Public Clients Research Articles

The Outcome of Renegotiations between Institutionalized Public–Private Partnerships and Their Public Clients: Data on the Public–Private Partnerships of the German Federal Armed Forces

ABSTRACTThis study analyzes the renegotiations that take place between institutionalized public–private partnerships (PPPs) and their public clients drawing on survey data on the PPPs of the German Federal Armed Forces. Generally, both the party that initiates such renegotiations and the time at which renegotiations are launched determine the outcome of the PPP’s renegotiated remuneration. This effect is moderated by the degree of contract specificity and by a decrease in demand. Specifically, when the public client initiates the renegotiation of an incomplete contractual agreement due to a decrease in demand, it can successfully reduce the remuneration of the PPP.

Barriers and facilitators for BIM use among Swedish medium-sized contractors - \u201cWe wait until someone tells us to use it\u201d

BackgroundThe pace of diffusion of BIM (Building Information Modelling) use is considered to increase with governmental initiatives in which public clients in countries like Finland, Singapore, United Kingdom, and Sweden begin requiring BIM as a part of the project delivery. Currently, larger contractor firms use BIM to a certain extent. However, BIM use by mid-sized contractor firms (that is, firms with 50–500 employees that can successfully compete with larger contractors on projects costing a maximum of 50 million Euros) is relatively unknown. Hence, the aim of the paper is to explore current use and perceived constraints and driving forces of BIM-implementation with respect to mid-sized contractors.MethodsA mixed method approach was applied, and data was collected through an interview study and a survey involving chief executive officers or their closest sub-ordinates in mid-sized contractor firms in Sweden. The survey was based on a technology-, organization-, and environment framework that is used in information systems research to study the use of inter-organizational information systems. The total population of firms in the survey corresponded to 104. The study presented the preliminary results based on 32 answers (with a 31% response rate).ResultsFifty-eight percent of the surveyed respondents stated that they had been involved in a project in which BIM was used in some manner. The most commonly used application included visualization, which also facilitates coordination and communication. The biggest perceived constraints involved partners that did not use BIM, lack of demand from clients, and the absence of internal demand in the company. With respect to the two last obstacles, significant differences existed between users and non-users. The most common perceived driving forces included the fact that BIM is perceived as a means to follow technical development and that BIM provides competitive advantages to the company.ConclusionsIt is concluded that the main driver responsible for BIM-implementation is mainly determined by an individual’s subjective positive or negative evaluation of BIM, instead of external pressure from clients and partners or by the internal capacity and knowledge to use BIM.

Busy Auditors, Partner-Client Tenure, and Audit Quality: Evidence from an Emerging Market

ABSTRACTUsing a sample of public firms listed in the Chinese market for the years 2000–2009, we find that audit partners with more public clients are associated with lower audit quality, consistent with the “busyness” effect that auditing multiple clients dissipates audit partner effort and, thus, reduces audit quality. However, the negative association is more pronounced for auditors with short audit partner-client tenure, supporting the idea that the lack of client-specific knowledge exacerbates the busyness effect. Collectively, these findings contribute to a better understanding of audit partner behavior in an emerging market.JEL Classifications: M42.

Peculiarities of public sector clients in service innovations

ABSTRACTThis paper analyses knowledge-intensive business service firms and their innovation activities in the context of federal government procurement with empirical evidence from Swiss information technology firms. The paper contributes to the growing literature on knowledge-intensive business services by expanding the concept to also capture public sector clients. It focuses in particular on the ways in which having a public sector client influences a knowledge-intensive business service firm’s ability to innovate, opportunities for interactive learning with their clients, and ways in which having a public sector client allows a firm to diversify. The paper shows that having a federal agency as a client is quite different from a private sector client particularly with regard to multi-party systems on the client side, the importance of informal interactions, and the role of public reputation.

