Colin Duffield

Comparative performance of PPPs and traditional procurement in Australia

Empirical research comparing projects procured as public–private partnerships (PPPs) with other methods of procurement is important because Australian governments plan to spend

Lateral performance of cold-formed steel-framed domestic structures

320 billion on infrastructure over the next decade and PPPs are perceived to be an appropriate form of delivery. Estimating cost and risks in Australian capital projects is often characterized by optimism bias—the tendency to be overly optimistic about planned actions—and is too often based on insufficient historical data on which to make decisions. Given this broad context it is important to begin to understand in detail how PPPs have performed against other forms of procurement. To achieve this, a detailed study has been undertaken to compare the project time and cost outcomes observed in the Australian PPP market with those projects delivered by governments via traditional procurement methods. Two sets or pools of projects were compared based on a detailed analysis of publicly available data for a sample of 21 PPP projects and 33 traditional projects. This selection was based on a consideration of previous studies, time and cost metrics, project size and the relative complexity of different project types. In comparing the two sets PPPs demonstrated superior cost efficiency over traditional procurement, which ranged from 30.8% when measured from project inception, to 11.4% when measured from contractual commitment to the final outcome. Between the signing of the final contract and project completion, PPPs were found to be completed 3.4% ahead of time on average, while traditional projects were completed 23.5% behind time. The overall conclusion is that PPPs provide superior performance in both the cost and time dimensions, and that the PPP advantage increases (in absolute terms) with the size and complexity of projects.

A Survey of Tendering Practices in the Australian Construction Industry

Abstract This paper presents key outcomes of an investigation in the performance of domestic structures with cold formed steel frames. The primary objective of this research project was to assess the performance and behaviour of these structures when subjected to earthquake loading. The research involved an extensive racking and dynamic testing program on both two- and three-dimensional framing configurations. A variety of construction details was tested to identify the critical components and assess the contributions from the non-structural components, particularly the plasterboard lining. It is concluded that the steel frames perform very well under earthquake loads. Non-structural components, such as plasterboard lining, make a significant contribution to the lateral bracing of the frames. The failure mechanisms and the load sharing between the various components are also identified and discussed.

A review of Australian PPP governance structures

AbstractThis paper presents the findings of a survey of the tendering practices of Australian civil engineering construction contractors. Common practices in assessing risks and opportunities, assessing the competition, setting margin, and developing competitive tendering strategies are discussed. A major conclusion is that much of the process is subjective and based on experienced judgement. Assessing the competition is almost always done on an informal basis without using historical competitor data. The margin-size decision (i.e. corporate overhead and profit) is usually done in the final few hours prior to tender submission with little or no formal methods of analysis. Most of the time, effort, and decision-making are directed towards estimating the direct costs, in formulating the construction methodology and design alternatives, and in assessing the risks and opportunities.

Improving investment sustainability for PPP power projects in emerging economies

Purpose – The purpose of this study is to critique specific governance requirements of public‐private partnerships (PPPs) with the objective of understanding what constitutes sound governance of these projects and conceptualises a framework that sets out the structure, resources, communication, reporting and monitoring systems that are essential for PPP governance that is consistent with an organisations corporate or strategic vision.Design/methodology/approach – General governance requirements are explored through a literature review of corporate, major capital projects and long‐term PPP arrangements. These governance requirements have been cross‐analysed based on the literature, interviews with senior project managers and investigation of different governance arrangements used on Australian PPP projects.Findings – It is concluded that the governance principles and requirements for PPPs is similar to best governance practice but there are significant differences between how traditional projects and PPPs ...

Different Delivery Models

Purpose – Many electricity projects in Asian emerging economies involve private finance using Public Private Partnerships (PPPs) yet problems remain in terms of project initiation, commercial structuring, and financial arrangements. The motivation to pursue previous PPP power projects has been unduly influenced by the ability to attract finance rather than an independent assessment of value for money (VfM) of the project. The purpose of this paper is to present the development of VfM framework for improving investment sustainability of PPP power projects in Asian emerging economies. Design/methodology/approach – The drivers for achieving VfM in projects involving both public and private participants have been determined by a critical review of international practices and the development of sustainable energy systems using grounded theory. These drivers have been used to cross-analyse six Asian PPP power projects. Findings – The evaluation of the case study projects identifies the key determining linkages ...

Relationships among Risk Management, Partnering, and Contractor Capability in International EPC Project Delivery

The definition adopted for public-private partnerships (PPPs) in this chapter is that of a long-term contract based on service outputs where there is significant risk transfer to the private sector. Typically, these long-term contract obligations involve design, major procurement, operation, and/or maintenance along with the provision of significant private finance. This chapter proceeds through the range of counterfactuals on the techniques to procure major public infrastructure, from simple public works, through competitive tendering, design and construct, and relationship-style contracts, to outline the wide range of possible alternatives to PFI (private finance initiative)-type PPPs. The chapter considers the theoretical advantages and disadvantages of the various contractual options and includes a discussion of the drivers that may warrant the inclusion of long-term commercial arrangements and private finance with a long-term contract. The relationship between long-term contracts, ownership, and finance, and their influence on governance, is considered.

Critical success factors in Thailand’s green building industry

AbstractEngineering-Procurement-Construction (EPC) method has become commonly adopted in international construction markets, in which contractors bear enormous risks. Previous studies suggest the need to improve contractors’ risk management by partnering with project participants and enhancing their organizational capability. Nevertheless, limited research has systematically and quantitatively addressed the causal relationships among them. This study quantifies the relationships among these themes via the development and validation of a conceptual mediation model. With supporting data from Chinese contractors, this research outlines the statuses on contractors’ risk management, application of partnering, and their organizational capability. Path analysis validates that partnering not only effectively facilitates risk management via promotion of contractor capability but also directly enhances risk management. Canonical correlation analyses further reveal the different degrees to which partnering critical ...

Evaluation of Cooperation during Project Delivery: Empirical Study on the Hydropower Industry in Southwest China

The promotion of Green Buildings (GB) has become a global trend that improves resource efficiency and the well-being of societies. The development of GB still encounters different obstacles in developing countries. The critical success factors of GB and their relationships with GB certification levels in Thailand have been investigated. The relationships between the competence of individual project participants and competence of project team at different GB certification levels are also analyzed. The results reveal the underlying patterns of the overall picture of the GB industry in Thailand, and suggest that all project participants should continuously improve their competences via technical and management innovation for delivering affordable and sustainable products, thereby making green buildings more available and appealing to the public. This study provides empirical evidence for all project participants to adopt appropriate team building strategies and optimally allocate their resources to achieve the suitable GB certification levels.

The Australian PPP Experience: Observations and Reflections

AbstractPrevious studies agree that cooperation among participants is critical to successfully deliver projects; however, little research has quantitatively illustrated how participants benefit from cooperation. Based on partnering and cooperative game theories, the degree of willingness to cooperate (DWC) model has been used in this study to reflect the interactions among participants through dynamic simulation. With the support of data collected from a field survey, the outcomes of DWC model simulation have been tested, confirming that DWCs have significantly positive influences on cooperation gains, and incentives are effective in improving participants’ rewards. Application of the DWC model then reveals the cooperation status of hydropower developments in Southwest China, suggesting five practical strategies for interorganizational cooperation in project delivery. This study advances the knowledge area of multiorganizational dynamics during project delivery by building interdisciplinary linkage betwee...