IDEAS home Printed from https://ideas.repec.org/a/bla/ausact/v28y2018i3p391-404.html
   My bibliography  Save this article

Value for Money and Risk Relationships in Public–Private Partnerships: Evaluating Program‐based Evidence

Author

Listed:
  • Michael Opara

Abstract

Value for money – VfM (the provision of improved public infrastructure and services at lower cost) – is a central rationale for the deployment of public–private partnerships (P3s). However, it remains unclear how VfM is actually created in P3s. There are several issues that surround the ex ante evaluation conducted during P3 assessment, including: transparency of the process, engagement of stakeholders, potential restrictions on current and future public sector flexibility, and political influences that call into question the legitimacy of the process. This study examines these issues using Alberta's P3 projects executed since 2003, and interviews 35 key participants and stakeholders. The findings suggest that while the transfer of risk from the public to the private sector is a key driver of VfM, it may overstate the extent to which planning related risks can be transferred. This paper recommends enhanced VfM component disclosures and transparency as the evaluation process evolves. Furthermore, a more rigorous approach to risk conceptualisation and valuation should be adopted. Risk allocation should be about managing not only occurrence, but also impact of the risk factor. Finally, political interference must be moderated to allow for the optimal realisation of the best possible choices presented by P3 deployments.

Suggested Citation

  • Michael Opara, 2018. "Value for Money and Risk Relationships in Public–Private Partnerships: Evaluating Program‐based Evidence," Australian Accounting Review, CPA Australia, vol. 28(3), pages 391-404, September.
    • Handle: RePEc:bla:ausact:v:28:y:2018:i:3:p:391-404
    DOI: 10.1111/auar.12194
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/auar.12194
    Download Restriction: no
    File URL: https://libkey.io/10.1111/auar.12194?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Joaquim Miranda Sarmento, 2010. "Do Public-Private Partnerships Create Value for Money for the Public Sector? The Portuguese Experience," OECD Journal on Budgeting, OECD Publishing, vol. 10(1), pages 1-27.
    2. Philippe Burger & Ian Hawkesworth, 2011. "How To Attain Value for Money: Comparing PPP and Traditional Infrastructure Public Procurement," OECD Journal on Budgeting, OECD Publishing, vol. 11(1), pages 91-146.
    3. Graeme A. Hodge & Carsten Greve & Anthony E. Boardman (ed.), 2010. "International Handbook on Public–Private Partnerships," Books, Edward Elgar Publishing, number 13451.
    4. Glenn Maguire & Arseni Malinovitch, 2004. "Development of PPPs IN Victoria," Australian Accounting Review, CPA Australia, vol. 14(33), pages 27-33, July.
    5. Jane Broadbent & Richard Laughlin, 2004. "PPPs: Nature, Development And Unanswered Questions," Australian Accounting Review, CPA Australia, vol. 14(33), pages 4-10, July.
    6. David Watson, 2003. "The Rise and Rise of Public Private Partnerships: Challenges for Public Accountability," Australian Accounting Review, CPA Australia, vol. 13(31), pages 2-14, November.
    7. Matti Siemiatycki & Naeem Farooqi, 2012. "Value for Money and Risk in Public–Private Partnerships," Journal of the American Planning Association, Taylor & Francis Journals, vol. 78(3), pages 286-299.
    8. Ranjith Appuhami & Sujatha Perera & Hector Perera, 2011. "Management Controls in Public–Private Partnerships: An Analytical Framework," Australian Accounting Review, CPA Australia, vol. 21(1), pages 64-79, March.
    9. Demi Chung & David Hensher, 2015. "Risk Management in Public–Private Partnerships," Australian Accounting Review, CPA Australia, vol. 25(1), pages 13-27, March.
    10. Rob Ball & Maryanne Heafey & David King, 2003. "Risk transfer and value for money in PFI projects," Public Management Review, Taylor & Francis Journals, vol. 5(2), pages 279-290, June.
    11. R. R. Officer, 2004. "Public or Private: Where Government Should Draw the Line," Australian Accounting Review, CPA Australia, vol. 14(33), pages 22-26, July.
    12. John Quiggin, 2004. "Risk, PPPs AND THE Public Sector Comparator," Australian Accounting Review, CPA Australia, vol. 14(33), pages 51-61, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zhao, Jianfeng & Greenwood, David & Thurairajah, Niraj & Liu, Henry J. & Haigh, Richard, 2022. "Value for money in transport infrastructure investment: An enhanced model for better procurement decisions," Transport Policy, Elsevier, vol. 118(C), pages 68-78.
    2. Hartman, Paul & Ogden, Jeff & Jackson, Ross, 2020. "Contract duration: Barrier or bridge to successful public-private partnerships?," Technology in Society, Elsevier, vol. 63(C).
    3. Michael Opara & Colman Kelechukwu Ozor, 2023. "Public-Private Partnerships in West Africa: A Policy Comparison of Nigeria and Ghana," International Journal of Business and Management, Canadian Center of Science and Education, vol. 18(2), pages 158-158, June.
    4. Michael Opara & Colman K. Ozor & Elvis Agbadoku & Gilbert Danso & Kennedy Kesse, 2024. "Ghana's Public-Private Partnership (P3) Projects: A Field-Level Investigation," International Journal of Business and Management, Canadian Center of Science and Education, vol. 19(5), pages 1-70, September.