Metro Area Client Bases, Metro Area Auditor Bases, and Client Auditor Choice

Prior research finds no consistent association between metropolitan audit market competition (henceforth “competition”) and either audit fees or measures of audit quality (“AQ”). We revisit the association of competition with fees and AQ using a novel proxy for competition: the Office to Client Ratio (OCR). OCR equals the number of PCAOB inspected audit offices in a metro area divided by the number of public clients purchasing audit services in the area. We conduct a “contest” to determine which variable, OCR or the prevailing proxy for competition, the Herfindahl index (HERF), performs best (i.e. is significantly associated with audit fees and measures of AQ as theory suggests). To investigate the association of competition with fees, we employ a unique natural experiment: the exogenous shock to audit costs and fees in 2004 that accompanied implementation of auditors’ SOX 404(b) reports for their largest (i.e. accelerated filer (AF) clients). We document that audit offices appear to have imposed substantial fee increases in 2004 on their smaller non-accelerated filer (NAF) clients, although those clients were not required to obtain SOX 404(b) reports. Evidence suggests that these fee increases served to subsidize extension of the new SOX 404(b) services to the larger AF clients. In this setting, unusually high levels of conflict over audit fees should have existed between audit offices and managers of their NAF clients. The ability of NAF clients to resist paying fee increases should depend powerfully on competition. We find that higher levels of OCR are associated with smaller audit fee levels paid by NAFs in the shock year of 2004, and smaller fee increases from 2003 to 2004. HERF does not perform as a (reverse) proxy for competition in either year. We then investigate the associations of OCR and HERF with fee levels in three more recent years, 2010-2012. We again find that OCR outperforms HERF. In additional analyses we investigate the associations of OCR and HERF with three measures of AQ in the 2010-2012 period: absolute discretionary accruals, misstatements of audited data, and auditors’ propensity to issue first-time going concern modified opinions to potentially distressed clients. We find some evidence that competition, measured as OCR but not as HERF, is associated with improved AQ (i.e. reduced likelihood of misstatements and higher likelihood of going concern opinions). In summary, OCR appears to be an effective proxy for competition in the audit fees context. It also is significantly associated with AQ metrics although to a lesser extent. We find no evidence that HERF serves as a (reverse) proxy for competition.

Developing a Self-assessment Model of Risk Management Maturity for Client Organizations of Public Construction Projects: Indonesian Context

This paper presents a self-assessment model to measure the risk management (RM) maturity level of construction public client organizations within the Indonesian context. It used a mixture of Delphi method to select and validate the most relevant attributes and Analytical Hierarchy Process (AHP) to assign the weights of the selected attributes. A total of 34 attributes, categorized under four dimensions (i.e., organizational culture, RM processes, RM resources, and RM implementation) were used. It has been shown that top management commitment, integrity and ethics, and change management capabilities were found to be the most important attribute, suggesting that RM maturity level is more than formal and standardized systems. The RM maturity score was computed by summing the products of AHP-based weights and ratings which were expressed in a 0–3 scale with 0 representing immature and 3 denoting mature level. Given this score, the maturity level of a client organization under evaluation will be classified into one of the following four levels: naive (0–24), novice (25–49), normalized (50–74), and managed (75–100). This model was pilot tested on a governmental unit under the Ministry of Public Works with a satisfactory result.

The Unintended Consequences of the Frequency of PCAOB Inspection

AbstractAfter more than 50 years of self‐regulation of the US auditing profession, the Sarbanes‐Oxley Act of 2002 (SOX) created the Public Company Accounting Oversight Board (PCAOB) as a quasi‐governmental entity with statutory authority to inspect accounting firms that audit public clients. The frequency of this inspection is annual or triennial, based upon the number of public clients the firm audits. We examine the effects of these two levels of inspection frequency on financial reporting quality and audit fees for clients of small and midsize public accounting firms. Our findings provide evidence of significantly higher audit quality and audit fees for clients of annually inspected firms relative to clients of triennially inspected firms. These findings are robust to auditor‐client alignment analyses, propensity score matching, time‐series analyses, examination of firms that have changed from triennial to annual inspection, and particular examination of firms with inspection deficiencies. Overall, our study suggests that the two‐tier frequency system of PCAOB inspection may have also resulted in two‐tier audit quality and audit fee systems for small and midsize public accounting firms, with more frequent inspection leading to more rigorous and informed auditor decisions. We discuss the implications of our results for the Board and the profession at large.

