gerald sundaraj sparc2009 presentation
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Postgraduate Research Proposal
The significance and co-dependency
of “Robustness” in a PPP (PFI)
project environment from the
perspective of the Granting Authority
Gerald SundarajSchool of Built Environment
University of Salford
SPARC Conference7 May 2009
Public Private Partnerships
(PPP) A PPP refers to co-operation between
different players, usually one from the privateand one from the public sector.
They work together to promote a commoninterest, using the complementarities of eachpartners and their special qualities.
This term has become increasingly popular,because it suggests that the best elements ofthe private and public sector approach arecombined.
The aim of these partnerships is to use theskills and the know-how of the private sectorfor the provision of a public service.
Types of PPP
Models Alternative Contracts
◦ Known also as service contracts
◦ Simplest form of partnership
Leasing
◦ Private sector uses public facilities
◦ Rental fee for services provided
◦ Maintenance of asset by private sector
Joint Ventures
◦ Co-responsibility & co-ownership
Concessions
◦ Best value service in public service
◦ New service facility or improves an existing one
◦ 20-30 years duration
Privatization
◦ Sale of state-owned asset
◦ Also known as asset sales
◦ Transfer of equity to private sector without time limitations
Types of PPP Models in the
UK Asset sales
Wider Markets
Sales of business
Partnership companies
Private finance initiative (PFI)
Joint Ventures
Partnership investments
Policy partnerships
Private Finance Initiative (PFI) Introduced in1992 in the UK
PFI model, incentive to the private sector toparticipate in public works or services. Thisbecame necessary because,
• Government procured and managed projectshave been generally delivered over budgetand behind schedule;
• Government was under pressure to reduce itsPublic Sector Borrowing Requirement(PSBR) in order to meet the targets requiredunder the Maastricht Treaty;
• Government required a new financingstructure outside the public sector borrowingrequirements to meet its investment needs ininfrastructure.
PFI Trend – July 2003
PFI Trend – March 2008
PFI consortium model
Source: HM Treasury
Private Finance Initiative
Genuine risk transfer Output specification Whole life asset performance Performance-related reward Factors
◦ Risk Assessment
◦ Value for Money
◦ Affordability
◦ Robustness
Framework
PPP PFIParties
SPV
Financiers
Contractors
Granting Authority
Central Government
Local Authority
Agency
Public Enterprise
Rural/Urban
Structure
Revenue/
Financial Capabilities
Technical Expertise
Endogenous
Factors
Design
Construction
Commission & O&M
Technology
Obsolescence
Regulations
Legislation
Demand
Exogenous
Factors
SLEEPT
social
legal
economic
environment
political
technology
Risk Transfer
Value for Money
Affordability
Robustness
Whole-Life-Cycle
CSF
Perspective
Research Question
What is the link between Risk Transfer Assessment, Value for Money, Affordability and Robustness?
How do these four elements affect each other◦ Individually
◦ Collectively
to provide a balance in a PPP/PFI model?
How can these four elements provide sustainability to the PFI model in a PFI project environment?
CSF IndividuallyValue for Money
Risk Transfer
Robustness
Risk Transfer
Affordability
Risk Transfer
Affordability
Robustness
CSF Collectively
Value for Money
Affordability
Risk Transfer Assessment
Robustness
Robustness
Value for Money
Risk Transfer Assessment
Affordability
Sustainable Model/Framework
Research Aim
Determine the significance and co-
dependency of “Robustness” in a
PPP (PFI) project environment from
the perspective of the Granting
Authority
Proposed Research
Objectives1. To determine the significance of Robustness
in a PPP(PFI) project environment
2. To determine the co-dependency of the
Critical Success Factors
3. To determine a sustainable CSF
model/framework
Research
Methodology
Qualitative Analysis
Semi-structured Interviews
Data triangulation – The use of a
variety of data sources (interviews,
archival material, observational data)
Cognitive Mapping
Current Stage
Identifying the problems and gaps
Carrying out literature review on ◦ PPP Various PPP models
◦ PFI
◦ Granting Authority Various granting authority
◦ Risk Transfer
◦ Value for Money
◦ Affordability
◦ Robustness
◦ Research Methodologies
THANK YOU
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