PFI/ PPP, private sector perspectives of UK Transport & Healthcare

Research output: Contribution to journalArticlepeer-review

21 Citations (Scopus)

Abstract

Abstract:Purpose - Public Private Partnerships (PPP) and the Private Finance Initiative (PFI) are defined as a range of practical longstanding relationships between the public and private sectors. This paper investigates managers’ perceptions of PPP/PFI in two of the three largest sectors for private sector capital-spend in PPP/PFI schemes, namely Transport (Highway Infrastructure) and Healthcare.Design/methodology/approach - A web-based Limesurvey™ questionnaire was used to collect data. A sample of 75 organisations was identified from the Partnerships UK (PUK) online Project Database (Partnerships UK, 2010). Forty-nine responses were received of which 39 were complete.Findings - Results from each sector relating to PPP/PFI ‘Best Value’, advantages and disadvantages, and government preferred procurement routes, are investigated. The majority of organisations did not consider that PPP/PFI provided ‘Best Value’ but thought it provided more value than the other two UK government preferred procurement routes ‘Design and Build’ and ‘Prime Contracting’.Practical implications - This questions the UK Government’s choice of preferred procurement routes. However, even during a recession and its aftermath the majority of respondents consider that PPP/PFI remains appropriate to Healthcare and Transport developments.Originality/value - Firstly, this paper carries out a ranking of common advantages and disadvantages to PFI/PPP followed by an investigation of ‘Best Value’ as perceived by contractors and consultants subsequent to the construction phase. Then the three preferred UK Government procurement routes are contrasted in terms of ‘Best Value’ and finally the paper investigates howPPP/PFI schemes are viewed during recessionary times.Keywords:- Public Private Partnerships (PPP), Private Finance Initiative (PFI), Best Value, Recession, Procurement, Procurement routesArticle Classification: Research Paper
Original languageEnglish
Pages (from-to)89-104
JournalBuilt Environment Project and Asset Management
Volume3
Issue number1
DOIs
Publication statusPublished (in print/issue) - 27 Jun 2013

