Gerald Sundaraj, "The significance and co-dependency of “Robustness” in a PPP (PFI) project environment from the perspective of the Granting Authority", University of Salford SPARC conference, 7 May 2009

1. Postgraduate Research Proposal
The significance and co-dependency
of “Robustness” in a PPP (PFI)
project environment from the
perspective of the Granting Authority
Gerald Sundaraj
School of Built Environment
University of Salford
SPARC Conference
7 May 2009

2. Public Private Partnerships
(PPP)
 A PPP refers to co-operation between
different players, usually one from the private
and one from the public sector.
 They work together to promote a common
interest, using the complementarities of each
partners and their special qualities.
 This term has become increasingly popular,
because it suggests that the best elements of
the private and public sector approach are
combined.
 The aim of these partnerships is to use the
skills and the know-how of the private sector
for the provision of a public service.

3. Types of PPP
Models
 Alternative Contracts
◦ Known also as service contracts
◦ Simplest form of partnership
 Leasing
◦ Private sector uses public facilities
◦ Rental fee for services provided
◦ Maintenance of asset by private sector
 Joint Ventures
◦ Co-responsibility & co-ownership
 Concessions
◦ Best value service in public service
◦ New service facility or improves an existing one
◦ 20-30 years duration
 Privatization
◦ Sale of state-owned asset
◦ Also known as asset sales
◦ Transfer of equity to private sector without time limitations

4. Types of PPP Models in the
UK
 Asset sales
 Wider Markets
 Sales of business
 Partnership companies
 Private finance initiative (PFI)
 Joint Ventures
 Partnership investments
 Policy partnerships

5. Private Finance Initiative (PFI)
 Introduced in1992 in the UK
 PFI model, incentive to the private sector to
participate in public works or services. This
became necessary because,
• Government procured and managed projects
have been generally delivered over budget
and behind schedule;
• Government was under pressure to reduce its
Public Sector Borrowing Requirement
(PSBR) in order to meet the targets required
under the Maastricht Treaty;
• Government required a new financing
structure outside the public sector borrowing
requirements to meet its investment needs in
infrastructure.

6. PFI Trend – July 2003

7. PFI Trend – March 2008

8. PFI consortium model
Source: HM Treasury

9. Private Finance Initiative
 Genuine risk transfer
 Output specification
 Whole life asset performance
 Performance-related reward
 Factors
◦ Risk Assessment
◦ Value for Money
◦ Affordability
◦ Robustness

10. Whole- CSF
Framework Life-Cycle
Risk Transfer
Parties Perspective
PPP PFI Value for Money
SPV
Affordability
Robustness
Financiers
Endogenous Exogenous
Factors Factors
Central
Contractors
Government Design SLEEPT
Granting Local Construction
Authority Authority social
Commission &
O&M legal
Agency
Rural/Urban
Technology
Public Obsolescence economic
Enterprise
Structure
Regulations environment
Revenue/
Financial Legislation political
Capabilities
Technical technology
Demand
Expertise

11. Research Question
 What is the link between Risk Transfer
Assessment, Value for Money,
Affordability and Robustness?
 How do these four elements affect each
other
◦ Individually
◦ Collectively
to provide a balance in a PPP/PFI
model?
 How can these four elements provide
sustainability to the PFI model in a PFI
project environment?

12. CSF Individually
Value for
Affordability
Money
Risk Robustnes
Transfer s
Robustness
Risk
Transfer
Affordability
Risk
Transfer

13. CSF Collectively
Value for
Money
Robustness Affordability
Risk Transfer
Assessment

14. Sustainable Model/Framework
Value for
Money
Robustness
Risk Transfer
Affordability
Assessment

15. Research Aim
Determine the significance and co-
dependency of “Robustness” in a
PPP (PFI) project environment from
the perspective of the Granting
Authority

16. Proposed Research
Objectives
1. To determine the significance of Robustness
in a PPP(PFI) project environment
2. To determine the co-dependency of the
Critical Success Factors
3. To determine a sustainable CSF
model/framework

17. Research
Methodology
 Qualitative Analysis
 Semi-structured Interviews
 Data triangulation – The use of a
variety of data sources (interviews,
archival material, observational data)
 Cognitive Mapping

18. Current Stage
 Identifying the problems and gaps
 Carrying out literature review on
◦ PPP
 Various PPP models
◦ PFI
◦ Granting Authority
 Various granting authority
◦ Risk Transfer
◦ Value for Money
◦ Affordability
◦ Robustness
◦ Research Methodologies

19. THANK YOU