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GERAD seminar

Project Networks and Reallocation Externalities


Nov 27, 2023   11:00 AM — 12:00 PM

Juan Camilo Serpa Associate Professor, Desautels Faculty of Management, McGill University, Canada

Juan Camilo Serpa

Presentation on YouTube.

A project involves several “participants”—including agencies, contractors, and subcontractors—all working concurrently on multiple projects and allocating resources among them. This interdependency creates a network of otherwise unrelated projects. By constructing the largest project network ever mapped, we track the timelines of 2.6 million infrastructure projects involving 140,000 participants. We show that a seemingly localized disruption, affecting only one project site, eventually causes delays and penalties across unrelated projects. This is because self-interest drives participants to opportunistically reallocate resources into disrupted projects, at the expense of other projects, triggering a domino effect of further reallocations in the network. Thus, the costs of on-site disruptions end up being evenly shared by multiple participants within the network, rather than being fully absorbed by the affected project. Performance-based contracts, which reward contractors for timeliness, exacerbate these externalities by encouraging self-interested resource reallocation.

Olivier Bahn organizer
Mehmet Gumus organizer


Hybrid activity at GERAD
Zoom et salle 4488
Pavillon André-Aisenstadt
Campus de l'Université de Montréal
2920, chemin de la Tour

Montréal Québec H3T 1J4