Organizing a Bidding Competition for a Toll Road Concession in South Africa: The Case of Chapman’s Peak Drive

Abstract

Chapman’s Peak Drive is a scenic coastal road in the Western Cape province of South Africa with a history of reoccurring rockfall incidents. This paper presents qualitative case study research that explores the competitive award of a concession to design, build, finance, and operate an upgrade of the road for a period of 30 years. The analysis focuses on the intensity of competition for the concession and its implications on value for money. The focus of the analysis is on rockfall risk which was the principal justification for the upgrade and which had the greatest financial significance for the project. The information on the case study project was obtained by interviewing some of the public and private sector individuals involved and by examining the documentation issued by the public sector. Analysis revealed that the award process supported the adoption of an innovative rockfall protection solution that is believed to be the optimal technical solution for Chapman’s Peak Drive. However, it also revealed that the value for money of the concession to the province may have been compromised by limited and unfocused competition between bidders. The paper hypothesizes that the amount and timing of information disclosed, use of bid bonds, level of output specification used, disclosure of the relative importance of the bid evaluation criteria, and timing of financier’s involvement, influenced the value for money of the project and that further quantitative research on their general effects on the value for money of concessions needs to be investigated. The primary contribution of the paper is that it allows more precise hypotheses to be devised for the purposes of quantitative research in the problem domain.