Empirical Analysis of Competition in Procurement Auctions

A vast amount of public services and goods are contracted through procurement auctions. Therefore it is very important to design these auctions in an optimal way. Typically, we are interested in two different objectives. The first objective is efficiency. Efficiency means that the contract is awarded to the bidder that values it the most, which in the procurement setting means the bidder that has the lowest cost of providing a service with a given quality. The second objective is to maximize public revenue. Maximizing public revenue means minimizing the costs of procurement. Both of these goals are important from the welfare point of view. In this thesis, I analyze field data from procurement auctions and show how empirical analysis can be used to help design the auctions to maximize public revenue. In particular, I concentrate on how competition, which means the number of bidders, should be taken into account in the design of auctions. In the first chapter, the main policy question is whether the auctioneer should spend resources to induce more competition. The information paradigm is essential in analyzing the effects of competition. We talk of a private values information paradigm when the bidders know their valuations exactly. In a common value information paradigm, the information about the value of the object is dispersed among the bidders. With private values more competition always increases the public revenue but with common values the effect of competition is uncertain. I study the effects of competition in the City of Helsinki bus transit market by conducting tests for common values. I also extend an existing test by allowing bidder asymmetry. The information paradigm seems to be that of common values. The bus companies that have garages close to the contracted routes are influenced more by the common value elements than those whose garages are further away. Therefore, attracting more bidders does not necessarily lower procurement costs, and thus the City should not implement costly policies to induce more competition. In the second chapter, I ask how the auctioneer can increase its revenue by changing contract characteristics like contract sizes and durations. I find that the City of Helsinki should shorten the contract duration in the bus transit auctions because that would decrease the importance of common value components and cheaply increase entry which now would have a more beneficial impact on the public revenue. Typically, cartels decrease the public revenue in a significant way. In the third chapter, I propose a new statistical method for detecting collusion and compare it with an existing test. I argue that my test is robust to unobserved heterogeneity unlike the existing test. I apply both methods to procurement auctions that contract snow removal in schools of Helsinki. According to these tests, the bidding behavior of two of the bidders seems consistent with a contract allocation scheme.

Driving whole-of-life efficiencies through BIM and procurement

Building Information Modelling (BIM) is a digital process that encompasses all aspects, disciplines and systems of built assets within a single virtual model. This allows stakeholders to collaborate more accurately and efficiently than with traditional processes. Case study 1 Design: New Generation Rollingstock Maintenance Centre, Queensland. Case Study 2 Construction: Perth Children's Hospital, Western Australia. Case Study 3 Asset Management: Sydney Opera House, New South Wales. This project sought to provide the built environment industry with a framework to measure and maximize benefits from implementing BIM across the life-cycle phases of a built asset.

The ghost in the city industrial complex: Le Corbusier and the fascist theory of Urbanisme

Le Corbusier participated in an urban dialogue with the first group in France to call itself fascist: the journalist Georges Valois’s militant Faisceau des Combattants et Producteurs (1925-1927), the “Blue Shirts,” inspired by the Italian “Fasci” of Mussolini. Le Corbusier’s portrait photograph materialised on the front cover of the January 1927 issue of the Faisceau League’s newspaper Le Nouveau Siècle edited by the former anarcho-syndicalist journalist Georges Valois, its leader, who fashioned himself as the French Mussolini. Le Corbusier was described in the Revue as one of les animateurs (the “organisers”) of the Party1 – meaning a member of the technical elite who would drive the Faisceau’s plans. On 1 May 1927, the Nouveau Siècle printed a full-page feature “Le Plan Voisin” on Le Corbusier’s 1922 redesign of Paris : the architect’s single-point perspective sketch appeared below an extract lifted from the architect’s original polemic Le Centre de Paris on the pages of Le Corbusier’s second book Urbanisme published two years earlier, a treatise on urbanism.2 Three weeks later, Le Corbusier presented a slide show of his urban plans at a fascist rally for the inauguration of the Faisceau’s new headquarters on the rue du faubourg Poissonniere, thereby crystalising the architect’s hallowed status in the league...

A Shapley value analysis to coordinate the formation of procurement

In this paper we address the problem of forming procurement networks for items with value adding stages that are linearly arranged. Formation of such procurement networks involves a bottom-up assembly of complex production, assembly, and exchange relationships through supplier selection and contracting decisions. Recent research in supply chain management has emphasized that such decisions need to take into account the fact that suppliers and buyers are intelligent and rational agents who act strategically. In this paper, we view the problem of Procurement Network Formation (PNF) for multiple units of a single item as a cooperative game where agents cooperate to form a surplus maximizing procurement network and then share the surplus in a fair manner. We study the implications of using the Shapley value as a solution concept for forming such procurement networks. We also present a protocol, based on the extensive form game realization of the Shapley value, for forming these networks.

