A Green Performance Bond Framework for Managing Greenhouse Gas Emissions During Construction: Proof of Concept Using Agent-Based Modeling

A+C and A+B+C bidding methods have been recognized as innovative green contracting strategies for addressing climate change by reducing greenhouse gas emissions during the construction phase of infrastructure projects. However, there are practical issues including the possibility of opportunistic bidding that casts doubt on the successful implementation of these bidding methods. This study introduces a green performance bond framework as a potential solution and evaluates its feasibility and effectiveness in discouraging opportunistic bidding behaviors. In doing so, the A+C bidding environment is simulated using agent-based modeling and conduct simulation experiments in which contractors attempt to increase their probability of winning by intentionally submitting an unrealistic emission mitigation plan. The results show that applying the green performance bond framework can significantly reduce the over-emission and the probability of success of an opportunistic bid in all bidding scenarios.