Association of Digital Procurement Systems with Cost Transparency in Public Works Contracts

Jason Chan; Greta Frank; Henry Pang

Authors

Jason Chan Department of Computing, Faculty of Computer and Mathematical Sciences, Hong Kong Polytechnic University, Hong Kong, Hong Kong SAR, China Author
Greta Frank Department of Computer Science, Faculty of Engineering, University of Freiburg, Freiburg im Breisgau, Germany Author
Henry Pang Department of Computing, Faculty of Computer and Mathematical Sciences, Hong Kong Polytechnic University, Hong Kong, Hong Kong SAR, China Author

Keywords:

Digital Procurement, Cost Transparency, Public Works, Randomized Experiment, Controlled Experiment

Abstract

This study investigates the causal impact of digital procurement systems on cost transparency in public works contracting through a randomized controlled experiment. Utilizing a unique dataset of municipal infrastructure projects, we examine how the transition from traditional, paper-biased bidding processes to an end-to-end digital procurement platform affects unit cost variance, bidder participation, and post-award contract amendments. The treatment group transitioned to a fully integrated digital portal featuring open-access itemized pricing sheets, automated audit trails, and real-time public dashboards, while the control group maintained the standard administrative workflow. The empirical findings indicate that digital procurement significantly reduces cost overruns and narrows the distribution of submitted unit prices, primarily by mitigating information asymmetry and eliminating rent-seeking opportunities during the bid evaluation phase. Additionally, the digital platform increased the average number of qualified bids per contract, fostering competitive dynamics that drove down procurement costs. These results demonstrate that digital interventions in public administration can systematically enhance fiscal accountability, streamline compliance, and promote cost transparency in complex public infrastructure investments.

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