The Agent-construction System for procuring mega projects in China

Abstract

While heated discussions have been directed towards various innovative procurement systems such as PPP, PFI, and BOT that carry the great expectation to help materialise the projects and deliver value to the society, a procurement system named agent-construction system (ACS or in Chinese Dai Jian Zhi) is being prevailing in China’s public procurement. This research aims to examine ACS by relating them to China’s particular Political, Economics, Social, Technological, Environmental, and Legal (PESTEL) background. It is found that the ACS is promising in procuring public projects owing to two merits: (a) clearly defined right and responsibilities; and (b) appropriate allocation of resources and risks amongst parties involved. The research is particularly useful when governments worldwide are searching for innovative procurement approaches to help deliver public projects and services. It also sheds light on how to devise an innovative procurement system. A word of caution, nevertheless, is that readers should not follow this “good practice” slavishly. One ought to truly understand the essence of procurement innovation and devise suitable innovative procurement systems in a given PESTEL setting.