Abstract

PONCE ZAMBRANO, José Miguel  and  LOOR COLAMARCO, Ignacio Wilhem. Differences between reference and executed budget in public bidding processes. Revista San Gregorio [online]. 2020, n.43, pp.1-20. ISSN 2528-7907.  https://doi.org/10.36097/rsan.v1i43.1445.

Differences between the estimated and final prices of government bidding processes is a global phenomenon. The literature suggests as prevalent causes the project costs underestimation by contracting entities, unbalanced offers by contractors, and the process of inspection and contract management. However, studies addressing this issue have focused primarily on the identification of unbalanced offers. This study uses a well-established machine learning approach to predict whether the reference budget of a government project will differ from the final project cost in 15% or more. A sample of contracts available on the public procurement portal of the Ecuadorian government in the period 2008-2019 is analyzed. With the help of R Core Team, the study uses Naïve Bayes predictive modeling to identify combinations of parameters for the variables region, sector, amount, term and contracting entity, with 70% or more probability that the final cost exceeds the contracted one by 15 % or more. The study identifies 15 possible combinations that can fall within this criterion. This study can help contractors identify risks that are typical of public procurement, and controlling entities to support the ability of government organizations to achieve the objectives set out in their operational and investment plans.

Keywords : Cost underestimation; government procurement; public bidding; price increase; reference budget; unbalanced offers.

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