Edited by Charles Edquist, Nicholas S Vonortas, Jon M Zabala-Iturriagagoitia and Jakob Edler
Chapter 5: Forward commitment procurement and its effect on perceived risks in PPI projects
This chapter is based on research (Van Meerveld, 2012; Van Meerveld et al., 2012) and the practical experiences of the second and third authors of this chapter in facilitating forward commitment procurement projects conducted as part of the Department for Business, Innovation and Skills (BIS) Innovation for Sustainability Programme and the Low Carbon Building (LCB) Healthcare Network. Although the application of forward commitment procurement (FCP) is limited to a few pilot projects, the outcomes demonstrated are most promising in that they have delivered innovative solutions into the market. Two of the case studies have led to the development of new and innovative solutions and one is progressing towards early adoption of an innovative solution. The chapter applies a theoretical framework in order to examine in more detail how the FCP methodology works, and to provide insights into how the process could be improved and replicated. Its focus is on the role of the market engagement phase of the FCP process. The chapter adopts a case study approach following Yin (2009), and is aimed at answering the following question: What are the effects of adopting the forward commitment procurement framework on the risks perceived by public sector customers and suppliers in projects concerning public procurement for innovation? Procurement involves transactions which involve agencies in the form of customers and suppliers. Therefore, agency theory and transaction cost economics are used to develop the theoretical framework.
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