Case Studies
Mar 29, 2012

Delivering Local Infrastructure through PPPs: Evidence from the School Sector

Publication: Journal of Construction Engineering and Management
Volume 138, Issue 12

Abstract

This paper discusses the use of public–private partnership (PPP) contracts in the school sector. With this purpose, four Portuguese case studies are carefully examined. The authors argue that the lessons provided by the literature are not being implemented by public authorities. In fact, while crafting these new governance structures, local governments seem to fail in protecting the public interest. To cope with this state of affairs, the authors draw a risk management strategy and advocate several contract management guidelines. The authors’ findings suggest that increasing transparency in procurement procedures and fostering the standardization of the tender documents and contractual clauses are absolute requirements in achieving value for money. Albeit these best practices are now beginning to be prevalent among academics and practitioners, local decision makers still strive to cope with the complex process of handling the whole life-cycle management of PPP arrangements.

Get full access to this article

View all available purchase options and get full access to this article.

References

Anastasopoulos, P., Labi, S., Bhargava, A., Bordat, C., and Mannering, F. (2010a). “Frequency of change orders in highway construction using alternate count-data modeling methods.” J. Constr. Eng. Manage., 136(8), 886–893.
Anastasopoulos, P., Labi, S., Bhargava, A., and Mannering, F. (2012). “Empirical assessment of the likelihood and duration of highway project time delays.” J. Constr. Eng. Manage., 138(3), 390–398.
Anastasopoulos, P., Labi, S., and McCullouch, B. (2009). “Analyzing duration and prolongation of performance-based contracts using hazard-based duration and zero-inflated random parameters Poisson models.” Transport Res Rec, 2136, 11–19.
Anastasopoulos, P., Labi, S., McCullouch, B., Karlaftis, M., and Moavenzadeh, F. (2010b). “Influence of highway project characteristics on contract type selection: Empirical assessment.” J. Infrastruct. Syst., 16(4), 323–333.
Anastasopoulos, P., McCullouch, B., Gkritza, K., Mannering, F., and Sinha, K. C. (2010c). “Cost savings analysis of performance-based contracts for highway maintenance operations.” J. Infrastruct. Syst., 16(4), 251–263.
Asenova, D., and Beck, M. (2010). “Crucial silences: When accountability met PFI and finance capital.” Crit. Perspect. Account., 21(1), 1–13.
Attalla, M., and Hegazy, T. (2003). “Predicting cost deviation in reconstruction projects: Artificial neural networks versus regression.” J. Constr. Eng. Manage., 129(4), 405–411.
Audit Commission. (2003). PFI in schools: The quality and cost of buildings and services provided by early pPrivate finance initiative schemes, The Audit Commission, London.
Aziz, A. (2007). “A survey of the payment mechanisms for transportation DBFO projects in British Columbia.” Constr. Manage. Econ., 25(5), 529–543.
Bajari, P., McMillan, R., and Tadelis, S. (2009). “Auctions versus negotiations in procurement: An empirical analysis.” J. Law Econ. Organ., 25(2), 372–399.
Ball, R., Heafey, M., and King, D. (2003). “Some lessons from using PFI for school building projects.” Local Gov. Stud., 29(2), 89–106.
Ball, R., Heafey, M., and King, D. (2007). “The private finance initiative in the UK.” Public Manage. Rev., 9(2), 289–310.
Bhargava, A., Anastasopoulos, P., Labi, S., Sinha, K. C., and Mannering, F. (2010). “Three-stage least squares analysis of time and cost overruns in construction contracts.” J. Constr. Eng. Manage., 136(11), 1207–1218.
Boussabaine, H., and Kirkham, R. (2004). Whole life-cycle costing: Risk and risk responses, Blackwell Publishing, Oxford.
Brousseau, E., and Glachant, J. (2002). “The economics of contracts and the renewal of economics.” The Economics of Contracts: Theories and Applications, Brosseau, E., and Glachan, J., eds., Cambridge University Press, Cambridge, 3–30.
Brux, J. (2010). “The dark and bright sides of renegotiation: An application to transport concession contracts.” Util. Policy, 18(2), 77–85.
Canadian Council for Public–Private Partnerships (CCPPP). (2010). International PPP schools survey report: PPP schools—the view from within, Canadian Council for Public–Private Partnerships, Toronto.
Carvalho, J. (2009). “Parcerias público-privadas em projectos de engenharia: Estudo de casos no sector da educação.” M.Sc. thesis, Technical Univ. of Lisbon, Lisbon.
Centre for Effective Learning Environments (CELE). (2009). International pilot study on the evaluation of quality in educational spaces: User manual, OECD Centre for Effective Learning Environments, Paris.
Chapman, C., and Ward, S. (2002). Managing project risk and uncertainty: A constructively simple approach to decision making, Wiley, Chichester.
Cruz, N., and Marques, R. (2011). “Viability of municipal companies in the provision of urban infrastructure services.” Local Gov. Stud., 37(1), 93–110.
Cruz, N., and Marques, R. (2012). “Mixed companies and local governance: No man can serve two masters.” Public administration, in press.
Demirag, I., and Khadaroo, I. (2008). “Accountability and value for money in private finance initiative contracts.” Finan. Account. Manage., 24(4), 455–478.
Demirag, I., and Khadaroo, I. (2010). “Costs, outputs and outcomes in school PFI contracts and the significance of project size.” Public Money Manage., 30(1), 13–18.
Demsetz, H. (1968). “Why regulate utilities?” J. Law Econ., 11(1), 55–65.
Dept. of the Environment, Transport and the Regions (DETR). (2000). KPI Rep. for The Minister for Construction, Dept. of the Environment, Transport and the Regions, London.
Edelenbos, J., and Klijn, E. (2009). “Project versus process management in public-private partnership: Relation between management style and outcomes.” Int. Public Manag. J., 12(3), 310–331.
European Commission. (2004a). Green paper on public-private partnerships and community law on public contracts and concessions, European Commission, Brussels.
