PFI Project Research Articles

KNOWLEDGE MANAGEMENT PROCESS IMPLEMENTATION IN PRIVATE FINANCE INITIATIVE PROJECT IN MALAYSIA

PFI involved a project with long-term relationships at various stages from pre-contract stage to contractual stage and in use stage which also include maintenance stage. KM process is one of the elements to ensure the success of the KM system. In the PFI project, the KM process also needs to be checked whether it is applied in the various stage of the pre-contract stages. Questionnaires had been distributed to the parties involved at the pre-contract stage. The results are then analyse using the Relative Important Index (RII) to identify the ranking of KM usage in various stages of the pre-contract stage. According to the analysis, some of the stages in the pre-contract process of the PFI are not fully implemented in the KM process. For knowledge acquisition and storage practise, the high usage of the process is at the conduct of value management, submission to cabinet and access, evaluation, and approval. The next KM process which is capturing and storing, the process evaluation, negotiation and recommend are the activities at the higher level practising these KM processes. At next KM process which is re-using and sharing are Access and approval by the ministry, evaluation, negotiate and recommend practise more on this KM process.

The Relationship between the termination by concession agreement and the termination by the administrative action in the PFI project

The Relationship between the termination by concession agreement and the termination by the administrative action in the PFI project

When might a project company break up? The perspective of risk-bearing capacity

Public-private partnerships (PPPs) have developed into a mainstream alternative procurement solution for the provision of public services. The aim is to explore a crucial but hitherto ignored issue in the study of PPPs: at what point a project company might break up. The project company’s two-stage break-up in the National Physical Laboratory PFI project inspired this research in which a formal model is developed to demonstrate that contract break-up decisions can be plausibly explained through quasi-rent changes. This finding brings to the foreground the importance of taking into account risk-bearing capability in the design of project governance. How to achieve a level of risk-bearing capacity through the optimal use of financial, organizational and contractual means is a research area worthy of future exploration.

The Royal Infirmary of Edinburgh: a case study on the workings of the Private Finance Initiative

An examination of documents released under FOI legislation relating to the contract for a UK hospital PFI project enables a large number of problems to be identified in the procedures which led to the PFI contract. These problems relate to the nature of the risk transferred and to the assumptions made in assessing value for money and affordability. The authors suggest there is a need for much better training of those involved in PFI bids, and much more effective central scrutiny of deals as they are being struck to prevent further poor value PFI contracts. The analysis should therefore be of use to public sector bodies and researchers appraising future contracts. The findings of this research have wider implications than in the field of PFI.

Cost Analysis and Feasibility Study for PFI Project on Dam Sediment Recycling

Cost Analysis and Feasibility Study for PFI Project on Dam Sediment Recycling

Service delivery and performance monitoring in PFI/PPP projects

Value for money in a PFI project depends crucially on performance monitoring to provide incentives for improvement and to ensure that service delivery is in accordance with the output specification. However, the effectiveness of performance monitoring and output specification cannot be fully assessed until PFI projects become operational. There is a need to examine the role of the performance monitoring mechanism in ensuring that ‘value for money’ is achieved throughout the delivery of services. Based on semi‐structured interviews with key stakeholders from the public and private sectors, the case studies suggest that there are low levels of performance deductions in PFI projects during the operational phase. However, the complexity of performance measurement, inadequate resources for performance monitoring and the difficulties in the interpretation of the output specification raise questions as to whether the low level of deductions truly reflect the actual level of services delivered. There is also evidence of the public sector forgoing entitled deductions in the ‘spirit of partnership’ and in exchange for minor contract variations in the output specification. Both the public and private sectors are undergoing a learning process which should lead to improvements in future PFI contracts.

계층분석법(AHP)을 이용한 BTT사업비 타당성 평가모형 정립에 관한 연구

The BTL project, 4 years since its operation. has benchmarked the PFI Project in Japan and has been introduced. Given the evaluation step to select a preferred bidder, in a technological factor, the basic plans are corrected and complemented, whereas in a price factor, the low price bidding system is being enforced. There is concern that how to select preferred bidders and how to operate project costs during operation and management period may be problematic. Thus, in this study, using the Analytic Hierarchy Process, the method of deciding the priority to select preferred bidders in an early stage of the project and the evaluation model to evaluate the validity of BTL project expenses in process of project enforcement are established. Targeting the group composed of experts who have experiences in the BTL project. Then, the levelling of evaluation factors and grouping have been carried out as following : LCC analysis and disbursement for government including two more detailed factors.