A combinatorial procurement auction for QoS-aware web services

Business processes and application functionality are becoming available as internal web services inside enterprise boundaries as well as becoming available as commercial web services from enterprise solution vendors and web services marketplaces. Typically there are multiple web service providers offering services capable of fulfilling a particular functionality, although with different Quality of Service (QoS). Dynamic creation of business processes requires composing an appropriate set of web services that best suit the current need. This paper presents a novel combinatorial auction approach to QoS aware dynamic web services composition. Such an approach would enable not only stand-alone web services but also composite web services to be a part of a business process. The combinatorial auction leads to an integer programming formulation for the web services composition problem. An important feature of the model is the incorporation of service level agreements. We describe a software tool QWESC for QoS-aware web services composition based on the proposed approach.

Optimal auctions for multi-unit procurement with volume discount bids

Our attention, is focused on designing an optimal procurement mechanism which a buyer can use for procuring multiple units of a homogeneous item based on bids submitted by autonomous, rational, and intelligent suppliers. We design elegant optimal procurement mechanisms for two different situations. In the first situation, each supplier specifies the maximum quantity that can be supplied together with a per unit price. For this situation, we design an optimal mechanism S-OPT (Optimal with Simple bids). In the more generalized case, each supplier specifies discounts based on the volume of supply. In this case, we design an optimal mechanism VD-OPT (Optimal with Volume Discount, bids). The VD-OPT mechanism uses the S-OPT mechanism as a building block. The proposed mechanisms minimize the cost to the buyer, satisfying at the same time, (a) Bayesian, incentive compatibility and (b) interim individual rationality.

The core and shapley value analysis for cooperative formation of procurement networks

Formation of high value procurement networks involves a bottom-up assembly of complex production, assembly, and exchange relationships through supplier selection and contracting decisions, where suppliers are intelligent and rational agents who act strategically. In this paper we address the problem of forming procurement networks for items with value adding stages that are linearly arranged We model the problem of Procurement Network Formation (PNF) for multiple units of a single item as a cooperative game where agents cooperate to form a surplus maximizing procurement network and then share the surplus in a stable and fair manner We first investigate the stability of such networks by examining the conditions under which the core of the game is non-empty. We then present a protocol, based on the extensive form game realization of the core, for forming such networks so that the resulting network is stable. We also mention a key result when the Shapley value is applied as a solution concept.

Ultrastructure of Biofilms Formed by Bacteria from Industrial Processes

Microorganisms exist predominantly as sessile multispecies communities in natural habitats. Most bacterial species can form these matrix-enclosed microbial communities called biofilms. Biofilms occur in a wide range of environments, on every surface with sufficient moisture and nutrients, also on surfaces in industrial settings and engineered water systems. This unwanted biofilm formation on equipment surfaces is called biofouling. Biofouling can significantly decrease equipment performance and lifetime and cause contamination and impaired quality of the industrial product. In this thesis we studied bacterial adherence to abiotic surfaces by using coupons of stainless steel coated or not coated with fluoropolymer or diamond like carbon (DLC). As model organisms we used bacterial isolates from paper machines (Meiothermus silvanus, Pseudoxanthomonas taiwanensis and Deinococcus geothermalis) and also well characterised species isolated from medical implants (Staphylococcus epidermidis). We found that coating of steel surface with these materials reduced its tendency towards biofouling: Fluoropolymer and DLC coatings repelled all four biofilm formers on steel. We found great differences between bacterial species in their preference of surfaces to adhere as well as their ultrastructural details, like number and thickness of adhesion organelles they expressed. These details responded differently towards the different surfaces they adhered to. We further found that biofilms of D. geothermalis formed on titanium dioxide coated coupons of glass, steel and titanium, were effectively removed by photocatalytic action in response to irradiation at 360 nm. However, on non-coated glass or steel surfaces irradiation had no detectable effect on the amount of bacterial biomass. We showed that the adhesion organelles of bacteria on illuminated TiO2 coated coupons were complety destroyed whereas on non-coated coupons they looked intact when observed by microscope. Stainless steel is the most widely used material for industrial process equipments and surfaces. The results in this thesis showed that stainless steel is prone to biofouling by phylogenetically distant bacterial species and that coating of the steel may offer a tool for reduced biofouling of industrial equipment. Photocatalysis, on the other hand, is a potential technique for biofilm removal from surfaces in locations where high level of hygiene is required. Our study of natural biofilms on barley kernel surfaces showed that also there the microbes possessed adhesion organelles visible with electronmicroscope both before and after steeping. The microbial community of dry barley kernels turned into a dense biofilm covered with slimy extracellular polymeric substance (EPS) in the kernels after steeping in water. Steeping is the first step in malting. We also presented evidence showing that certain strains of Lactobacillus plantarum and Wickerhamomyces anomalus, when used as starter cultures in the steeping water, could enter the barley kernel and colonise the tissues of the barley kernel. By use of a starter culture it was possible to reduce the extensive production of EPS, which resulted in a faster filtration of the mash.