European Commission. (2004b). Resource book on PPP case studies, European Commission, Directorate-General Regional Policy, Brussels.
European PPP Expertise Centre (EPEC). (2010). Eurostat treatment of public-private partnerships: Purposes, methodology and recent trends, European PPP Expertise Centre, Luxembourg.
Grimsey, D., and Lewis, M. (2005). “Are public private partnerships value for money? Evaluating alternative approaches and comparing academic and practitioner views.” Account. Forum, 29(4), 345–378.
Guasch, J. (2004). Granting and renegotiating infrastructure concession: Doing it right, The World Bank, Washington, DC.
Herbsman, Z. J., and Glagola, C. R. (1998). “Lane rental: Innovative way to reduce road construction time.” J. Constr. Eng. Manage., 124(5), 411–417.
HM Treasury. (2007). Standardisation of PFI Contracts: Version 4, HMSO, London.
Ismail, S., and Pendlebury, M. (2006). “The private finance initiative (PFI) in schools: The experiences of users.” Finan. Account. Manage., 22(4), 381–404.
Jahren, C., and Ashe, A. (1990). “Predictors of cost-overrun rates.” J. Constr. Eng. Manage., 116(3), 548–551.
Ke, Y., Wang, S., and Chan, A. (2010). “Risk allocation in public-private partnership infrastructure projects: A comparative study.” J. Infrastruct. Syst., 16(4), 343–351.
Khadaroo, I. (2008). “The actual evaluation of school PFI bids for value for money in the UK public sector.” Crit. Perspect. Account., 19(8), 1321–1345.
Knight, K., and Fayek, A. M. (2002). “Use of fuzzy logic for predicting design cost overruns on building projects.” J. Constr. Eng. Manage., 128(6), 503–512.
Li, B., Akintoye, A., Edwards, P., and Hardcastle, C. (2005). “Critical success factors for PPP/PFI projects in the UK construction industry.” Constr. Manage. Econom., 23(5), 459–471.
Love, P. E. D., Davis, P., Chevis, R., and Edwards, D. (2011). “Risk/reward compensation model for civil engineering infrastructure alliance projects.” J. Constr. Eng. Manage., 137(2), 127–136.
Marques, R., and Berg, S. (2010). “Revisiting the strengths and limitations of regulatory contracts in infrastructure industries.” J. Infrastruct. Syst., 16(4), 343–351.
Marques, R., and Berg, S. (2011). “Risks, contracts and private sector participation in infrastruture.” J. Constr. Eng. Manage., 137(11), 925–932.
McQuaid, R., and Scherrer, W. (2010). “Changing reasons for public-private partnerships (PPPs).” Public Money Manage., 30(1), 27–34.
Ministry for Human Resource Development (MHRD). (2010). Scheme for augmenting school education through public private partnership, Ministry for Human Resource Development, New Delhi.
Ministry of Education (ME). (2011). NZ schools PPP project: Market sounding, Ministry of Education, Wellington.
Murphy, T. (2008). “The case for public-private partnerships in infrastructure.” Can. Public Adm., 51(1), 99–126.
National Audit Office (NAO). (2009). The building schools for the future programme: Renewing the secondary school estate, National Audit Office, London.
National Development Finance Agency (NDFA). (2007). Template project agreement, National Development Finance Agency, Dublin, Ireland.
Organization for Economic Cooperation and Development (OECD). (2009). Review of the secondary school modernisation programme in Portugal, OECD, Paris.
Organization for Economic Cooperation and Development (OECD). (2011). Designing for education: Compendium of exemplary educational facilities 2011, OECD, Paris.
Pakkala, P. (2005). “Performance-based contracts–International experiences.” Proc., TRB Workshop on “Performance-based Contracting”, Finnish Road Administration, Washington, DC.
Partnerships Victoria. (2003). Contract management guide, Dept. of Treasury and Finance, Melbourne, Australia.
Partnerships Victoria. (2009). Partnerships Victoria in schools: Project summary, Department of Education and Early Childhood Development, Melbourne, Australia.
PViS. (2009). “Project Agreement.” The Partnerships Victoria in Schools Project, 〈http://www.partnerships.vic.gov.au〉 (Dec. 2, 2011).
Reeves, E. (2008). “The practice of contracting in public private partnerships: Transaction costs and relational contracting in the Irish schools sector.” Public Admin., 86(4), 969–986.
Reeves, E., and Ryan, J. (2007). “Piloting public private partnerships: Expensive lessons from Ireland’s schools sector.” Public Money Manage., 27(5), 331–337.
Regan, M., Smith, J., and Love, P. E. D. (2011). “Impact of the capital market collapse on public-private partnership infrastructure projects.” J. Constr. Eng. Manage., 137(1), 6–16.
Royal Incorporation of Architects in Scotland (RIAS). (2002). Quality indicators in the design of schools, Royal Incorporation of Architects in Scotland, Edinburgh, Scotland.
Semple, C., Hartman, F. T., and Jergeas, G. (1994). “Construction claims and disputes: Causes and cost/time overruns.” J. Constr. Eng. Manage., 120(4), 785–795.
Shaoul, J., Stafford, A., and Stapleton, P. (2008). “The cost of using private finance to build, finance and operate hospitals.” Public Money Manage., 28(2), 101–108.
Touran, A., and Lopez, R. (2006). “Modeling cost escalation in large infrastructure projects.” J. Constr. Eng. Manage., 132(8), 853–860.
Vining, A., and Boardman, A. (2008a). “Public-private partnerships: Eight rules for governments.” Public Works Manage. Policy, 13(2), 149–161.
Vining, A., and Boardman, A. (2008b). “Public-private partnerships in Canada: Theory and evidence.” Can. Public Admin., 51(1), 9–44.
Williamson, O. (1985). The economic institutions of capitalism: Firms, markets and relational contracting, The Free Press, New York.
Yescombe, E. R. (2007). Public-private partnerships: Principles of policy and finance, Elsevier, New York.
Yuan, J., Skibniewski, M., Li, Q., and Zheng, L. (2010). “Performance objectives selection model in public-private partnership projects based on the perspective of stakeholders.” J. Manage. Eng., 26(2), 89–104.
Zietlow, G. (2005). “Cutting costs and improving quality through performance-based road management and maintenance contracts—The Latin American and OECD experiences.” Proc., Senior Road Executives Programme, Restructuring Road Management, Univ. of Birmingham, Birmingham, United Kingdom.

