Public Private Partnerships In Infrastructure Development Construction Essay

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The working title for the dissertation will be Investigation of Public Private Partnerships in infrastructure development. Public Private Partnership (PPP) project which is based on a concession agreement between a government on one side and private sector company on other side, for delivering an infrastructure facility on payment of user charges. The objective is to combine the best abilities of public and private sectors for reciprocated benefit. PPPs are used to build new and upgrade existing public facilities. Compared with traditional model, in PPP private sector assumes a superior role in planning, financing, design, construction, operation and maintenance of these facilities.

PPP is becoming a progressively more significant vehicle to deliver public infrastructure development and public service facilities. In recent years countries around the world have met the challenge of expanding and maintaining decisive infrastructure by restructuring public utilities and intensifying private sector participation in the infrastructure sectors. Recognizing the significance of adequate infrastructure, and the given constrictions on public budgets to finance these rising infrastructure needs, Governments have sought to transfer part of the burden of new infrastructure investment to private sector. The significance of involving public and private stakeholders and creating a juncture for dialogue is undeniably receiving growing identification.

Over the lifetime of these projects the political, social, legislative and fiscal environment could all change extensively. This is especially in the case of developing countries where the political, social and economic circumstances are unbalanced. Consequently a high degree of risk and ambiguity surround PPPs and it is a vital that enough identification, appraisal and assessment of these risks take place. These risks have high level of impact on the viability of the project, which is an essential parameter in the thriving implementation of project.

The issue of private sector involvement is high on the social, political and economic and agenda of various countries, with the vital challenge being formulate activities that are knowable and sustainable, while delivering enhanced services. Infrastructure is necessary to supporting economic intensification.

The Concession agreement plays a very imperative role in PPP and provides a rigid structure of how the PPP should be employed. It delineates the relation between the parties and can be considered as the central part of PPP project. It addresses the issues which are very important for the thriving completion of project such mitigation and allocation of risks.

Sponsors will invest in a task only if the risks in the project are fewer than the incentive, if the project fetches. PPP projects carry various risks that are distinctive to this type of delivery method in addition to the risks linked with more customary assignments.

Therefore by considering the significance of all the above, in the dissertation, the different types of PPP models, concession agreements, key success factors, risk management and case studies of PPP projects will be studied.

2. SEARCH STRATEGY

The method of planning a search strategy would facilitate to elucidate thinking about the topic and ensure that looking information is apt to the task. Learning how to search skilfully in databases, and how information is prearranged in them, provides with useful assignable knowledge and skills. The following steps explicates about the search strategy used in this coursework for finding appropriate journal articles, search engines and other sources of information.

In the first step key words were identified related to the dissertation topic. The key words consist of PPP and Partnerships. PPP is also known as Public private partnership. 'PPP' was used as a key word because it delineates the contractual agreement between public and a private sector entity or it can be also defined as the agreement between government and the private sector pertaining to the stipulation of public services. On the other hand 'Partnerships' was also used as a key word, since it involves cooperation i.e. 'to work together'- and in a public policy can be termed as collaboration between private or public sector for shared benefit. Therefore the two key words used in finding journal articles were found to be appropriate to the topic.

In the second step the identified key words were placed in different search engines on the internet, for finding the peer reviewed journal articles. The two search engines used in this coursework are Compendex and ScienceDirect.

Compendex is the widespread bibliographic database which has the full potential of directive line searching in practised mode, however also offers simpler searching in Easy and quick search modes. Refining searches and dealing with hit sets in compendex is simple and uncomplicated. 

ScienceDirect is the most important full-text methodical database offering journal articles and book chapters. This search engine offers refined search and salvage functionality that facilitates the user to exploit the effectiveness of their knowledge discovery process.

In the third step the peer-reviewed journal articles are downloaded from the above mentioned search engines. At the same time the URL (Universal Resource Locater) links were also noted down and later on the URL links were affixed to the four review papers.

In the fourth step while writing the reviews, in order to substantiate and argue with the four journal articles, different websites, reports and journal articles related to the topic are searched on the internet.

In the fifth step all the references which were used in writing the reviews are cited accurately at the end.

