Graeme Bowles

Public-private partnerships and contract negotiations: an empirical study

Despite the increasing popularity in the use of the public–private partnership concept as a procurement strategy, there have been reported cases of problems associated with the initial stages of the process in terms of unduly high bidding costs and pre‐contract time overruns due mainly to the protracted nature of the negotiations. Empirical research conducted in the UK has focused on the extent of these pre‐contract time and cost overruns. The key attributes of both the private sector consortia and the public sector organizations that have significant bearing on the efficiency of the pre‐contract processes are: the nature and strength of the consortium, the quality of the technical proposals they produce for the bid, and the quality of their financial proposals. For the public sector organizations they are the organizational capabilities and technical capabilities. The financial capabilities of the public sector are ranked lowest in influencing the procurement process. Whilst there was broad agreement on the ranking of importance for the various descriptive attributes, differences between the two sectors are revealed relating to risk, previous experience, evaluation criteria in the bidding documents and effect of public opinion. A better understanding of what is important to each party in the negotiations is an important step in improving the PPP process.

An assessment of the impact of valuation error on property investment performance measurement

Analyses the effect of valuation error on the implied precision of investment performance measurement of property assets. A prerequisite for measuring the absolute or relative performance of commercial property investments is that valuations provide a reliable proxy for prices. However, there are conceptual and empirical grounds to suggest that uncertainty is inherent in the valuation process. This is primarily due to the structure of the commercial property market and the techniques and guidelines of the property valuation process. Sampling theory is used to measure portfolio valuation error confidence bands for hypothetical property investment portfolios based on different assumptions concerning assumed levels of valuation error, size of portfolio and number of measurement time periods. It is concluded that, for the majority of investment portfolios, property investment performance measures will include some uncertainty and thus the property fund manager should be sceptical of the implied precision in reported measures of return.

Whole life costing of domestic energy demand reduction technologies: householder perspectives

A recent, major UK research project investigated technical and social aspects of reducing the CO2 emissions of UK domestic housing by 50% by the year 2030. As 80% of the UK housing stock that will be present in 2030 has already been built, this study aimed to research the whole life costs of three sets of energy demand reduction technologies for existing housing, over a 25‐year period, suitable to deliver significant CO2 emissions reduction up to 50%. Demand side technological interventions in the form of fabric upgrades and ventilation systems are identified. Whole life cycle analysis of interventions carried out on two housing variants prominent in the domestic stock under different energy price scenarios is carried out using discounted cash flow and compared with the do‐nothing option. The results show that, despite reducing annual energy bills, there is no clear financial case even over a 25‐year horizon for householders to invest in the proposed interventions that contribute to CO2 emission reduction targets. When discussed with respect to household income and consumption preferences, the results reveal the need for new policy approaches to overcome the financial and non‐financial hurdles for a mass uptake of energy efficient technologies.

Financial management of planned maintenance for housing associations

Since the Housing Act 1988, UK housing associations (HAs) have been responsible, with the removal of government grants, for funding all maintenance necessary for the upkeep of new stock over its lifespan. Sinking funds (SFs) have to be created, out of rental income, that are adequate to finance the long term projected maintenance demand. This paper reviews the use of SFs for building asset management with particular reference to the requirements being made of HAs. Current assumptions of what constitutes an adequate level of SF investment by their funding agencies are questioned with an analysis of case study data. Using linear-programming, the benefits of modelling an SF over merely calculating it are demonstrated. The technique is used to formulate SF strategies, some of which admit the possibility of going into deficit in the future, and these are compared with results from conventional SF projections. Finally, the effect that varying element and component lifespans can have on SF projections are investigated by using Monte Carlo methods to simulate profiles of long term maintenance expenditure, and observing how well funds projected with the original SF strategy match them. The results show the importance of reviewing regularly the SF policy in order that it remains relevant to the needs of the stock.

An evaluation of the performance of a large scale collaborative procurement initiative in the social housing sector

Purpose – The purpose of this paper is to understand the factors relating to the implementation of a new procurement initiative that affect performance and value for money (VFM). The study is based on a four-year research project carried out on behalf of the Scottish Government to monitor and evaluate the performance and efficiency of a bulk procurement vehicle for social housing. Design/methodology/approach – The researchers had a brief to monitor and evaluate the implementation of the procurement process and its influence on cost and efficiency targets. The study employed a mixed method approach with annual rounds of qualitative and quantitative data collection from project stakeholders including the contractors, consultants, clients and sponsor. Confidential semi-structured interviews were conducted on conclusion of the project to gauge views on how well the procurement process worked from the various perspectives and to reflect on the influence of the process on VFM. Findings – The procurement program...

A Study of the Elements that Lead to an Ineffectiveness of Risk Management Implementation in Independent Water and Power Plant Projects in Saudi Arabia

Many countries worldwide are facing a significantly high demand for water and power. Saudi Arabia has one of the highest water consumption rates per capita in the world. Water and power plant projects following the Independent Water and Power Plant (IWPP) approach have typically involved a plethora of risks. Since about 75% of IWPP projects in Saudi Arabia (SA) have failed to meet specified objectives, effective risk management (RM) implementation is key to the success of any public and private project. Practitioners have related their experience about RM in IWPP projects in SA through semi-structured interviews, and analysed these through the grounded theory approach. The paper concludes with an emergent diagram that illustrates three major phenomena, eight categories, and eighteen subcategories affecting the implementation of RM in water and power plant projects in SA.

Optimisation of sinking funds for major repairs in a housing association

Changes to the financial framework regulating housing associations require them to create a sinking fund that will accrue the necessary cash for future maintenance work to their stock. This paper presents an alternative to the conventional methods by using a Linear Programming model to obtain sinking fund strategies. The relevance of such modelling is discussed with reference to the evolving Sinking Fund system in the UK and European Housing Association movements. The methodology is applied to data from a Housing Association in Scotland. The paper concludes that the LP model offers a degree of flexibility not found in existing practice. The work has relevance to the long-term maintenance management of any built asset.