International Competition on the Norwegian Infrastructure Market

The Norwegian infrastructure market experiences a development of larger projects with bigger budgets than ever before. This paper provides an overview of the current situation in the Norwegian rail and road infrastructure market, in order to grant contractor and client input on how value can be increased through efficient procurement and contract models in the future projects. The papers addresses the following research questions: What are the biggest opportunities and challenges of operating on the Norwegian infrastructure market for the clients and contractors? How can we ensure a healthy competition on the Norwegian infrastructure market? An initial literature study was followed by fourteen semi-structured open-ended interviews with key persons involved in one rail and three road projects, respectively. These case specific interviews were supported by six semi-structured interviews with experienced practitioners. Our findings present several challenges and possibilities of being on the Norwegian market. The identified factors, such as cultural differences and political stability makes the market challenging and preferred at the same time. We also found that clients can increase the international competition by offering contracts that are written in English, contracts of a certain size and by letting the contractors handle the design phase themselves. The public clients find themselves in a position where they feel an obligation to protect the established contractors, but at the same time attract new ones. This study is limited to projects where the contract is signed after 2012, and with a net value above 40 million euros. Due to an ongoing change in the market, where new contractors win several large-scale projects, it becomes important to identify the opportunities and challenges that occur when the competition in the market increases. The paper describe how clients can facilitate for a healthy competition and also successful projects in the near future. Some of the opportunities and challenges may also exist in other infrastructure markets, which may make the results usable for not only the Norwegian public clients, but also construction clients in other parts of the world.

Trust Attributes to Supply Chain Partnering in Industrialised Building System

The purpose of this paper is to explore the concept of supply chain partnering practised in Industrialised Building System. The relationship was based on the elements of trust, share a vision, decision-making and continuous improvement. The methodology adopted were using quantitative and qualitative approach. Outcomes of the results, the public clients point out on the element of trust in between contractors were based on the frequency and effectiveness of communication and private client indicates competence of work as a successful element of trust in supply chain partnering in Industrialised Building System.

Identifying perspectives of public project managers on project success: Comparing viewpoints of managers from five countries in North-West Europe

Public and private project managers contribute to the success of Large Infrastructure Projects. Considering the public client, so far researchers have been looking at him in a passive role with respect to project success. The focus of this exploratory research is what public project managers who are actively involved in the project, consider project success. Using Q-methodology, we identify four viewpoints in the respondent group, consisting of managers from five North-Western European countries and the specific success criteria accompanying these viewpoints. Within each viewpoint, the managers have the same vision on the ranking of project success criteria. Next to the conventional project manager, we distinguish the product driven manager, the parent oriented manager and the manager with a stakeholder focus. In Large Infrastructure Projects, where public and private partners collaborate, awareness of these different perspectives will help to understand the motives of the public project manager.

Critical success factors for public-private partnership in water supply projects

Purpose Public–private partnerships (PPPs) are viewed as a reform tool for resolving inefficiency and absence of dynamism in water supply delivery in developing countries. However, the requirements for their successful implementation have received very little attention. This paper aims to describe a set of critical success factors (CSFs) that, when given special and continual attention, would ensure a successful project implementation and to provide a predictive tool to aid implementers to evaluate the likelihood of a successful PPP water supply project. Design/methodology/approach Fourteen perceived CSFs were initially derived from project cases and extant literature, and verified through a two-round Delphi survey. Factor analysis established five critical success factor groups (CSFGs) that were then used to develop a fuzzy synthetic evaluation tool for assessing the chance of a successful project. Findings The five key CSFGs are commitment of partners, strength of consortium, asset quality and social support, political environment, and national PPP unit. The model output showed that, overall, these factors have a “very high” positive impact on a successful implementation of a water supply project. Hence, there is an excellent correlation between achievement of the CSFGs and project success. Success indices of individual principal factors are also “very high”. Originality/value The study presents a tool to public clients and private audience, and it is hoped that the study will trigger policy development towards PPP practice in developing countries, because these findings have wider implications for legal and regulatory systems, public capacity, financing, public procurement and politics.

Understanding pre-qualification preferences of public clients in traditional and design-build procurement systems

The present study investigated the pre-qualification (PQ) process followed by various public clients in India to find their preferences regarding the pre-qualification criterions and also to ascertain if 'single step' procurement or a 'two-step' procurement process was favoured by clients. The approach used in this study was content analysis of 111 numbers of request for qualification (RFQ)/request for proposal (RFP)/notice inviting tenders (NITs) issued by public clients. Total eight 'pre-qualification categories' were identified along with 14 'PQ criterions' for traditional procurement and 13 'PQ criterions' for design build (DB) procurement. The study concluded that 'experience in executing similar projects', 'performance of executed projects' and 'financial capability of bidder' were the most preferred PQ categories and it was also found that single step procurement was preferred by public clients compared to two-step procurement for all types of construction projects. The findings of this study are expected to make contribution to the existing body of knowledge due to their relevance to academic fraternity as well as to those stakeholders of construction industry who wish to gain better understanding of PQ process in Indian public project procurement.