3. PAPER REVIEW 1

In the refereed journal paper the author intends to identify the key critical success factors (CSF) and success sub factors (SSF) in order to determine the success or failure of PPP infrastructure projects. This has been achieved by carrying out literature review, taking experience from successful projects in different countries and conducting interviews with some PPP experts. At last the identified CSFs were classified into five main factors and a questionnaire survey was performed to request for worldwide expert opinions on the relative implication of the CSFs and SSFs. This paper has been selected because to understand the importance of CSFs in PPP projects which has an imperative role in the success or failure of a project.

PPPs represent a distinctive and flexible solution to execute infrastructure projects. CSFs refer to the restricted number of areas in which agreeable outcomes would ensure victorious competitive recital for the department or organisation. It was argued that CSFs would enhance project value with improved quality of outcome, increase management success, economic feasibility, favourable investment environment and appropriate risk allocation [1]. In order to validate the theme of PPP improvement, CSFs concept is taken for the study through the referred journal (Critical Success Factors for Public-Private Partnerships in Infrastructure Development) stating that CSFs can encounter the competent procurement process through a model development for inclusion by utilizing questionnaire survey [2]. CSFs does not include the word effective procurement in ranking significance of success factors, as this effective procurement process demonstrates transparency and to be competitive throughout the entire procurement process and enhances project value for money. CSFs evaluation can also be done by using factor analysis method which identifies a relatively diminutive number of factor groupings that can be used to signify relationships among sets of several inter-related variables [3]. In addition economic efficiency of PPP for Infrastructure Development can be improved through contractual flexibility analysis which incorporates flexibilities into the contemporary way of contract structuring [4]. Theoretically CSFs are identified based either on expert opinions or on quantitative measures. For example analytical hierarchy process is adopted on CSFs to determine the qualified importance of success related factors for construction projects [5]. The papers also reveals that the CSFs for PPPs under Win-Win Principle would create a favourable environment and provide needed support for private sector participation, and establishes valuable measures to ensure that privatized projects and services are delivered at public acceptable standards and quality. An effective legal and authoritarian framework should be established in favourable investment environment aspect to facilitate the formulation of successful contractual vehicles for PPPs that are attuned with a country's legal system [6].

The questionnaire survey model is well structured by calculating the relative significance indices of five CSFs and SSFs under each CSF separately. However for future development of PPP infrastructure projects factor analysis could be used to determine the main success factor groupings that motivate project procurement. In addition, sensitivity analysis and simulation methods should also be used in the economic appraisal of large infrastructure projects.

4. PAPER REVIEW 2

In the refereed journal paper the authors aim to develop a framework for building relationally 'sustainable teams in PPP projects'. This has been achieved by incorporating and assessing the past performance of technical, sustainability and relational criteria. Eventually

Delphi-type approach (DTA) was instigated to review the basic structure and purpose of the proposed framework involving professionals from industry and academia. This paper was selected because to be acquainted with the reliable factors used for choosing best PPP teams which has a major impact on time, cost and quality of the project.

Infrastructure privatization involves political, social, legal economic and environmental aspects and consequently is much more convoluted than traditional public procurement. It was said that technical, relational and sustainability aspects will facilitate clarity and reliability in appraisals and permit a holistic overview of overall performance for selecting best PPP teams [7]. In order to authenticate the topic of sustainable development of PPP team, Delphi-type approach is used in this study through the referred journal (Selecting sustainable teams for PPP projects) declaring that professional experts can select the best team by providing ratings against each aspect in an appropriate framework[8]. The findings led that the Construction clients were including sustainability prerequisites in the procurement documents. For example on National Museum project in Australia, potential alliance partners were required to demonstrate practical experience and idealistic approach in the areas of developing sustainability and ecological management[9]. Theoretically for measuring the performance of a PPP team, single scoring system can be used which facilitates transparency and consistency in evaluation. The DTA is a systematic method to obtain expert judgment on the possible effectiveness and adaptive nature of the relational framework. The paper also divulges that adaptability of the Delphi method symbolize both its power and the basis for its imperfection. The findings also indicate that to adapt the Delphi method to meet scenario-specific decision-making and anticipating needs. It is vital to first differentiate between rounds and segments in a Delphi process as the number of segments would typically depend on the objectives. The characteristic application of the ranking-type Delphi is for the identifying and prioritising issues [10].The DTA study used only one round in the survey, as the authors took the freedom to not have a second round of this study-to obtain developmental comment and the results specify that there is a consensus among professionals for both the overall and relational frameworks. However for an appropriate selection of superlative PPP team, competitive selection process should be used. Successful selection of sustainable team must include enhanced tender documents, project brief, determination of proper criteria and methods for prequalification and tender appraisal, fiscal capital structure and potential enhancements in diverse stages.

