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Achieving best value in private finance initiative project procurement

Author

Listed:
  • Akintola Akintoye
  • Cliff Hardcastle
  • Matthias Beck
  • Ezekiel Chinyio
  • Darinka Asenova

Abstract

The wherewithal of achieving best value in private finance initiative (PFI) projects and the associated problems therein are documented. In the UK, PFI has offered a solution to the problem of securing necessary investment at a time of severe public expenditure restraint. In PFI schemes, the public sector clients must secure value for money, while the private sector service providers must genuinely assume responsibility for project risks. A broad-based investigation into PFI risk management informs the discussion in this paper. It is based on 68 interviews with PFI participants and a case study of eight PFI projects. The research participants comprised of contractors, financial institutions, public sector clients, consultants and facilities management organizations. The qualitative software Atlas.ti was used to analyse the textual data generated. The analysis showed that the achievement of best value requirements through PFI should hinge on: detailed risk analysis and appropriate risk allocation, drive for faster project completion, curtailment in project cost escalation, encouragement of innovation in project development, and maintenance cost being adequately accounted for. Factors that continue to challenge the achievement of best value are: high cost of the PFI procurement process, lengthy and complex negotiations, difficulty in specifying the quality of service, pricing of facility management services, potential conflicts of interests among those involved in the procurement, and the public sector clients' inability to manage consultants.

Suggested Citation

  • Akintola Akintoye & Cliff Hardcastle & Matthias Beck & Ezekiel Chinyio & Darinka Asenova, 2003. "Achieving best value in private finance initiative project procurement," Construction Management and Economics, Taylor & Francis Journals, vol. 21(5), pages 461-470.
    • Handle: RePEc:taf:conmgt:v:21:y:2003:i:5:p:461-470
    DOI: 10.1080/0144619032000087285
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    Cited by:

    1. Mohammed Fadhil Dulaimi & Mohamed Alhashemi & Florence Yean Yng Ling & Mohan Kumaraswamy, 2010. "The execution of public-private partnership projects in the UAE," Construction Management and Economics, Taylor & Francis Journals, vol. 28(4), pages 393-402.
    2. Abraham Park & Chen Yu Chang, 2013. "Impacts of Construction Events on the Project Equity Value of the Channel Tunnel Project," ERES eres2013_97, European Real Estate Society (ERES).
    3. Roehrich, Jens K. & Lewis, Michael A. & George, Gerard, 2014. "Are public–private partnerships a healthy option? A systematic literature review," Social Science & Medicine, Elsevier, vol. 113(C), pages 110-119.
    4. João M. S. Carvalho & Nuno Rodrigues, 2022. "Perceived Quality and Users’ Satisfaction with Public–Private Partnerships in Health Sector," IJERPH, MDPI, vol. 19(13), pages 1-18, July.
    5. Veiko LEMBER & Ole Helby PETERSEN & Walter SCHERRER & Robert ÅGREN, 2019. "Understanding The Relationship Between Infrastructure Public‒Private Partnerships And Innovation," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 90(2), pages 371-391, June.
    6. Jiangang Shi & Kaifeng Duan & Guangdong Wu & Rui Zhang & Xiaowei Feng, 2020. "Comprehensive metrological and content analysis of the public–private partnerships (PPPs) research field: a new bibliometric journey," Scientometrics, Springer;Akadémiai Kiadó, vol. 124(3), pages 2145-2184, September.
    7. Iram Khan & Asad Ghalib & Farhad Hossain, 2015. "Stakeholders Involvement or Public Subsidy of Private Interests? Appraising the Case of Public Private Partnerships in Pakistan," Public Organization Review, Springer, vol. 15(2), pages 281-296, June.
    8. Ahmadabadi, Ali Akbari & Heravi, Gholamreza, 2019. "The effect of critical success factors on project success in Public-Private Partnership projects: A case study of highway projects in Iran," Transport Policy, Elsevier, vol. 73(C), pages 152-161.
    9. Soo-Yong Kim & Le Dinh Thuc, 2020. "Sustainable Location Selection for Investing in Public–Private Partnership Infrastructure Projects: From a Developing Country’s Perspective," Sustainability, MDPI, vol. 12(15), pages 1-19, July.
    10. Alireza Valipour & Hadi Sarvari & Jolanta Tamošaitiene, 2018. "Risk Assessment in PPP Projects by Applying Different MCDM Methods and Comparative Results Analysis," Administrative Sciences, MDPI, vol. 8(4), pages 1-17, December.
    11. Yanchun Zhang & Jianglin Gu & Ming Shan & Yazhi Xiao & Amos Darko, 2018. "Investigating Private Sectors’ Behavioral Intention to Participate in PPP Projects: An Empirical Examination Based on the Theory of Planned Behavior," Sustainability, MDPI, vol. 10(8), pages 1-25, August.
    12. 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.
    13. Rogers Mwesigwa & Justine Nanteza & Joseph Mayengo & Ruth Nabwami & Joshua Tumwesige, 2024. "Critical success factors for public-private partnership projects in Uganda," SN Business & Economics, Springer, vol. 4(11), pages 1-22, November.
    14. 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.
    15. Jiao Feng & Nannan Wang & Guoshuai Sun, 2022. "Measurement of Innovation-Driven Development Performance of Large-Scale Environmental Protection Enterprises Investing in Public–Private Partnership Projects Based on the Hybrid Method," Sustainability, MDPI, vol. 14(9), pages 1-21, April.
    16. Krzysztof Wasowski, 2013. "Analiza wspolpracy sektora publicznego z doradcami zewnetrznymi w realizacji projektow w systemie koncesyjnym oraz w formie partnerstwa publiczno-prywatnego w Polsce (Analysis of public sector coopera," Problemy Zarzadzania, University of Warsaw, Faculty of Management, vol. 11(43), pages 136-155.
    17. van den Hurk, Martijn & Verhoest, Koen, 2017. "On the fast track? Using standard contracts in public–private partnerships for sports facilities: A case study," Sport Management Review, Elsevier, vol. 20(2), pages 226-239.
    18. Nunzia Carbonara & Roberta Pellegrino, 2020. "The role of public private partnerships in fostering innovation," Construction Management and Economics, Taylor & Francis Journals, vol. 38(2), pages 140-156, February.
    19. Arshad Ali Javed & Patrick T.I. Lam & Albert P.C. Chan, 2014. "Change negotiation in public-private partnership projects through output specifications: an experimental approach based on game theory," Construction Management and Economics, Taylor & Francis Journals, vol. 32(4), pages 323-348, April.
    20. KhatolwaAsman Kiloh & Peterson Obara Magutu & Richard Nyaanga Ongeri, 2020. "Operations Strategies And Competitiveness Of Kenyan Cooperative Sector," Noble International Journal of Social Sciences Research, Noble Academic Publsiher, vol. 5(3), pages 22-33, March.
    21. Thais Rangel & Jesús Galende, 2010. "Innovation in public--private partnerships (PPPs): the Spanish case of highway concessions," Public Money & Management, Taylor & Francis Journals, vol. 30(1), pages 49-54, January.
    22. Alamoush, Anas S. & Ballini, Fabio & Ölçer, Aykut I., 2024. "Management of stakeholders engaged in port energy transition," Energy Policy, Elsevier, vol. 188(C).
    23. Barlow, James & Köberle-Gaiser, Martina, 2008. "The private finance initiative, project form and design innovation: The UK's hospitals programme," Research Policy, Elsevier, vol. 37(8), pages 1392-1402, September.
    24. Haiyan He, 2023. "Incentive Mechanism of Utility Tunnel PPP Projects with User Involvement," Sustainability, MDPI, vol. 15(14), pages 1-26, July.
    25. Tajani, Francesco & Morano, Pierluigi & Di Liddo, Felicia, 2020. "The optimal combinations of the eligible functions in multiple property assets enhancement," Land Use Policy, Elsevier, vol. 99(C).

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