Random selection: winning the lottery in construction contracts

Government procurement accounts for 10%-15% of gross domestic product. The majority of this is below the European Union financial thresholds and completed under local policy. From 2012, random selection (RS) has been used as part of the selection mechanism. For the first time, this paper analyses and compares RS to the rotation process used in frameworks. The empirical data was gathered from the public sector client and private sectors via structured Limesurvey™ questionnaires. The results indicate that RS is considered transparent with high accountability. However, concerns are raised over safeguards against abuse or manipulation. The impact of using RS on quality, value for money and open competition indicated greater private sector concern. Agreement was achieved on it not always providing the best economic operator, that size of organisations involved does not matter and there is adequate competition. However, the procurement policy for the adoption of RS for certain contract types was deemed correct.

Understanding pre-qualification preferences of public clients in traditional and design-build procurement systems

Understanding pre-qualification preferences of public clients in traditional and design-build procurement systems

BIM in the operations stage: bottlenecks and implications for owners

Purpose – The use of Building Information Modelling (BIM) in the Netherlands is increasing. Studies show that BIM is mainly used in the lifecycle stages of initiation, development and realisation. Owners and operators are presumably yet to discover the added value of BIM for maintenance and information management within their organisations. The purpose of this paper is to investigate information management during the operations stage from the viewpoint of owners and determines the added value of BIM within this growing field of construction. Design/methodology/approach – This research is based on a literature review, explorative interviews and process modelling. In total, 21 semi-structured interviews were conducted among public real estate and infrastructure owners and operators, software companies, service providers and contractors. Findings – This paper provides empirical insights into the sources of inefficiency and ineffectiveness in the activities of Dutch semi-public and public clients. It finds that the current added value of BIM in the operations stage is marginal. The main reasons for this are a lack of alignment between the supply of and demand for information and the context-dependent role of information. Practical implications – The authors propose a structured approach that supports client organisations in establishing greater alignment between the supply of and demand for information, and a less context-dependent role for information during the operations stage. Originality/value – In contrast to previous studies, this paper offers a new perspective on BIM in the operations stage, a growing field of interest in practice and science.

Public Perspectives on Project Success – Influenced by National Culture?

Project success, both the determination and the achievement, is a widely discussed subject. Literature seems to agree on one thing: whether a project is considered a success depends on the perspective taken to judge it. But how the public project manager determines the success of his project is not clearly discussed in literature. In 2013 we conducted a research using Q-methodology to reveal which success criteria are important to Dutch public project managers who are in charge of construction projects. In the follow up research, described in this paper, we will extend the research to several European countries. Within the European Union national governments are the largest initiators and clients of large infrastructure projects, which are put up for tender in an international market. In this international context it is essential for private companies, consultancies or contractors, to better understand their public client, in order to come up with internationally competitive bids, successfully collaborate and complete complex projects. The objective of this follow up research is to expose managerial viewpoints on project success in different European countries. The respondents in the research performed early 2014 are governmental project managers, who are responsible for the execution of an internal assignment and who are the representative of the client to the contractor. The position of the respondents in the government organization is similar to the research already carried out in the Netherlands. Based on the research (Hofstede, 2001) into differences in the national culture of countries variations between these countries can be expected. This paper describes the set-up of the study and hypotheses, based on literature, influences of culture on the perception of project success.

