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Value for Money and Risk in Public–Private Partnerships

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  • Matti Siemiatycki
  • Naeem Farooqi

Abstract

Problem, research strategy, and findings: Delivering improved public services at lower cost, also known formally as value for money (VfM), is often the main rationale for procuring large infrastructure projects through public–private partnerships (PPPs). However, it is unclear whether the ex ante assessments of PPPs account for key planning concerns, including limitations on community consultation, contractual lock-ins that curtail public flexibility to make future plans, and a political preference for PPPs that may influence the way that projects are structured and evaluated. This set of questions is examined for 28 infrastructure PPPs delivered in Ontario, Canada, and interviews with18 senior political, government, and private-sector participants in the province's PPP industry. We find that transferring of construction risks from government to the private-sector partners drives VfM results, and may overvalue the extent to which planning related risks can be transferred. Takeaway for practice: PPP contract structures should permit more transparency during the project planning process and preserve the flexibility of governments to control key planning tasks such as user fees, service coordination and facility expansion. Strategies might include: the unbundling of construction and operation phases of the PPP in all but the most unique situations, the use of competitive dialogue tendering to deepen public–private collaboration earlier in the planning process, and the inclusion of contract rebalancing terms to better share rather than transfer project risks. Research support: This research was funded through a Standard Research Grant from the Social Sciences and Humanities Research Council of Canada (Application Number: 110998).

Suggested Citation

  • 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.
    • Handle: RePEc:taf:rjpaxx:v:78:y:2012:i:3:p:286-299
    DOI: 10.1080/01944363.2012.715525
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    Cited by:

    1. 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.
    2. Alessandra Tafuro & Giuseppe Dammacco & Antonio Costa, 2023. "A Conceptual Study on the Role of Blockchain in Sustainable Development of Public–Private Partnership," Administrative Sciences, MDPI, vol. 13(8), pages 1-15, July.
    3. 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.
    4. 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.
    5. Weixia Lyu & Yanan Zheng & Camila Fonseca & Jerry Zhirong Zhao, 2020. "Public-Private Partnership Transformation and Worker Satisfaction: A Case Study of Sanitation Workers in H-City, China," Sustainability, MDPI, vol. 12(13), pages 1-13, July.
    6. Phillip O’Neill, 2019. "The financialisation of urban infrastructure: A framework of analysis," Urban Studies, Urban Studies Journal Limited, vol. 56(7), pages 1304-1325, May.
    7. Chiapa Aguillón, Everardo, 2020. "Challenges in local governance: Public-private partnerships as an instrument for local transport policies," Studia z Polityki Publicznej / Public Policy Studies, Warsaw School of Economics, vol. 7(2), pages 1-21, July.
    8. Philip Ashton & Marc Doussard & Rachel Weber, 2016. "Reconstituting the state: City powers and exposures in Chicago’s infrastructure leases," Urban Studies, Urban Studies Journal Limited, vol. 53(7), pages 1384-1400, May.
    9. 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.
    10. Spohr, Jonas & Wikström, Kim & Ronikonmäki, Niko-Matti & Lepech, Michael & In, Soh Young, 2024. "Are private investors overcompensated in infrastructure projects?," Transport Policy, Elsevier, vol. 152(C), pages 1-8.
    11. 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.
    12. Wikus Kruger & Anton Eberhard, 2018. "Renewable energy auctions in sub‐Saharan Africa: Comparing the South African, Ugandan, and Zambian Programs," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 7(4), July.
    13. Martijn van den Hurk & Marlies Hueskes, 2017. "Beyond the financial logic: Realizing valuable outcomes in public–private partnerships in Flanders and Ontario," Environment and Planning C, , vol. 35(5), pages 784-808, August.
    14. Rosella Carè & Riccardo De Lisa, 2019. "Social Impact Bonds for a Sustainable Welfare State: The Role of Enabling Factors," Sustainability, MDPI, vol. 11(10), pages 1-23, May.
    15. Chin, Jae Teuk, 2021. "The shifting role of public–private partnerships in vacant property redevelopment," Land Use Policy, Elsevier, vol. 105(C).
    16. 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.
    17. 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.
    18. Ilyas, Muh. Indra Fauzi, 2023. "Analysis Of Local Government Financial Performance Based On The Method Value For Money," MPRA Paper 119027, University Library of Munich, Germany, revised 19 Oct 2023.
    19. 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).
    20. Love, Peter E.D. & Ika, Lavagnon & Matthews, Jane & Fang, Weili, 2021. "Shared leadership, value and risks in large scale transport projects: Re-calibrating procurement policy for post COVID-19," Research in Transportation Economics, Elsevier, vol. 90(C).

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