Cliff Hardcastle

Critical success factors for PPP/PFI projects in the UK construction industry

Public–private partnerships (PPPs) are increasingly used in the United Kingdoms public facilities and services provision through the Private Finance Initiative (PFI). Despite some casualties, PPP/PFI projects have been undertaken successfully, but the reasons for success are not entirely clear. Questionnaire survey research examined the relative importance of 18 potential critical success factors (CSF) for PPP/PFI construction projects in the UK. The results show that the three most important factors are: ‘a strong and good private consortium’, ‘appropriate risk allocation’ and ‘available financial market’. Factor analysis revealed that appropriate factor groupings for the 18 CSFs are: effective procurement, project implementability, government guarantee, favourable economic conditions and available financial market. These findings should influence policy development towards PPPs and the manner in which partners go about the development of PFI projects.

Perceptions of positive and negative factors influencing the attractiveness of PPP/PFI procurement for construction projects in the UK

Purpose – The paper aims to report the findings of research into perceptions of what makes the Private Finance Initiative (PFI) attractive or unattractive as a procurement system for projects in the UK.Design/methodology/approach – The research uses a postal survey questionnaire technique for primary data collection. Literature review is used to identify relevant factors, which are then incorporated into the design of the survey instrument. Survey response data is subjected to descriptive statistical analysis and subsequently to rotated factor analysis.Findings – Public/private partnerships (PPP)/PFI project procurement is perceived as most attractive in terms of positive factors relating to better project technology and economy, greater public benefit, public sector avoidance of regulatory and financial constraints, and public sector saving in transaction costs. Negative aspects, relating to factors such as the inexperience of the participants, the over‐commercialisation of projects, and high participati...

Partnership, Value for Money and Best Value in PFI Projects: Obstacles and Opportunities:

The Private Finance Initiative (PFI) and Best Value policies were introduced by the UK government as part of a drive to improve public service provision. Both Best Value and PFI focus on harmonising the interaction between the public and private sectors in the context of public private partnerships. Based on 68 interviews with representatives of the main stakeholder groups involved in PFI procurement and development in Great Britain, this paper analyses practitioner views on the problems encountered in implementing these schemes. In this context, it is noted that there is considerable disagreement with regard to the sources of, and solutions for, current difficulties. Amongst public sector respondents, there is a view that PFI procurement has to be standardised further in order to become more cost effective, and to allow for easier manageability. Private sector respondents, meanwhile, emphasise the need for clients to adopt a commercial ethos and to acquire a greater degree of expertise with regard to managing market-based solutions. Both views are indicative of an ongoing uncertainty amongst PFI stakeholders with regard to the levels of risk identification and management that are required for the successful implementation of PFI projects.

Construction procurement : redefining the contours of organizational structures in procurement

Today there are a number of different types of procurement routes available for clients to choose from. Each different type of procurement (traditional, design and build, management, etc.) has its own proponents and inherent strengths and weaknesses. Selection of optimal procurement systems is difficult, because even experienced clients cannot know all the potential benefits or risks for each system. Procurement is, therefore, a succession of ‘calculated risks’. Industry and academia have focussed research on reducing procurement risk through better procurement-system selection methods. Current research considers procurement as a set of rationalistic decisions within a closed environment, aiming to produce generic, prescriptive rules for clients and advisers to use to select the ‘best’ procurement route for their project. This paper seeks to identify whether prescriptive procurement guidance was adhered to on a set of case study projects. It was found that clients usually selected appropriate procurement systems, and where an inappropriate system was selected, alterations were made in contract form to incorporate aspects of the ‘best’ procurement route.

IDENTIFYING AND COMMUNICATING PROJECT STAKEHOLDER RISKS

A systematic approach to risk management is needed if stakeholders are to effectively manage the risks they face on projects. Risk identification is a critical part of risk management. Using observations from project experience and class workshops, the effectiveness of several risk identification techniques is explored in the context of construction projects. Emphasis is given to the risk communication processes involved, from an intra-stakeholder perspective. While some techniques are effective for particular project stages and situations, a work breakdown structure (WBS) approach is found to be a good ‘fall back’ method for identifying project risks at the schematic and subsequent design stages. The more detailed the WBS, the more comprehensive the risk identification can be. Multiple risk identification workshops are recommended during the pre-construction phase of a project. Precise risk statements are essential for effective risk communication, and project risk schedules should be developed as active documents.

CONCURRENT ENGINEERING: A COMPARISON BETWEEN THE AEROSPACE AND CONSTRUCTION INDUSTRIES

The construction industry in the UK has been subject to frequent reports over recent years, all focusing on perceived inefficiencies within the industry and how processes can be improved to deliver construction projects on time, and within cost and quality targets. Most notable of these reports have been Latham (1994) and Egan (1998), which contend that construction should come closer to manufacturing in design, development and supply chain practices to achieve ambitious improvement targets. The most frequently mentioned industries for such “benchmarking” are the aerospace and automotive industries. Concurrent Engineering (CE) appears to offer significant potential to the construction industry as a means to achieve these targets. This paper identifies key aspects of CE practice in aerospace manufacturers and, in the spirit of the Egan report, possibilities for their adoption in UK construction projects.

The causal relationship between construction workload and construction price

Based on the Engle-Granger (1987) methodology for cointegration and error correction mechanism models the paper examines causal relationships between the UK construction workload and price. The model tests the intuitive belief that the construction price (tender price index) is a long run determinant of construction workload (new orders) and that the relationship is constantly correcting itself back on to this long run path. The results suggest that there is a relationship between the variables but a very weak one.