Impact of the Capital Market Collapse on Public-Private Partnership Infrastructure Projects
Publication: Journal of Construction Engineering and Management
Volume 137, Issue 1
Abstract
The collapse of capital markets is having an impact of the funding arrangements for economic and social infrastructure projects in Australia. Bearing this in mind, this paper seeks to examine whether the current volatility and uncertainty in capital markets in Australia affects the feasibility of privately financed infrastructure and specifically the public-private partnership (PPP) method of procurement. This paper examines the role and dependency that capital markets play in funding PPPs, current market conditions, and how they will affect PPP viability. In addition, alternative funding and procurement mechanisms that can be used for short- and medium-term infrastructure deliveries are presented.
Get full access to this article
View all available purchase options and get full access to this article.
Acknowledgments
The writers would like to acknowledge the financial support provided by Infrastructure Association of Queensland (Australia). The writers would also like to thank the reviewers for their constructive comments which helped improve the quality of this paper.
References
Akintoye, A., and Beck, M. (2008). Policy, finance and management for public-private partnerships (Innovation in the built environment), Wiley-Blackwell, Oxford, U.K.
Akintoye, A., Beck, M., and Hardcastle, C. (2003). Public private partnerships: Managing risks and opportunities, Blackwell Publishing, Oxford, U.K.
Allen Consulting Group. (2007). “Performance of PPPs and traditional procurement in Australia.” Final Rep. to Infrastructure Partnerships Australia, Melbourne, Melbourne, Australia.
Australian Infrastructure Fund. (2007). “Prospectus,” Melbourne, Australia.
Bult-Spiering, M., and Dewulf, G. (2006). Strategic issues in the public private partnerships: An international perspective, Blackwell Publishing, Oxford, U.K.
ConnectEast Prospectus. (2004). Macquarie Bank, Melbourne, Australia.
Debelle, G. (2008). Recent debt market developments, address to the debt markets summit, Reserve Bank of Australia, Sydney, New South Wales, Australia.
DLA Piper. (2006). European PPP Rep. No. 2005, LLP, London.
Egan, J. (1998). “Rethinking construction.” A Rep. of the Construction Task Force to the Deputy Prime Minister, John Prescott, London.
Fitzgerald, P. (2004). “Review of partnerships Victoria provided infrastructure.” Final Rep. to the Treasurer, Growth Solutions Group, Melbourne, Australia.
Flyvbjerg, B., Skamris Holm, M. K., and Buhl, S. L. (2006). “Accuracy in traffic forecasts.” Transplant. Rev., 26(1), 1–24.
Garling, P., and Foster, P. (2006). “Risk management and portfolio construction.” Paper Presented at the Int. Seminar on Infrastructure Investment, China Regulatory Commission and AMP Capital Markets, Beijing.
H.M. Treasury. (2003). The Green book, appraisal and evaluation in central government, treasury guidance, H.M. Stationery Office, London.
H.M. Treasury. (2006). PFI: Strengthening long-term partnerships, H.M. Stationery Office, London.
Infrastructure Trust of Australia. (1996). “Prospectus”, Sydney, Australia.
Latham, M. (1994). “Constructing the team.” Final Rep. of the Government/Industry Review of Procurement and Contractual Arrangements in the United Kingdom Construction Industry, HMSO, London.
Lester, D. (2008). PPP—The supported debt model, Mondaq business briefing, Clayton Utz, Sydney, New South Wales, Australia.
Market Wrap. (2008). Australian financial review, Australia.
McKenzie, R. (2008). “Strategies to improve value for money in PPP financing.” Public Infrastructure Bulletin, December (7), 5–17.
Minter Ellison. (2007). Legal update: Smart strategies for public private partnerships, Sydney, New South Wales, Australia.
Mott McDonald. (2002). “Review of large project procurement in the United Kingdom.” Rep. for H.M. Treasury, Croydon, London.
National Audit Office (NAO). (2001). “Modernising construction.” Rep. by the Comptroller and Auditor General, HC371, London.
National Audit Office (NAO). (2004a). “Improving public transport in England through light rail.” Rep. by the Comptroller and Auditor General, HC518, London.
National Audit Office (NAO). (2004b). “London underground PPP: Were they good deals?” Rep. by the Comptroller and Auditor General, HC645, London.
National Audit Office (NAO). (2005). “Improving public services through better construction.” Rep. by the Comptroller and Auditor General, Case Studies, HC354-1, London, Vols. 1 and 2.
National Audit Office (NAO). (2006). “Ministry of Defence, major projects report.” Rep. by the Comptroller and Auditor General, HC23-1, London.
Pongsiri, N. (2002). “Regulation and public private partnerships.” International Journal of Public Sector Management, 15(6), 487–495.
Regan, E. V. (1999). A new approach to tax exempt bonds, infrastructure financing with the AGIS bond, public policy brief 58, The Jerome Levy Economics Institute of Bard College, New York.
Regan, M. E. (2004). “Infrastructure, a new asset class in Australia.” Research Paper No. 2/04, Australian Centre for Public Infrastructure, School of Enterprise, Melbourne Univ., Private, Hawthorn, Melbourne, Australia.
Regan, M. E. (2006). “PPPs: Adding value to public procurement.” Research Paper No. 0432, Australian Centre for Public Infrastructure, The Univ. of Melbourne, Hawthorn, Melbourne, Victoria, Australia.
Regan, M. E. (2007). “Value for money: A review of the literature.” Working Paper No. 127, Mirvac School of Sustainable Development, Bond Univ., Gold Coast, Australia.
Regan, M. E. (2008). “What impact will current market conditions have on public private partnerships?” Research Rep. No. 121, Bond Univ. and the Infrastructure Association of Queensland, Gold Coast, Australia.
Reijniers J. J. (1994). “Organisation of public private partnership projects: The timely prevention of pitfalls,” Int. J. Project Manage., 12(3), 137–142.
Reserve Bank of Australia (RBA). (2008). Bulletin, Sydney, NSW, Australia.
RiverCity Motorway. (2006). Product disclosure statement, Brisbane, Australia.
Smartinvestor. (2008). Australian financial review, Melbourne, Australia.
Standard and Poor. (2002). Traffic risk in start-up toll facilities, infrastructure finance, New York.
Standard and Poor. (2004). Traffic forecasting risk, study update, London.
Standard and Poor. (2005). Public private partnerships, global credit survey, infrastructure and public finance ratings, New York.
Standard and Poor. (2007). Infrastructure Finance Ratings, PublicPrivate Partnerships, Global Credit Survey, London.
Standard and Poor. (2008a). Infrastructure finance ratings, public private partnerships, global credit survey 2008, London.
Standard and Poor. (2008b). To meet growing infrastructure needs, Asia must develop a credit culture, Ratings Direct, McGraw-Hill, Sydney.
Wibowo, A. (2004). “Valuing guarantees in a BOT infrastructure project.” Eng., Constr., Archit. Manage., 11(6), 395–403.
Yescombe, E. R. (2007). Public-private partnerships: Principles of policy and finance, Elsevier, New York.
Information & Authors
Information
Published In
Journal of Construction Engineering and Management
Volume 137 • Issue 1 • January 2011
Pages: 6 - 16
Copyright
© 2011 ASCE.
History
Received: Mar 3, 2009
Accepted: Jun 4, 2010
Published online: Jun 16, 2010
Published in print: Jan 2011
Authors
Metrics & Citations
Metrics
Citations
Download citation
If you have the appropriate software installed, you can download article citation data to the citation manager of your choice. Simply select your manager software from the list below and click Download.