Bibliographical note

Reference text: Akintoye, A.; Chinyio, E., 2005. Private Finance Initiative in the Healthcare Sector: Trends and Risk Assessment in Engineering, Construction and Architectural Management ,Vol 12 (6), 601-616.
Bain, R(2006),Private Finance Rates of Return: Evidence from the UK’S PFI Roads Sector, available on-line at http://www.robbain.com/ETC%20Paper%20Bain%202008.pdf [Accessed February 2012]
Barlow, J. (2007). Redefining healthcare infrastructure. Integrating services and the built environment, available on-line at http://www.rc2007.org/Download/Presentations/James_Barlow.pdf [Accessed February 2012]
Barlow, J., Koberle-Gaiser, M. (2005). The Private Finance Initative, Project Form and Design Innovation The UK’s Hospital Programme. in Research Policy,Vol. 37 (8), pp. 1392-1402.
Bartlett, J, E; Kotrlik, J,W; Higgins, C,C (2001) ‘Organisational Research: Determining Appropriate Sample Size in Survey Research’ in Information Technology, Learning, and Performance Journal, Vol.19, No.1
Berg, S and Pollitt, M (2002), Private initiatives in infrastructure: priorities, incentives, and performance, Edward Elgar Publishing, Cheltenham UK.
Broadbent, J., Gill, J., and Laughlin, R. (2003), Evaluating the Private Finance Initiative in the
National Health Service in the UK in Accounting, Auditing and Accountability Journal, Vol, 16 (3), pp. 422-445.
Cabinet Office (1999), ‘Modernising Government’, White Paper, HMSO (Available on-line:
http://www.archive.official-documents.co.uk/document/cm43/4310/4310-00.htm [Accessed February 2012]).
Carrillo, P., Robinson, H., Foale, P., Anumba, C. and Bouchalaghem, D. (2008) Participation, barriers, and opportunities in PFI: the United Kingdom experience. Journal of Management in Engineering, Vol. 24, No. 3, Pps. 138–45.
Chan D and Kumaraswamy D (2001), ‘A comparative study of causes of time overruns in Hong Kong construction projects’, in International Journal of Project Management Vol. 15, No. 1, pp. 55-63.
Cuthbert, J., Cuthbert, M. (2008), The Implications of Evidence Released Through Freedom of Information on the Projected Returns from the New Royal Infirmary of Edinburgh and Certain Other PFI Schemes, available on-line at http://www.cuthbert1.pwp.blueyonder.co.uk/new_page_5.htm [Accessed February 2012]
Dalrymple, J., Shutt, G., Collin, J., Oliver, J., Swainston, M., Walker, D., and Sidwell, T. (2006),
Feasibility Study linking Best-Value Procurement Assessment to outcome performance indicators, available on-line at http://www.constructioninnovation.info/images/pdfs/Research_library/ResearchLibraryC/Project_Reports/Feasibility_Studt_Linking_Best_Value_Procurement_Assessment_to_Outcome_Performance_Indicators_.pdf [Accessed February 2012].
Department of Health, (2000). The NHS Plan: A Plan For Investment, A Plan For Reform. London: Cm 4818-1, The Stationary Office
English, L, and Guthrie J (2006), State Audit of Public Private Partnerships in Australia: a lack of public accountability?, in Proceedings of the 4th International Conference on Accounting, Auditing and Management in Public Sector Reforms, Siena, 7-9 September 2006 available online at http://unpan1.un.org/intradoc/groups/public/documents/apcity/unpan034364.pdf [Accessed February 2012].
English, L, (2005), Using public-private partnerships to achieve value for money in the delivery of healthcare in Australia, in International Journal of Public Policy Vol. 1 (1/2), pp. 91-121.
Erlendsson (2002) ‘Value for Money studies in Higher Education’ Available from: http://notendur.hi.is/joner/eaps/wh_vfmhe.htm, [Accessed February 2012].
European Commission (2004), Green book on public-private partnerships, COM2004 327
Glaister, S, Scanlon, R., and Travers, T. (2000). Getting Public Private Partnerships Going in Transport. in Public Policy and Administration, Vol. 15 (4), pp. 50-71.
Griggs R. (2002).PFI Practical Perspectives Lessons so far, available on-line at www2.accaglobal.com/pubs/members/publications/.../M77_PFI.pdf [Accessed February 2012]
Grimsey, D; Lewis, M.K (2005) Are Public Private Partnerships Value for Money? in Accounting Forum, vol. 29, pp. 345-378.
Haslam, C., (2005). The NHS Plan: Accounting for investment and reform in twenty acute hospital trusts in England (1998–2003) in Accounting Forum Vol. 29, pp. 437-453.
Hellowell M and Pollock A, (2009) The Private Financing of NHS Hospitals; Politics, Policy and Practice, Institute of Economic Affairs, Vol 29 Issue 1, pp 13-19.
Henjewele, C., Sun M., and Fewings P. (2011) Critical parameters influencing value for money variations in PFI projects in the healthcare and transport sectors, Construction Management and Economics, Vol. 29, No.8, pps. 825-839
HM Treasury (2011), UK National Infrastructure Plan 2011, The Stationery Office Limited, Crown Copyright: London UK.
HM Treasury (2010a) PFI Published Tables, available on-line at http://www.hmtreasury.gov.uk/d/pfi_tables_june2010.pdf [Accessed February 2012].
HM Treasury (2010b) Infrastructure Cost Review: Main Report, available on-line at
http://www.hm-treasury.gov.uk/d/cost_review_main211210.pdf [Accessed February 2012].
HM Treasury (2010c) Infrastructure UK, available on-line at http://www.hmtreasury.gov.uk/ppp_infrastructureuk.htm [Accessed February 2012].
HM Treasury (2007) Value for money assessment guide, London, HMSO
House of Commons Select Committee on Transport (2009, July). Taxes and Charges on Road
Users. Available on-line at www.publications.parliament.uk/pa/cm200809/cmselect/.../103.pdf [Accessed February 2012]
HM Treasury,(2003). PFI: Meeting the Investment Challenge. London: The Stationary Office