HOW POLICY NETWORKS CAN DAMAGE DEMOCRATIC HEALTH: A CASE STUDY IN THE GOVERNMENT OF GOVERNANCE

This article examines a detailed case study of implementation networks in England using the example of the relocation of the Norfolk and Norwich hospital, which became a flagship PFI project for the Labour government after 1997. The case study illustrates the workings of the new order of multi‐layered governance with both local and national networks from different policy areas interacting. However, it also sheds light on the governance debate and illustrates how in the world of new public management, powerful actors, or policy entrepreneurs, with their own agenda, still have the facility, by exercising power and authority, to shape and determine the policy outputs through implementation networks. It is argued that, whereas policy networks are normally portrayed as enriching and promoting pluralist democratic processes, implementation networks in multi‐layered government can also undermine democratic accountability. Four aspects here are pertinent: (1) the degree of central government power; (2) local elite domination; (3) the fragmentation of responsibility; and (4) the dynamics of decision making which facilitates the work of policy entrepreneurs. All these factors illustrate the importance of ‘the government of governance’ in the British state.

Paying for the UK's Hospital Building Program

In the UK, smaller hospitals, often known affectionately, if misleadingly, as “cottage hospitals” and tending to serve more rural populations, survive from one crisis to the next and constantly face the threat of closure. The trend is for bigger institutions almost always sited in urban areas, and that is certainly true of new buildings and major extensions or upgradings of existing hospital premises. Still, at least there is a significant public hospital building program in the UK. At the start of 2006 there were 86 projects costing over £10 million (about U.S.$14 million) at various stages, and the price tags attached to these added up to nearly £18 billion (U.S.$25 billion).1 How can the country's cash-strapped National Health Service (NHS) afford such a huge sum? The answer is that it cannot and does not need to; almost all of these projects are not being paid for by the taxpayer, at least to start with, thanks to the Private Finance Initiative or PFI. PFI, which is being used in areas other than health, including school buildings and road projects, was introduced back in 1992 under the then Conservative government. However, little happened with it in the health sector until 1997 when the incoming New Labour administration seized upon the concept with surprising enthusiasm. PFI comes thick-painted with politically correct cosmetics. It will only be used when it can meet requirements of “efficiency, equity and accountability,” and a PFI project must deliver clear value for money “without sacrificing the terms and conditions of staff.” Nonetheless, PFI is fast becoming the only source of funding for major capital projects in the NHS; of the 86 referred to above, only six are being financed the old-fashioned way, straight out of the public purse. Under PFI a consortium, perhaps of a bank and a building firm, pays for a hospital's construction under a contract that requires the local health authority lease it back for a period, typically of 30 years, after which the property reverts to the NHS. PFI thus allows the funding of large capital investments “without immediate recourse to the public purse.” It is that word “immediate” that explains the controversy currently surrounding the whole PFI concept.2–6 Under the more market-oriented NHS that the UK has had under governments with very different political philosophies, hospital trusts are charged by the NHS for use of buildings, but under PFI far more has to be paid. A hospital in south-east London that had been labelled a flagship for the PFI idea is heading for a £19 million deficit, of which about half can be attributed to PFI repayments. On the other side of the River Thames an even bigger controversy is unfolding: The country's largest hospital PFI project is the combined redevelopment of two urban teaching hospital sites (St Bartholomews and The London) at a cost of over £1.2 billion. It has been estimated that under PFI, repayments will increase eight-fold.3 At the end of 2005 the Department of Health announced a review of the scheme just when the project's consortium had been set up and most of those involved must have thought the scheme had the go-ahead. So there we have the dilemma. Many British towns and cities have for a long time needed new hospitals or major upgrades of older buildings. Under PFI more such projects have left the drawing-boards than would have been likely under former Treasury policies for capital schemes. On the other hand—and, some might argue, rather late in the day—the affordability of PFI repayments is proving a serious obstacle.

The Cost Comparison of the Administration and Private Organization in the PFI Project

The Cost Comparison of the Administration and Private Organization in the PFI Project

発注者支援の観点から見たPFI事業のモニタリングに関する研究 : 発注者側から見た建築生産プロセス その3

In the PFI project, the public body is the owners. And, a Special Purpose Company (SPC) is selected by the competitive tendering. The public body orders the building performance to the SPC. However, the SPC orders a detailed design and construction due to the contract. Therefore, it is uncertain whether owner's intention is surely reflected. In this paper, the one to reconsider the meaning of the monitoring from the standpoint of the owner support, and to present the technique of a new monitoring.

PFI事業の提案書作成におけるエスノデザインメソッドの考察 : Private Finance Initiativeの施設計画に関するエスノメソドロジー

In making proposals for PFI project, we can see remarkable conduct as a specialist. Such conduct is quite different from the other design-communication, especially in housing environment design. And it is characteristic in their situated actions as "being the member." Ethno-design-method is inevitably working in such situated process practically. This paper aims to describe the ethno-design-methods which are found in their decision-making for programming, planning and designing facilities by participatory action research and analysis of conversations between members. Making proposals for PFI project develops through the collaborative practice by trial and error. The ethno-design-methods as collaborative practice were found as comprising (a) making agreeable responses to confirm explanation and intention, (b) interrupting except the end of utterance and (c) suggesting ideas or questions euphemistically.

