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Comment by JumpCrisscross | Hacker News Reader

> How would you re-open bidding and enact a switchover?

When the price change is announced, anyone from the original pool has [30] days to match. First to match immediately wins the work from the existing contractor. Loser pays to move their equipment out; winner should have included that cost when they agreed to match.

This system works for two reasons. First, the first bidder will be cautious about requesting increases if it means risking losing the work. Second, the change-over cost, borne by both the outgoing loser and incoming winner, imposes just enough friction to grant the first winner an incumbency bias. This bias helps keep bidding in the original auction competitive.

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That just wouldn't work for large civil projects for so many reasons.

It also seems like you are only trying to address the problem of people introducing needless variances as a way increasing profit.

Which is not the case being discussed here and I don't think it is major reason for cost overruns. They haven't requested an increase, they have found out that to satisfy the engineering requirements of the project that more work has to be done.

> Which...I don't think it is major reason for cost overruns

It's commonly called out as one of the driving reasons behind the horrible economics of American civil engineering [1].

> They haven't requested an increase, they have found out that to satisfy the engineering requirements of the project that more work has to be done

It's both. The change may be merited. If so, it should win--again--in a temporary re-auction. But refusing to market test an 82% cost increase is game theoretically begging to get screwed on pricing. Given American taxpayers get screwed on pricing for public-sector civil engineering (after accounting for land, labour and materials cost differences), I think it's a fair discussion to have.

[1] http://marroninstitute.nyu.edu/content/blog/is-u.s.-infrastr...

It is most definitely a fair discussion to have, and the bidding/financing/contractual system for these projects really does need to change to have better incentives.

I just don't think your incentives would produce better outcomes, from my perspective it would make things worse.

I will make no attempt to defend the specific recommendations I mooted. There is better work, in any case, in the academic domain on fixing our flawed civil-engineering auction processes.

The problems anyone campaigning for auction reform runs into are three-fold. One, it's a boring problem with boring solutions. Two, there are vested interests. And three, Americans suffer from a just-world bias when it comes to infrastructure [1]. The latter is apparent even in this thread. It's difficult to find solutions when people vigorously defend a clearly-flawed system.

[1] https://en.wikipedia.org/wiki/Just-world_hypothesis

For sure. I don't know how you overcome the inertia of our societies structure to head towards something that would likely be better for the majority of citizens. Which is a problem in many more domains that just civil works auctions.

I can see how the recommendation you mooted would improve incentives in some procurement domains. Large civil works isn't one of them however.

This demonstrates a total and complete lack of understanding of how large scale construction projects like this work.

You really believe the main issue is "getting the old equipment out" and "the new equipment in"?

Your plan sounds like an amazing way to create a tremendous amount of safety risk, shoddy work, or a project that runs forever.

> You really believe the main issue is "getting the old equipment out" and "the new equipment in"?

No, I was responding to a specific complaint made upthread.

> Your plan sounds like an amazing way to create a tremendous amount of safety risk, shoddy work, or a project that runs forever

Do you have any basis for this? The change-over requirement for midstream cost adjustments (above a threshold) works well enough for e.g. aerospace subcontractors. It adds delays in the short-term but promotes better behavior in the long.

> It adds delays in the short-term

A delay in this project is a safety risk. They are trying to have a working spillway by Nov 1, so if unexpected rains cause another extreme inrush into the lake they can handle it by releasing >100,000 cfs from the spillway. Without that ability, they are risking failure of the emergency spillway and the flooding[1][2] of a large part of the central valley.

[1] https://www.youtube.com/watch?v=yVcGUvE3BBc

[2] https://www.youtube.com/watch?v=4p0Hc56vJ2Y

You're correct in observing that change-over processes are less-frequently implemented for time-sensitive work. I was making a broader point around our public-sector low-bid auction process.

For this type of work, the best process would avoid appointing a single contractor. Unfortunately, that would also require more expertise in the public officials allocating work, a concentration we find politically toxic in America.

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