This paper considers the supplier's strategic delivery lead time in a public procurement setting as the result of the firm's opportunistic behaviour on the optimal investment timing. In the presence of uncertainty on construction costs, we model the supplier's option to defer the contract's...

Time overruns are common in public works and are not confined to inherently complex tasks. One explanation advanced in this paper is that bidders can undergo unpredictable changes in production costs which generate an option value of waiting. By exploiting the real-option approach, we examine...

Drawing on the real-options theory we analyse bidding behaviour in a sealed-bid-first-score procurement auction where suppliers, facing variable production costs, must simultaneously report the contract price and the cost level at which they intend to perform the project. We show that this award...