Teresa de Lemos

Risk management in the Lusoponte concession¿a case study of the two bridges in Lisbon, Portugal

The case study of Lusoponte illustrates the concession awarded by the Portuguese Government to finance, design, build and operate two bridges over the Tagus in Lisbon, Portugal. It includes an overview of the projects background and an analysis of the main risk categories stating both the actual risks encountered and the mitigation measures adopted. Throughout the project a great attention was given to whole life cycle costs, and gains in efficiency and cost control. Among the lessons that can be learned from both the public and private sector is that a complete risk management analysis must include not only the technical factors but also a realistic assessment of environmental and social risks. These were the risks that were somewhat overseen and that caused the main problems to the projects development.

From Concessions to Project Finance and the Private Finance Initiative

Since the mid-twentieth century in the U.S. and, more recently, since the 1970s in Europe, Asia, and other developing countries, national governments increasingly have used private capital to implement infrastructure projects and to provide services previously in the scope of the public sector. They do it using several types of concessions. Following this trend, in 1992, the U.K. government announced the Private Finance Initiative (PFI), a guidance and a legal framework for concessions in the U.K. Its main objective was to encourage private capital investment into public projects. To help the reader understand why the U.K. government introduced PFI, this article examines the historic and economic background of concessions.

An examination on the sustainable competitive advantage of private finance initiative projects

The Private Finance Initiative (PFI) is a long‐term concession of services used by the UK Government to capture private capital to fund public projects. This model is being increasingly applied in Portugal and the assessment of its competitive advantage is very important to Portugal. The empiric study undertaken both in Portugal and the UK has permitted some conclusions to be drawn already. PFI has developed the way the construction industry is managed, and has increased the competitive advantage of UK construction industry acting in the four vectors of competitive advantage: innovation, quality, efficiency and attention to the client. Innovation occurred through new designs that were more efficient and cost effective through the project’s whole life cycle. There is the widespread use of management tools: whole life cycle costing, risk management and benchmarking. PFI also improved communication in the UK construction industry, forcing interaction and feedback from all stakeholders in a project.

An examination of the suitability of a UK PFI model within the Czech Republic, the Republic of Ireland, Palestine (Gaza‐West Bank), Portugal and Turkey

Purpose – The objective of this research is to identify the cross‐cultural similarities and differences of the implementation of the UK PFI procurement process in different contexts.Design/methodology/approach – The research methodology adopted was the SLEEPT approach. The identified features are examined from source material of various projects within the stated nations. A Delphic approach of confirmation by national collaborators from each country is utilised. Confirming and disaffirming features are examined utilising exogenous cultural drivers.Findings – The conclusion of this research identifies cross‐cultural features of six different cultures presented as a “cultural compass” which will inform the development of future private finance initiative (PFI)/public private partnership (PPP) projects. The impact of this research will have implications for the appreciation of cultural similarities and differences of national “construction cultures” for effective project delivery of future PFI/PPP projects.O...

The Nature of PFI

This article proposes a U.K. Private Finance Initiative (PFI) holistic and integrative con-ceptual model that integrates a hierarchy of four levels of concepts: government ideology, principles, practices, and tools. The PFI life cycle process, value chain, and value-delivery network are also mapped. PFI is as a novel way to do business, and requires the establishment of a long-term relationship. PFI is an innovative concession as it relates the revenues for the private partner solely to the provision of a service, which in turn is performance related. To assess PFI success or failure is still premature because of the long life cycle of PFI projects, 20 to 30 years, and most projects have not yet been in operation for 10 years. In addition, based on the empirical data from the research and recurring to business information sources and academic studies on PFI (still very limited), the article addresses two important issues that emerged from the introduction of PFI: first the change in organizational culture brought about by a move into the services sector, coupled with the need to deal with long-term issues, followed by the financing structure, that is, the balancing of debt and equity and the hypothesis of considering bond issues to finance senior debt.

Model for Management of Whole Life Cycle Risk Uncertainty in the Private Finance Initiative (PFI)

Based on empirical data, the authors have developed a dynamic model of whole life cycle risk uncertainty for PFI projects. This model is both an assessment and a management tool for PFI risks. It presents a clear picture of how uncertainty progresses throughout the whole life cycle, and is comprehensive so as to avoid the wishful-thinking attitude that might prevent the adoption of correct risk-management measures. The whole life cycle model of risk uncertainty can be quantified and used to classify projects according to their degree of uncertainty and maturity. It recognizes that uncertainty is dependent on both the particular risk and on the period of the projects life cycle. This model can be used as a tool for structuring strategic decisions.