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Indicators and incidents of potential collusion among main contracting firms in municipal road network projects : the Saudi Arabian context

AlAhmadi, Nawaf and Agapiou, Andrew (2016) Indicators and incidents of potential collusion among main contracting firms in municipal road network projects : the Saudi Arabian context. In: RICS COBRA 2016. Royal Institute of Chartered Surveyors (RICS Foundation). ISBN 9781783211609

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Abstract

The development of legal and regulatory instruments to address suspected collusive practices in the Saudi Arabian public works sector will hasten the demand for baseline evidence on the extent of illicit behaviour among bidders. Currently, there is scant knowledge and little empirical analysis of the scope and scale of such uncompetitive practices in the Saudi Arabian construction industry. This paper aims to establish the indicators and incidents of potential bid rigging in the Saudi Arabian public works sector through a two-step historical analysis of bidding data. This analysis examines market concentration metrics and measures of the volatility of bidders’ prices during tender bid submissions for municipal road network projects over the past five years in three main municipalities of the country. The preliminary results of the two-stage analysis indicate evidence for collusion among bidders in the less-populated, geographically dispersed regions of the country, which are under less government control, oversight, and supervision than the more populous, central regions of the Kingdom. This analysis provides market intelligence to enable further investigations into potential collusion among contracting firms in the future.