RISK IN EVALUATION OF BIDS FOR PUBLIC CONTRACTS. EMPIRICAL RESEARCH FROM THE CZECH REPUBLIC

Public contracts especially construction works are connected with high risks. Previous research shows a significant number of contracts with higher costs than expected and delays. Theory of decision making offers a variety of approaches to incorporate risks into decisions: adding criteria measuring risks; assessment of the risk of two best options; determining stochastic consequences of alternatives using decision trees, payoff matrixes, scenarios or Monte Carlo simulation or calculation of costs of preventive and contingency actions. Public contracting entities have limited possibilities to use these approaches due to legal requirements such as transparency, the order of steps while contracting etc. The aim of the paper is to identify possibilities of risk incorporation into an evaluation of bids in public contracts and analysis of the behaviour of public contracting entities from the perspective of risk incorporation. The research was conducted on contracts for construction works in the Czech Republic. The data show that contracting entities used the criteria as sanctions, guarantees, warranty period etc. transferring risks on contractors.