IPSOS MORI (2008) Investigating the performance of operational PFI contracts. Available online
at http://www.partnershipsuk.org.uk/uploads/documents/Ipsos%20Mori%20Report%20OTF%2
0Web.pdf [Accessed February 2012].
Kalyvitus S., and Vella E. (2011) Public Capital Maintenance, Decentralization, and US Productivity Growth, Public Finance Review November 2011, Vol. 39 No. 6, Pps. 784-809
Keramidas, O and Bout-Colonna, L (2007), Public-private partnership: a new way of thinking for Health Management, in Journal of Public Sector Performance Management, Vol. 1(1), 2007, pp. 83-99.
Kometa ST, Olomolaiye PO, Harris FC. (1994). Attributes of UK Construction Clients Influencing Project Consultants Performance.in Construction Management and Economics. Vol. 12., pp.433-443.
KPMG(2010), Delivering Value for Money through Infrastructural Change available on-line at
http://readingroom.lsc.gov.uk/SFA/VFM_Infrastuctural_Change_Report.pdf [Accessed February 2012]
Krejcie, R. V., & Morgan, D. W. (1970). Determining sample size for research activities, in Educational and Psychological Measurement, Vol. 30, Pgs. 607-610.
Ling T (2000) Unpacking Partnership: The case for Healthcare, in New managerialism, new welfare? Sage Publications pp 82-101.
Leiringer, R. (2006) Technological innovation in the context of PPPs: incentives, opportunities and
actions in Construction Management and Economics, Vol.24, No.3, pp.301-308.
Local Government (2011). Best Value Statutory Guidance, available on-line at http://www.communities.gov.uk/publications/localgovernment/bestvaluestatguidance [accessed April 2012].
Mainelli, M (2003), PFI and PPP: could they result In Enron UK? In Balance Sheet, Vol. 11,(2), available on-line at http://www.emeraldinsight.com/journals.htm?issn=0965-67&volume=11&issue=2&articleid=1490705 [Accessed February 2012]
Manu C(2005), The Principle Of Value For Money In Procurement available on-line at http://www.ghanaweb.com/GhanaHomePage/features/artikel.php?ID=83959 [Accessed February 2012]
Murphy, T (2008), The case for public-private partnerships in infrastructure in Canadian Public Administration Vol. 51, Issue 1, pp 99–126, March 2008.
National Audit Office (2003), PFI: Construction Performance, London: The Stationery Office.
NHS Executive, (1999). Public Private Partnerships in the National Health Service: The Private
Finance Initiative. London: Treasury Public Enquiry Unit
Norton, S and Blanco, L (2009), Public Private Partnerships: a comparative study of new public
management and stakeholder participation in the UK and Spain, in International Journal of Public Policy, Vol. 4 (3/4), pp.214-231.
Office of Government Commerce (2007) Getting Value for Money from Procurement, London,
Crown Copyright.
Patel, M., and Robinson, H. (2010) Impact of governance on project delivery of complex NHS PFI/PPP schemes, Journal of Financial Management of Property and Construction, Vol. 15 Iss: 3, pp.216 - 234
Pitt, M; Collins, N and Walls, A (2006) The Private Finance Initiative and Value for Money in the Journal of Property Investment and Finance, vol. 24, No 4 pp 363-373.
Pollitt M (2002) The Declining Role of the State in Infrastructure Investments in the UK. Available on-line at http://www.econ.cam.ac.uk/dae/repec/cam/pdf/WP0001.PDF [Accessed April 2012].
Pollock, A., Price, D. and Player, S. (2007) An examination of the UK Treasury’s evidence base
for cost and time overrun data in UK value-for-money policy and appraisal. Public Money and Management, Vol. 27, No.2, pps.127–34.
Quiggin, J (2004) Risk, PPPs AND THE Public Sector Comparator, in Australian Accounting Review, Vol. 14, Issue 33, pp 51–61.
Roe, P and Craig, A (2004) Reforming the Private Finance Initiative, available on-line at
www.cps.org.uk/files/reports/original/111028110829-PFI.pdf [Accessed February 2012]
Samasivan, M., and Soon, Y.W. (2007) Causes and Effects of Delays in Malaysian Construction
Industry. International Journal of Project Management. Vol. 25, pp. 517-526.
Shaoul, J., Stafford, A. and Stapelton, P (2011). NHS Capital Investment and PFI: From Central
Responsibility to Local Affordability, Financial Accountability & Management, Vol.27, No. 1,
February 2011, pps 1-17.
Shaoul, J. (2005). ‘The private finance initiative or the public funding of private profit?’ Greve,
C and Hodge G (eds). The Challenge of Public Private Partnerships: Learning from International Experience. Edward Elgar, London.
Shaoul, J., (1998). Charging for Capital in the NHS Trusts: To Improve Efficiency in Management Accounting Research, Vol. 9, pp. 95-112.
Shifrin, T. (2009). Public Finances Take The Initiative in PFI Funding.in Public Finance [online], pp. 12-13. Available on-line at
http://proquest.umi.com/pqdweb?did=1680035781&sid=5&Fmt=4&clientId=17200&RQT=3
09&VName=PQD [Accessed February 2012]
Timmins, N. and Wighton, D., (1998). First PFI Roads Receive Mixed Reaction. in Financial Times, 28 January 1998,p. 8
Yuan; Jingfeng; Zeng; Yajun, A; Skibniewski; Miroslaw, J and Li (2009) Selection of performance objectives and key performance indicators in PPP projects to achieve value for money in Construction Management and Economics, vol. 27, pp. 253-270.
Zarco-Jasso, H (2005), Public-private partnerships: a multidimensional model for contracting, in
International Journal of Public Policy, Vol. 1(1/2), pp. 22-40.

Keywords

  • Public Private Partnerships (PPP)
  • Private Finance Initiative (PFI)
  • Best Value
  • Recession
  • Procurement
  • Procurement routes

Fingerprint

Dive into the research topics of 'PFI/ PPP, private sector perspectives of UK Transport & Healthcare'. Together they form a unique fingerprint.

Cite this