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Kashiwagi, D and Savicky, J (2003) A case study of the transaction cost and value of the delivering of construction. In: Greenwood, D J (Ed.), Proceedings 19th Annual ARCOM Conference, 3-5 September 2003, Brighton, UK. Association of Researchers in Construction Management, Vol. 2, 477–84.
- Type: Conference Proceedings
- Keywords: financial management; transaction cost
- ISBN/ISSN: 0 9534161 8 6
- URL: http://www.arcom.ac.uk/-docs/proceedings/ar2003-477-484_Kashiwagi_and_Savicky.pdf
The State of Hawaii was introduced to performance-based procurement in 1998. Four years later, the State of Hawaii used a transaction cost analysis of performance-based procurement to identify if the State was receiving the best value (construction performance and price). The transaction cost analysis used relative differences in the delivery component costs of the best value system and the low bid system. The study identified that the relative transaction costs of the performance-based procurement were lower than the transaction costs of the design-bid-build costs. The analysis was possible due to the same organization running both procurement systems, negating the need to identify every possible activity related to the transaction costs. Due to the number of projects, budget figures, construction cost figures, design costs, and construction times, the State was able to identify relative transaction costs and performance for both processes.