The integrated approach is well organized which contributes openly to sustainable infrastructure through relationship building and knowledge-building. The anticipated model can be next incorporated with the overall PPP team selection system that would integrate the evaluation of proposals from prequalified consortia that will include assessments of financial and infrastructure operational plans as well.

5. PAPER REVIEW 3

In the refereed journal paper the author intends to categorize 21 Best value contributing factors (BVCFs) in devising partnerships with the private sector in infrastructure improvement. This has been accomplished through literature review of BVCFs in various types of contracts, case studies of international PPP practices, and interviews with international PPP professionals and experienced practitioners. This paper was selected to know the importance of BVCFs in PPP project, which aims to exploit the outcome of a business deal through proper contractual arrangements.

PPP is a proven procurement technique used to identify the alternative approaches for financing and delivering public infrastructure projects. It was said that Best value source selection (BVSS) approach would promote creativity and modernism from the private sector and allows the public sector to make a correct trade off between price and non-price criteria in tender appraisal [11]. In order to validate the theme of BVSS methodology, BVCF concept is taken for the study through the referred journal (Public Clients Best Value Perspectives of Public Private Partnerships in Infrastructure Development) stating that BVCFs can determine each of the dimensions in PPP improvement, which would direct and focus the efforts of the private sector in crafting pioneering project delivery models to offer the best value and to award a justifiable contract [12]. The virtual significance of price and non-price criteria differs in various types of contracts. In BVSS approach price plays a prevailing role in an acquisition where there are apparent requirements and risks are nominal. Nevertheless, non-price criteria could take over in an attainment where the requirements are not well defined, much improvement work is required, and there are considerable performance risks [13]. The paper also reveals the research for the incorporation of Best Value perspectives in diverse types of contracts. In Design-Bid-Build contracts, there is partial possibility for the BVSS approach, as contractors are needed to tender for a construction job, the design of which has been previously completed. For instance, the Maryland Department of Transportation implements a bid modification process for supplementary period of warranties beyond the predetermined minimum five-year warranty time [14]. BVSS approach maintains the balance between most economically advantageous perspectives and the best-value prospects. Time, outlay, aesthetics, operation and maintenance, professional, safety, and ecological facets all influence the best value. In adopting the BVSS approach, the client should evidently define the objectives it wishes to accomplish, the relative significance of each value item, and enlarge both objective and subjective indicators to assess these contributors. The client's objectives should be transformed into a proper tender appraisal package that includes a set of criteria and their equivalent value functions [15]. Conflicts could exist among diverse objectives in the BVSS scenario, and thus there should be a trade off, according to the virtual significance of these objectives

The BVSS methodology is well prepared and is satisfactorily flexible to accommodate the general business needs of the client, and the explicit objectives, features, and stipulations of the PPP project. Descriptive assessment and rank agreement investigation reveal that there is no statistical distinction in the ranking of these BVCFs between the academic and the industrial groups. Consequently, it can be concluded that all the identified BVCFs are imperative and should be considered in a best value approach in PPPs in infrastructure development.

6. PAPER REVIEW 4

In the refereed journal paper the authors intend to identify preferred risk allocations in PPP projects in the United Kingdom (UK). This has been accomplished by classifying risks in different types of PPP/PFI (Private finance initiative) projects and conducting opinion survey using a postal questionnaire, which is used to explore risk allocation preferences in PPP infrastructure projects. Finally a three-level meta-classification (MC) was proposed, whereby risks were considered in terms of the nature of their relationship to the projects. This paper was selected in order to recognize the PPP project risk factors, as it provides the guideline for public sector clients in preparing a realistic risk allocation framework for use in tendering documents.

