Working notes on the methods we use to select and price public supply contracts: simulation, survival analysis and model evaluation. The figures use simulated data.
A supply contract consumes cash before it returns any. The supplier asks for a deposit at order and the balance at shipment, freight and customs are paid on the way, and the public buyer pays after acceptance. We simulate the cash balance of a contract from award to payment and read two quantities from it: the peak financing need and the day the balance turns positive again. The simulation sets how much financing a bid requires and which payment terms reduce it. All figures use simulated contracts with a fixed seed.
The delay between delivery and payment decides how long a contract stays financed. A naive estimate takes the paid contracts and averages their delays. That estimate ignores contracts still unpaid at the time of observation, and it understates delays as a result. We treat payment as a time-to-event problem, estimate the survival curve with the Kaplan-Meier estimator, check the shape of the tail with a quantile plot, and measure the bias of the naive estimate. All figures use simulated contracts with a fixed seed.
The selection model estimates, before a bid, the probability that the buyer pays on time. We use it only if it predicts better than a simple rule, the buyer's own past payment record, on contracts it has never seen. We judge it with the Brier score, check its calibration, compare it with placebo models trained on shuffled outcomes, and repeat the comparison period by period in a walk-forward design. All figures use simulated contracts with a fixed seed.