Analyzing Threefold Schemes for Enhancing Communication Channel Efficiencies Using IP Multimedia Server–Client Systems for LTE Networks

In 3G, the server platform of IP multimedia subsystem (IMS) offers multimedia service to the multimedia clients through the exchange of authenticated key agreement (AKA) scheme. Since the IMS service is transmitted over public networks, the server and client of IMS shares a common session-key via the execution of AKA scheme to secure the communication service over a public network. Though there are some identical steps involved in the key authentication Scheme of IMS, the communication efficiencies of IMS server and client are still conciliating. Besides, it is having the issues of insecurity and session compatibility dealt with the real time transport protocol (RTP). To resolve the issues of IMS, this paper proposes three novel schemes: (1) The first scheme is multimedia server---client authentication scheme and its purpose is to mitigate the packet congestion on the networks; (2) The second scheme is traffic on background and its purpose is to analyze the signal congestion, bandwidth consumption and network utilization of the system; and (3) The last one is fault detection index and its purpose is to prevent the SIP vulnerabilities, like bye and invite. In addition, we integrate the proposed and existing authentication schemes, such as EPS-AKA, AP-AKA, UMTS-AKA, X-AKA, S-AKA and so on., in the IMS server and client environments to testify the metrics, namely round trip time, call response time, packet generation, flow analysis, RTP session, network utilization, throughput analysis, bandwidth utilization and flooding attack detection realistically.

Effect of adoption of relational contracting practices on relationship quality in public projects in Singapore

Purpose – The purpose of this paper is to investigate relational contracting (RC) practices that give rise to higher quality interpersonal relations between these pairs of stakeholders at the end of public projects: clients and contractors; contractors and consultants; and clients and consultants. It developed models to predict the level of quality of interpersonal relations between the stakeholders at the completion of public projects. Design/methodology/approach – Using a set of questionnaire, data were collected from randomly selected construction industry practitioners who have had experience in public projects in Singapore. The data were analysed to identify association between the use of RC practices and quality of interpersonal relations between stakeholders. In-depth interviews with experts were conducted. Findings – It was found that when certain RC practices were adopted to a larger extent, public projects also have significantly higher quality of interpersonal relations between clients, contractors and consultants. Three mathematical models were developed to predict the relationship quality between stakeholders at the end of the public project. Research limitations/implications – The limitations include the subjective nature of the Likert scale that was used in answering the questionnaire survey and the limited number of interviews. The effect of existing good relations among stakeholders was not taken into account. Practical implications – Suitable RC practices for adoption by public clients, contractors and consultants in public projects are recommended. These include developing deeper mutual trust and understanding, sharing project information, and having real gain-share/pain-share among contracting parties. Originality/value – RC practices that are significantly associated with relationships among contracting parties in public projects in Singapore are uncovered. Contracting parties may use the recommendations to help enhance their relationships with one another in a public project.

Risk allocation in public-private partnership water supply projects in Ghana

Appropriate risk allocation (RA) between public and private sectors according to their risk management (RM) capabilities is crucial for the success of public-private partnership (PPP) projects. The RA process in PPP water projects is examined, and a methodology based on fuzzy set theory is outlined with RA principles that can be used by public-private participants to arrive at fair RA decisions. Empirical data based on an industry-wide three-round Delphi questionnaire survey is used in this study to outline the methodology. The fuzzy set theory is employed for the RA analysis because it deals well with the complex multi-criteria problem of, and precisely accounts for the fuzziness inherent in human cognitive process that characterize, RA decision-making. Five risk factors are evaluated on each RA principle, analysed and assigned between the public and private sectors. The results show that it is appropriate to allocate risks according to both sectors’ RM capability to manage them, using established RA principles and fuzzy set theory. The methodology renders the decision-making process more systematic and practical because the fuzzy theory approach allows decision makers to express their evaluations of both sectors’ RM capabilities in descriptive qualitative terms. The results should assist public clients to establish efficient RA strategies and develop balanced RA schemes for PPP contracts, with a view to achieving a mutually acceptable RA with the private sector.

An Innovative Approach to e-public Tendering Based on Model Checking

Abstract The public construction sector has recently started to put more effort into cost savings and improvement of efficiency. Therefore, public clients have started to promote new strategies, embracing innovative approaches such as Building Information Modelling (BIM) and e-Procurement. Tendering plays a key role for the success of the overall process; however, the selection of the best contractor is still a difficult task. The paper investigates how tendering can be integrated with Model Checking in order to control the compliance between the client's requirements and bidders’ offers within a digital environment. The research shows that, although the BIM is still not widely adopted in tendering procedures, Model Checking tools are already available to support the jury, as well as bidders. Moreover, even though BIM can be implemented in several procurement procedures, it is more effective if a collaborative and integrated behaviour is promoted. Results can help increase public clients’ awareness of the limits and potentials of an innovative approach and to set BIM requirements and guidelines.