Information & Authors

Information

Published In

Go to Journal of Construction Engineering and Management
Journal of Construction Engineering and Management
Volume 138Issue 12December 2012
Pages: 1433 - 1443

History

Received: Aug 25, 2011
Accepted: Mar 27, 2012
Published online: Mar 29, 2012
Published in print: Dec 1, 2012

Permissions

Request permissions for this article.

Authors

Affiliations

Nuno Ferreira da Cruz [email protected]
Researcher, CEG-IST, Technical Univ. of Lisbon, Avenida Rovisco Pais, 1049-001 Lisbon, Portugal (corresponding author). E-mail: [email protected]
Rui Cunha Marques [email protected]
Associate Professor, CEG-IST, Technical Univ. of Lisbon, Avenida Rovisco Pais, 1049-001 Lisbon, Portugal. E-mail: [email protected]

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.

Cited by

View Options

Get Access

Access content

Please select your options to get access

Log in/Register Log in via your institution (Shibboleth)
ASCE Members: Please log in to see member pricing

Purchase

Save for later Information on ASCE Library Cards
ASCE Library Cards let you download journal articles, proceedings papers, and available book chapters across the entire ASCE Library platform. ASCE Library Cards remain active for 24 months or until all downloads are used. Note: This content will be debited as one download at time of checkout.

Terms of Use: ASCE Library Cards are for individual, personal use only. Reselling, republishing, or forwarding the materials to libraries or reading rooms is prohibited.
ASCE Library Card (5 downloads)
$105.00
Add to cart
ASCE Library Card (20 downloads)
$280.00
Add to cart
Buy Single Article
$35.00
Add to cart

Get Access

Access content

Please select your options to get access

Log in/Register Log in via your institution (Shibboleth)
ASCE Members: Please log in to see member pricing

Purchase

Save for later Information on ASCE Library Cards
ASCE Library Cards let you download journal articles, proceedings papers, and available book chapters across the entire ASCE Library platform. ASCE Library Cards remain active for 24 months or until all downloads are used. Note: This content will be debited as one download at time of checkout.

Terms of Use: ASCE Library Cards are for individual, personal use only. Reselling, republishing, or forwarding the materials to libraries or reading rooms is prohibited.
ASCE Library Card (5 downloads)
$105.00
Add to cart
ASCE Library Card (20 downloads)
$280.00
Add to cart
Buy Single Article
$35.00
Add to cart

Media

Figures

Other

Tables

Share

Share

Copy the content Link

Share with email

Email a colleague

Share