Risk transfer and value for money in PFI projects

Risk transfer is an essential element of the private finance initiative. It also makes an important contribution to value for money estimates. Indeed many PFI projects only achieve value for money because of the risk transfer contribution. A participant observation study was carried out to assess how risk was evaluated in a PFI project. Issues related to the lack of an evidence-based approach to risk assessment, the potential dominance of a very small number of risks and difficulties of imposing penalties on the contractor are discussed.

A Study on New Construction Procurement System for Government in the UK

In the United Kingdom, departments and agencies are successfully undertaking a new construction procurement system with some approaches such as Public Private Partnership, Design and Build, Prime Contracting and Partnering. The common concept of these approaches is co-operative working among client, designers, contractor, sub-contractors and suppliers for a better construction performance. National Audit Office also considers that such approaches may be effective in the public works. However, those new approaches are different from the traditional system in Japan. This paper is aimed to clarify what is the new construction procurement system in the UK At first, new approaches are reviewed, including the example of the Channel Tunnel Rail Link which is the largest PFI project in the UK. Then, Partnering which is regarded a core part of the new system and the payment mechanism for Partnering are clarified through consideration on the concept and content of them. Finally, the lessons learned from the new system and the possibility of its introduction to Japan are considered.

The public face of a private finance initiative

For those engineers and contractors used to traditional procurement methods, PFI agreements can come as something of a surprise. There are new terms to be understood, and a different overall philosophy. This article looks at the structure of a typical PFI project, steps in the bidding process, and examines some areas where engineering and building contractors will be asked to take on greater risks than they are used to bearing.

A Range of the Amount of Public Assistace in PFI Projects

Since both central and many local governments in Japan have been in financial crisis, they are required to reduce public expenditure. It is getting difficult for them to provide all the public services by themselves even if these services are strongly needed from their taxpayers. For this reason, PFI option is being developed as a new procurement measure to enable them to achieve both reducing their public expenditure and providing necessary public services needed.Key factors in PFI project are optimal risk allocation among the various parties participating in the project, and appropriate public assistance to concessionaire. Under an advantageous PFI contract to public sector, there is a risk that the contract itself may not be finalized, and, even if it is concluded, the risk that the concessionaire may default is still remained. On the contrary, under an advantageous PFI contract to concessionaire, there is also a risk that Moral Hazard may spoil the efficiency of the projects. Therefore, it is very important in PFI projects to design contracts, especially on risk allocation and public assistance. In this study, we focused on public assistance and examined the range of the amount of public assistance.Conditions of successful PFI project are that the project is decided worth undertaking as a result of Cost Benefit Analysis and that three main parties in the project (public sector, investors and financiers) can achieve their own purposes in the project. The latter one can be described three conditions as follows:(i) Public sector can reduce net expenditure or split expenditure to reduce expenditure of each fiscal year on the project, (ii) investors can make profit on the project, and (iii) financiers can be ensured that all the principal for the project and its interest can be repaid without fail.We examined the range of the amount of public assistance on the three assumptions as follows:(i) Public sector can fix the amount of public assistance to the concessionaire in the contract previously, (ii) there is no uncertainty in the utility of beneficiaries and (iii) optimal risk allocation is achieved.As a result of our analysis, the range of the amount of public assistance is shown in the table. And we confirmed that this result could also be derived from Benefit Incidence Table.In practice, the amount of public assistance depends on the public sector's requirement level to reduce expenditure, investors' requirement level of profit, and financiers' requirement level of interest through their negotiation. However, it must be determined within the range of our result.We derived the result described above on some assumptions of risk allocation, risk cost, and uncertainty of utility in our study. However, the range of the amount of public assistance depends on them. Therefore, we must model the uncertainty of utility and risk cost, and analyze the optimal risk allocation in each PFI type in economic model after this. Moreover, we must make this analysis consistent with Benefit Incidence Table approach theoretically and develop its practical use.

The economics of the private finance initiative

This article outlines and assesses the private finance initiative in the UK. The initiative has been slow to develop despite pressure from governments (anxious to limit the PSBR) and several revamps to facilitate the PFI approach. Within a PFI project there are beneficial incentives to avoid cost over-runs but not to reduce costs where they affect long-run services. These incentives and the limits to their effectiveness are explored. Such contracts require the transfer of risk from the public to the private sector. the role and pricing of risk in the PFI is analysed. It is argued that the PFI does not value risk correctly and that the value for money test is biased against private-sector provision. Policy implications are discussed, including a revamp of the value for money test and the introduction of explicit assessment of the impact of potential renegotiation and other contractual difficulties.

An Observer’s Tale: Stonehaven Community Hospital

The authors have been observing the progress of a PFI project for the health service in Scotland. The case is significant for its being a modest scheme in contrast to some of the giant 25-year and £50M ventures receiving so much attention elsewhere. In addition, the scheme challenges some of the structural and policy givens of the new NHS.