Pulp and Paper Fiction: On the Discursive Legitimation of Global Industrial Restructuring

Despite the central role of legitimacy in social and organizational life, we know little of the subtle meaning-making processes through which organizational phenomena, such as industrial restructuring, are legitimated in contemporary society. Therefore, this paper examines the discursive legitimation strategies used when making sense of global industrial restructuring in the media. Based on a critical discourse analysis of extensive media coverage of a revolutionary pulp and paper sector merger, we distinguish and analyze five legitimation strategies: (1) normalization, (2) authorization, (3) rationalization, (4) moralization, and (5) narrativization. We argue that while these specific legitimation strategies appear in individual texts, their recurring use in the intertextual totality of the public discussion establishes the core elements of the emerging legitimating discourse.

The Nature and Change of Bonds in Industrial Business Relationships

A focus on cooperative industrial business relationships has become increasingly important in studies of industrial relationships. If the relationships between companies are strong it is usually a sign that companies will cooperate for a longer time and that may affect companies’ competitive and financial strength positively. As a result the bonds between companies become more important. This is due to the fact that bonds are building blocks of relationships and thus affect the stability in the cooperation between companies. Bond strength affect relationship strength. A framework regarding how bonds develop and change in an industrial business relationship has been developed in the study. Episodes affect the bonds in the relationship strengthening or weakening the bonds in the relationship or preserving status quo. Routine or critical episodes may lead to the strengthening or weakening of bonds as well as the preservation of status quo. The method used for analyzing bond strength trying to grasp the nature and change of bonds was invented by systematically following the elements of the definitions of bonds. A system with tables was drawn up in order to find out if the bond was weak, of medium strength or strong. Bonds are important regulators of industrial business relationships. By influencing the bonds one may have possibilities to strengthen or weaken the business relationship. Strengthen the business relationship in order to increase business and revenue and weaken the relationship in order to terminate business where the revenue is low or where there may be other problems in the relationship. By measuring the strength of different bonds it can be possible to strengthen weak bonds in order to strengthen the relationship. By using bond management it is possible to strategically strengthen or weaken the bonds between the cooperating companies in order to strengthen the cooperation and tie the customer or supplier to the company or weaken the cooperation in order to terminate the relationship. The instrument for the management of bonds is to use the created bond audit in order to know which bonds resources should be focused on in order to increase or decrease their strength.

Customer Needing - Conceptualising Industrial Service from a Customer Perspective

Views on industrial service have conceptually progressed from the output of the provider’s production process to the result of an interaction process in which the customer also is involved. Although there are attempts to be customer-oriented, especially when the focus is on solutions, an industrial company’s offering combining goods and services is inherently seller-oriented. There is, however, a need to go beyond the current literature and company practices. We propose that what is needed is a genuinely customer-based parallel concept to offering that takes the customer’s view and put forward a new concept labelled customer needing. A needing is based on the customer’s mental model of their business and strategies which will affect priorities, decisions, and actions. A needing can be modelled as a configuration of three dimensions containing six functions that create realised value for the customer. These dimensions and functions can be used to describe needings which represent starting points for sellers’ creation of successful offerings. When offerings match needings over time the seller should have the potential to form and sustain successful buyer relationships.

Re-Conceptualizing Value-Creation From Industrial Business Logic to Service Business Logic

There is an urgent interest in marketing to move away from neo-classical value definitions suggesting that value creation is a process of exchanging goods for money. In the present paper, value creation is conceptualized as an integration of two distinct, yet closely coupled processes. First, actors co-create what this paper calls an underlying basis of value. This is done by interactively re-configuring resources. By relating and combining resources, activity sets, and risks across actor boundaries in novel ways actors create joint productivity gains – a concept very similar to density (Normann, 2001). Second, actors engage in a process of signification and evaluation. Signification implies co-constructing the meaning and worth of joint productivity gains co-created through interactive resource re-configuration, as well as sharing those gains through a pricing mechanism as value to involved actors. The conceptual framework highlights an all-important dynamics associated with ´value creation´ and ´value´ - a dynamics the paper claims has eluded past marketing research. The paper argues that the framework presented here is appropriate for the interactive service perspective, where value and value creation are not objectively given, but depend on the power of involved actors´ socially constructed frames to mobilize resources across actor boundaries in ways that ´enhance system well-being´ (Vargo et al., 2008). The paper contributes to research on Service Logic, Service-Dominant Logic, and Service Science.

Chemicals risk modeling : toxic effect risks imposed on aquatic organisms by industrial activity

Yhteenveto: Kemikaalien teollisesta käsittelystä vesieliöille aiheutuvien riskien arviointi mallin avulla.