ICE - Institution of Civil Engineers - Virtual Library

This paper analyses the use of the private finance initiative (PFI) approach to deliver school projects in England. The findings are based on case-study research in the Building Schools for the Future scheme (BSF), the largest single capital investment in 50 years to rebuild and renew all of England’s secondary schools. Up to half of the school infrastructure is to be procured by PFI contracts. A major concern has been the high cost associated with PFI procurement and any subsequent changes to scope. Furthermore, in some cases PFI-funded schools have been closed soon after completion; at great cost to the public sector. The aim of this research was therefore to understand the underlying reasons for these problems. The main conclusion is that the difficulties in BSF arise from not sorting out strategic issues and instituting appropriate organisational frameworks before engaging the private sector. The result of this is a lack of clarity about the long-term needs and end user aspirations. A brief outline of current programme management methods is given and it is suggested that this might be integral to the successful delivery of schools using private finance. A clear strategic vision that cascades into projects via programmes will ensure that the school infrastructure is appropriate for the anticipated strategic benefits and is aligned to the overall service delivery ambitions.

The period between 1990 and 1997 saw a record growth in the number of public–private partnerships (PPPs) for provision of water/sewerage services in developing countries. Nonetheless, PPPs have not fared well in sub-Saharan Africa, which accounted for 80% of the PPP contracts that attracted disputes or were cancelled between 1990 and 2004. Since the 1980s, management contracts between international water operators and utilities in Africa have been promoted by the World Bank and other multi-international agencies as a model that could boost management capacity in utilities of developing countries and lead to improved effectiveness and efficiency. The present study draws upon empirical data from Kampala, Uganda and uses it as a case study to show that, on the whole, these expectations were not fulfilled. It is demonstrated that the performance improvements of the National Water and Sewerage Corporation, the utility in Kampala, were not as high as expected when it was twice managed by different international operators. On the other hand, the corporation has made impressive performance improvements under the current public management model. Conclusions have been drawn from the case study on what are the drivers of performance improvement in the water utilities of developing countries.

In Greece the legislative framework for concession contracts is mainly governed by recently enacted Law 3389/2005 related to public–private partnerships (PPPs). This paper first sets out the key provisions of the new law, which is basically divided into three main sections: (a) terms, field of application and central support mechanism; (b) award process; (c) contractual framework, financing and tax details. The paper then considers the particular situation of concession contracts involving Greek authorities. Recently, the Greek state started the simultaneous transformation of the twelve main port authorities from public to private entities (sociétés anonymes). Two of these entities (Piraeus and Thessaloniki) signed concession contracts with the state, according to which the usage and exploitation of existing and future infrastructure is accorded – in return for a fee – to the port authorities. Finally, other structures of financial cooperation in the port sector are also proposed, such as the creation of joint-venture partnerships.

The paper presents the results of an investigation into the role of export credit agencies (ECAs) in international private-finance initiative/public–private partnership (PFI/PPP) projects. The research was based on an assessment of published literature and a study of relevant official reports. The use of PFI/PPP procurement to deliver essential infrastructure continues to grow worldwide. In developing countries, funding raised locally through taxation, the money markets and official development assistance is inadequate to meet the required needs. PFI/PPP projects with foreign private participation provide a vital contribution to the acceleration of economic growth and provision of essential services and infrastructure. It is demonstrated in this paper that ECAs play a number of key multiple roles in international PFI/PPP projects. First, the role of ECAs can be as lenders. ECA loans can be offered to exporters, investors or directly to the special-purpose vehicle. ECAs also play the role of insurers/guarantors. ECAs are diversified in country risks and therefore best placed to cover political and non-commercial risks. They can provide cover for non-commercial risks which include: currency inconvertibility and transfer restrictions, expropriation, war and civil disturbance or breach of contract, etc. The professional advisory role includes arranging project finance and a disputes resolution service. ECAs play key multiple roles in the realisation of international PFI/PPP projects. They are clearly central to efficient risk management in such projects and for attracting foreign direct investment into infrastructure in developing countries.

Recent literature on public–private partnerships (PPPs) in urban water supply and sanitation (WSS) services tends to concentrate on distressed projects, especially when high-profile concessions are cancelled. Successful projects get comparatively little attention, contributing to the impression that water PPPs do not work. The management contract in Yerevan, Armenia is one example in which private sector participation in WSS service provision has brought benefits to the population, and has been endorsed satisfactorily by the government and national stakeholders. This paper discusses the process and outcomes of Yerevan’s management contract (2000–2005), and highlights important lessons for policy-makers and reformers. Based on available data, the authors find evidence of improvements in the quality of services, collections, and energy efficiency, but only modest improvements in technical efficiency. The case study holds valuable lessons for other developing countries, as some challenges had to be faced during implementation. It shows ultimately that, to realise benefits from a management contract, both parties must be willing to make it work, and build over time a true partnership.

Since 2003 public–private partnerships (PPPs) have represented between 10 and 13.5% of the total investment in public services in the UK. The macro-economic and political benefits of PPPs were among the key drivers for central government’s decision to promote this form of procurement to improve UK public services. Political support for a PPP project is critical and is frequently cited as the most important critical success factor. This paper investigates the significance of political support and reviews the treatment of political risk in a business case by the public sector project sponsor for major UK-based light rail transit PPP projects during their development stage. The investigation demonstrates that in the early project stages it is not traditional quantitative Monte Carlo risk analysis that is important; rather it is the identification and representation of political support within a business case together with an understanding of how this information is then used to inform critical project decisions.