between 18 project and 22 non-project local governments over 2016–18. Outcomes were measured through two rounds of primary surveys of nearly 500 local government officials and nearly 3, 000 households. Over the course of the project, measured state capacity improved in project areas, but due to comparable gains in non-project areas, the project’s value-added to change in state capacity is estimated to be zero across all the dozens of relevant variables in the surveys. The data suggest that state capacity is evolving in Tanzania through endogenous changes in trust and legitimacy in the country rather than from financial incentives offered by external partners.
    Keywords: state capacity, governance, decentralizations, performance-based financing
    JEL: D02 O10 O19
    Date: 2021–12–08
  3. By: Lerner, Michael
    Abstract: The majority of U.S. states have set targets for renewable energy, but the prospects for meeting most of these goals hinge on the willingness of local governments to allow large-scale renewable energy projects in their communities. In this paper, I investigate how exposure to lobbying by wind developers and the actions of neighboring jurisdictions inform the adoption and design of rules for siting commercial wind farms. Using data collected from 1603 counties in 23 states, I find local policymakers are more likely to enact wind ordinances when they have more time to interact with wind developers and when neighboring counties have adopted wind ordinances or approved the construction of wind farms. I also observe that counties tend to adopt more stringent rules when more wind farms have been built in neighboring counties. This evidence suggests that efforts to scale up renewable energy generation may encounter increasing resistance from local governments.
    Keywords: climate change; comparative governance; developed countries; economic development; energy; innovation
    JEL: N0
    Date: 2022–03–01
  4. By: Nilsson, Jan-Eric (Swedish National Road & Transport Research Institute (VTI)); Odolinski, Kristofer (Swedish National Road & Transport Research Institute (VTI)); Nyström, Johan (NYFOU)
    Abstract: One of the consequences of the institutional separation of railway infrastructure from train operations in Europe is a misalignment of incentives in which the actions of one party may create costs for the other. To internalise otherwise external costs of track-works experienced by train operators and customers, it is essential to reform the way in which project contracts are tendered. This study suggests a self-selection mechanism for tendering rail infrastructure activities. Bidders may therefore submit bids based on the industry’s standard Unit Price Contract or a Fixed-Price Contract. The mechanism is designed to increase the possibility for a welfare maximising trade-off between construction and user costs. Using standard Benefit-Cost principles and parameter values, a case study where five switches are replaced provides substance to the discussion. The study provides a starting point for addressing risk in the construction industry and a blueprint for further development by professionals to fill in gaps and to test the approach under a controlled format before full-scale implementation.
    Keywords: Procurement; Risk; Rail infrastructure; Vertical separation; Delay fee; Unit price contract; Fixed-price contract
    JEL: H57 R42 R48
    Date: 2023–09–04

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