P.E.D Love, B.M. Wood, D. Picken and B. Confoy
In an attempt to improve the effectiveness and efficiency of correctional facilities the Australian Government has recognised the need for their privatisation. Consequently, the…
Abstract
In an attempt to improve the effectiveness and efficiency of correctional facilities the Australian Government has recognised the need for their privatisation. Consequently, the Victorian Government initiated an “Infrastructure Investment Policy”, which led to the development of a portfolio called the “New Prisons Project”. This paper presents findings from several prison projects that have been developed using different procurement methods by both the public and private sector. The findings reveal that prisons procured by the private sector using BOO systems are more cost‐efficient, specifically in relation to construction and operating costs, than those procured by other means. Discussions on the future of privatising correctional services using BOO systems are also presented.
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S. Thomas Ng, Jingzhu Xie and Mohan M. Kumaraswamy
Unlike other project delivery options, a much larger proportion of risks is borne by the private partner in public‐private partnerships, since a large amount of equity is needed…
Abstract
Purpose
Unlike other project delivery options, a much larger proportion of risks is borne by the private partner in public‐private partnerships, since a large amount of equity is needed to finance the scheme. As a result, it is of paramount importance for the franchisee to analyse the possible project outcomes with due reference to potential risks affecting cash inflow and outflow. The purpose of this paper is to address the shortcomings of deterministic estimations by developing a proposal for a simulation model that aims to unveil the probability distributions of the equity amount and return on equity.
Design/methodology/approach
In this paper, a simulation model is developed to establish the probability distributions of these two indicators under the influence of risks. A simple case study is also presented to illustrate the concept and application of this model.
Findings
The simulation model can generate the probability distributions related to the net present value of the equity component as well as the rate of return on equity.
Practical implications
The method proposed in this paper should help the private investors analyse the amount of equity to be injected to the project and its corresponding return rate.
Originality/value
By referring to the probability distribution, an equity investor can establish whether they can recover their investment and gain a desired return rate. Based upon the risk attitude of the investor, decision‐makers can then decide whether the scheme should be pursued or not.
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A number of Australian states have employed private correctional companies to both manage, and design and construct their own facilities. Such projects have employed alternative…
Abstract
A number of Australian states have employed private correctional companies to both manage, and design and construct their own facilities. Such projects have employed alternative delivery methods from what had been traditionally procured state facilities. The study highlights private prison operators' responses to the evaluation of their Request for Proposal by state governments. The findings reveal that although the evaluation of tender bids by the participating state governments was appropriate, various problems were encountered with the evaluation methodology employed to assess and award tenders. The study shows that the areas of concern include the: suitability and reliability of the evaluation methods; reactions to the bid outcomes; appropriateness of the debriefing sessions. The study shows that operators would prefer fundamental changes to the evaluation methodologies of the design and construction component of the private prison request for proposal evaluation.
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Esther Cheung, Albert P.C. Chan, Patrick T.I. Lam, Daniel W.M. Chan and Yongjian Ke
This paper aims to explore the critical success factors (CSFs) necessary for adopting public private partnerships (PPPs) in both Mainland China and Hong Kong.
Abstract
Purpose
This paper aims to explore the critical success factors (CSFs) necessary for adopting public private partnerships (PPPs) in both Mainland China and Hong Kong.
Design/methodology/approach
An empirical questionnaire survey was conducted with relevant experienced practitioners in Mainland China and Hong Kong.
Findings
Both Mainland China and Hong Kong have been keen to deliver more infrastructure service projects through PPP mode, with the former aiming to meet its rapidly growing infrastructure demand and the latter uplifting its efficiency further. The results indicate that Hong Kong does not regard multi‐benefit objectives as importantly as Mainland China. Mainland China on the contrary felt more concerned with an equitable risk sharing mechanism, which is understandable given the problems affecting the financial market in Mainland China.
Originality/value
It is anticipated that the results presented in this paper will assist both the public and private sectors to deliver PPP projects more successfully.
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Akintayo Opawole and Godwin Onajite Jagboro
Demand–supply matrices with adverse consequences has occasioned government response to concession initiatives in infrastructure in Nigeria. However, concession-based projects have…
Abstract
Purpose
Demand–supply matrices with adverse consequences has occasioned government response to concession initiatives in infrastructure in Nigeria. However, concession-based projects have been trailed by administrative and legal controversies. While this scenario has negatively impacted the acceptability of a concession contract, there is, nevertheless, a paucity of research effort aimed at developing a sustainable framework. The purpose of this paper is to develop a conceptual framework for the evaluation and allocation of obligations of parties, thereby enhancing the synergy and cooperation between the public and private sector organization.
Design/methodology/approach
Data were obtained through a questionnaire administered to professionals in concession-based contracts in southwestern Nigeria, which included architects, estate surveyors, quantity surveyors, engineers and builders, accountants/bankers/economists and lawyers. The respondents were selected using random and respondent driven sampling approaches. The questions were structured to ensure that the respondents have appropriate experience in concession-based projects and hold appropriate positions as decision-makers so as to give credence to the collected data.
Findings
The study identified 47 contractual obligations in the specific context of developing countries. Based on “half-adjusting principle”, 13 of the obligations notably cost of land acquisition and cost of social disturbances were allocated to the public party; 18 of the obligations notably project design and cost of feasibility study were allocated to the private party; and 16 of the obligations including preparation of terms of a contract and relocation of third party facilities were shared by the parties.
Originality/value
The framework benchmarked the categorization of public and private parties’ obligations in concession-based public–private partnership (PPP) contracts. The study has the implication for the evaluation and allocation of obligations of parties, which could mitigate the risk of failure of PPP projects in relation to the specific context of developing countries.
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The construction industry has faced a period of intense introspection. This has prompted researchers and practitioners to consider what type and structure of construction industry…
Abstract
The construction industry has faced a period of intense introspection. This has prompted researchers and practitioners to consider what type and structure of construction industry is most appropriate to meet the challenges posed by market driven economies. Client demands are responding more rapidly to changing organisational and market imperatives. Creative and innovative solutions are expected from client analysts, advisers and consultants, from within and outside the construction industry. Previous research conducted in several client organisations at the project initiation (pre‐design) stage indicate that typically a building is not necessarily the only, or best, solution. It is contended that these trends have implications for the nature and workload of the construction industry in developed and developing countries alike. It reviews the past, considers present trends and suggests the effect such directions may have on the procurement of construction facilities.
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Public sector regimes in Australasia are reforming their operations to enhance effectiveness and efficiency. Competition and contracts are presented as mechanisms facilitating…
Abstract
Public sector regimes in Australasia are reforming their operations to enhance effectiveness and efficiency. Competition and contracts are presented as mechanisms facilitating such reform in areas such as costs, productivity and quality. This paper argues that short‐term contractual arrangements such as compulsory tendering do not live up to such reformist expectations. Unresolved questions thus preclude any final judgement about the benefits claimed for contracts and tendering in public management. In pursuing “best value” procurement policies, the public sector should consider delivery of services as a facilities management issue. Furthermore, business practice suggests that success is linked to an ability to be flexible in environments noted for change more than constancy. However, the preference given to competitive tendering and contracting (CTC) and more specifically to compulsory competitive tendering (CCT) by state and federal governments in Australia limits the growth of networks at community levels. The policy arena from which CCT derives is more transitory and limited in scope. The notion of compulsory tendering through market competition is discussed and challenged. The authors conclude that good procurement of facilities is a result of strategic linkages.