Risk allocation is the method of isolating and assigning the accountability associated with a particular risk for a variety of supposed circumstances and it is predominantly challenging and significant in the context of PPPs. It was assumed that the private sector can handle risks better than the public sector by adopting PPP process and the fact that a value-for-money (VFM) outcome for government in implementing the PPP process will frequently turn on the victorious transfer to the private sector [16]. In order to authenticate the theme ' Risk allocation' the referred journal (The allocation of risk in PPP/PFI construction projects in the UK) was taken for this study, stating that majority of the PPP project risks, should be allocated to the private sector partner which in turn could be managed in an successful way[17]. The advantage of grouping and classifying project risks in the proposed MC framework would facilitate a planned method to risk management for private and public sector project stakeholders. The categorised catalogue would explore the perceptions of PPP participants' of risk allocation for the infrastructure projects in UK. In the proposed framework, the public sector sponsor classify the risks appending to the project in a risk register, setting out the risks pertinent to each stage of the project and the probability of occurrence for each risk event and an approximation of the financial consequences. This analysis facilitates the public client to ascertain the type and quantum of risk that it seeks to reassign to the private sector [18]. The main reason for intending the micro-level of PPP risks in the paper is based on the fact that, typically the public sector has societal responsibility, whereas the private sector is profit driven. Site availability risks tend to be engaged by the public sector in overseas PPP projects. A good example is the ''land possession and reparation risk'' of Donglu Second Tunnel (YD2nd) Tunnel in China, where the local authority took accountability for this [19]. The findings reveal that, in a PPP infrastructure project, the public sector partner should retain site accessibility and political risks and the majority of the project risks, particularly those at the meso risk level must be allocated to the private sector partner. Risk allocation in PPP projects should be viewed from a Transaction cost economics (TCE) perspective, since any issue that can be devised as a contracting problem and can be examined to improvement in transaction cost economizing terms [20].

The postal questionnaire survey was well organised and the identified risks were properly allocated in a hierarchical manner. The framework provided in this study is focussed and uncomplicated. Nonetheless the PPP Project participants should adopt measures associated with sustainability and project efficiency, in order to attain VFM objectives in service delivery developments.

7. SUMMARY THE OF FOUR PAPERS

All the four paper talk about the different topics related to PPP. Even though the work described in one paper does not match with another, However it can be clearly seen that there is a connection between the four papers which intends to the enhancement of PPP in various methods.

In the first refereed journal paper the author briefly describes the main CSFs for PPP projects such as favourable investment environment, economic feasibility, and consistent concessionaire consortium with strong technical strength and sound fiscal package. In the second refereed journal paper the authors presented a fundamental framework for assessing the past performance scores of PPP project teams by integrating the technical, relational and sustainability factors.

In the third refereed journal paper the author classifies 21 BVCFs for developing BVSS approach through the literature review of previous studies in Design-Bid-Build, Design-Build, Design-Build-Maintain Design-Build-Operate contracts and interviews with international professionals in various public client organizations. In the fourth refereed journal paper the authors provided a risk allocation framework for public sector clients by classifying the three levels of risk factors in PPP/PFI projects.

Consequently by considering the outline of the four referred journal papers, it can be perceived that the four papers do not contradict each other and also arrived at different conclusions. On the other hand the connection between the four papers can be created as given below.

As the first refereed journal paper tells about the significance of CSFs in PPP Projects and these CSFs can be connected to the second referred journal paper for choosing a sustainable PPP team. For evaluation of Project framework the CSFs and sustainability implications of the PPP team should be connected in order to accomplish the project's success. Hence in any PPP project the CSFs and team selection aspects should be given equal importance for the improvement.

Conversely in the third referred journal paper the best-value contributing factors were identified and in the best value selection methodology, risks are taken into account for the selection of an appropriate concessionaire for the best-value approach. In this way the third paper can be linked to the fourth paper in order to develop an appropriate risk allocation model between the public and private sectors.

On the whole four referred journals papers focus on the best practices, effective methods and effectual risk allocation of PPP Projects in an enhanced way. Thereby the above conclusions would facilitate to recognize the key concepts and best methods that could be studied in detail for implementing on the case studies and reviewing accurate literature of PPP projects in the research.

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