    5. Hongqiang Wang & Qiaoyan Lin & Yingjie Zhang, 2022. "Risk Cost Measurement of Value for Money Evaluation Based on Case-Based Reasoning and Ontology: A Case Study of the Urban Rail Transit Public-Private Partnership Projects in China," Sustainability, MDPI, vol. 14(9), pages 1-22, May.
    6. Zhao, Jianfeng & Liu, Henry J. & Love, Peter E.D. & Greenwood, David J. & Sing, Michael C.P., 2022. "Public-private partnerships: A dynamic discrete choice model for road projects," Socio-Economic Planning Sciences, Elsevier, vol. 82(PA).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Opara, Michael & Rouse, Paul, 2019. "The perceived efficacy of public-private partnerships: A study from Canada," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 58(C), pages 77-99.
    2. Sebastian Zwalf, 2022. "Managing goal conflict. The case of agency theory in the policy settings for public–private partnerships; A perspective on citizen and government interests," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 93(4), pages 913-930, December.
    3. Cian O'SHEA & Dónal PALCIC & Eoin REEVES, 2019. "Comparing Ppp With Traditional Procurement: The Case Of Schools Procurement In Ireland," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 90(2), pages 245-267, June.
    4. Karen Benson & Peter M Clarkson & Tom Smith & Irene Tutticci, 2015. "A review of accounting research in the Asia Pacific region," Australian Journal of Management, Australian School of Business, vol. 40(1), pages 36-88, February.
    5. Mariana Valverde & Aaron Moore, 2019. "The performance of transparency in public–private infrastructure project governance: The politics of documentary practices," Urban Studies, Urban Studies Journal Limited, vol. 56(4), pages 689-704, March.
    6. Palaco, Ileana & Park, Min Jae & Kim, Suk Kyoung & Rho, Jae Jeung, 2019. "Public–private partnerships for e-government in developing countries: An early stage assessment framework," Evaluation and Program Planning, Elsevier, vol. 72(C), pages 205-218.
    7. Penyalver, Domingo & Turró, Mateu & Williamson, John B., 2019. "Measuring the value for money of transport infrastructure procurement; an intergenerational approach," Transportation Research Part A: Policy and Practice, Elsevier, vol. 119(C), pages 238-254.
    8. Salman Ahmad & Shahnawaz Khan & Shah Wali Khan, 2016. "Developing Infrastructure through Public Private Partnerships; Understanding the Elements of the Enabling Environment," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 8(1), pages 19-34, April.
    9. Avner Offer, 2018. "Patient and impatient capital: time horizons as market boundaries," Oxford Economic and Social History Working Papers _165, University of Oxford, Department of Economics.
    10. Carlos Oliveira Cruz & Joaquim Miranda Sarmento, 2020. "Traffic forecast inaccuracy in transportation: a literature review of roads and railways projects," Transportation, Springer, vol. 47(4), pages 1571-1606, August.
    11. Chin, Jae Teuk, 2021. "The shifting role of public–private partnerships in vacant property redevelopment," Land Use Policy, Elsevier, vol. 105(C).
    12. Dorothée Allain-Dupré & Claudia Hulbert & Margaux Vincent, 2017. "Subnational Infrastructure Investment in OECD Countries: Trends and Key Governance Levers," OECD Regional Development Working Papers 2017/05, OECD Publishing.
    13. Geddes, R. Richard & Wagner, Benjamin L., 2013. "Why do U.S. states adopt public–private partnership enabling legislation?," Journal of Urban Economics, Elsevier, vol. 78(C), pages 30-41.
    14. Demi Chung, 2009. "Developing an Analytical Framework for Analysing and Assessing Public-Private Partnerships: A Hospital Case Study," The Economic and Labour Relations Review, , vol. 19(2), pages 69-90, July.
    15. Matos, José M.A. & Ramos, Sandra & Costa, Vítor, 2019. "Stochastic simulated rents in Portuguese public-private partnerships," Transportation Research Part A: Policy and Practice, Elsevier, vol. 130(C), pages 107-117.
    16. Miranda Sarmento, J. & Renneboog, L.D.R., 2014. "Public-Private Partnerships : Risk Allocation and Value for Money," Discussion Paper 2014-022, Tilburg University, Center for Economic Research.
    17. Benjamin F Teresa, 2016. "Managing fictitious capital: The legal geography of investment and political struggle in rental housing in New York City," Environment and Planning A, , vol. 48(3), pages 465-484, March.
    18. Timothy C. Irwin, 2015. "Defining The Government'S Debt And Deficit," Journal of Economic Surveys, Wiley Blackwell, vol. 29(4), pages 711-732, September.
    19. Kokkaew, Nakhon & Oliveira Cruz, Carlos & Alexander, Derek, 2015. "The impact of rule of laws on the recovery of distressed PPP infrastructure Projects," MPRA Paper 77494, University Library of Munich, Germany.
    20. Chung, Demi & Hensher, David A. & Rose, John M., 2010. "Toward the betterment of risk allocation: Investigating risk perceptions of Australian stakeholder groups to public-private-partnership tollroad projects," Research in Transportation Economics, Elsevier, vol. 30(1), pages 43-58.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ausact:v:28:y:2018:i:3:p:391-404. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=1035-6908 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.