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Critical Issues in PPP Development, an Emerging Policy Paradigm and the Future of PPPs
Abstract
This concluding chapter offers insights into three areas. First, it highlights critical issues in PPP development in Kazakhstan and Russia. Second, it discusses why the current public policy regarding PPP deployment in Kazakhstan, and to an even greater extent in Russia, can be viewed as a paradigm. Third, it outlines the future of partnerships, that is, challenges to further PPP development that Kazakhstan and Russia face, and how the two nations can meet these challenges.
... Therefore, it is better to look at PPP in terms of the principal features that distinguish it from other types of agreements between the government and private organizations, keeping in view its unique contractual aspects. According to Mouraviev and Kakabadse (2017a), some of the legal challenges faced by PPP CPs are incomplete and inconsistent legislation surrounding partnerships, weak institutional development, virtually nonexistent civil participation, underdeveloped financing institutions and unclear stance from the government regarding approaches to PPP project preparation. Other legal challenges include lack of PPP-specific governance structures and established procedures for partner interaction; tariff adjustments; dispute resolution; ambiguous government approach to risk allocation; excessive government regulation in which the government focuses on input; and a contradictory perception of a policy paradigm, which serves as an instrument for massive PPP deployment, although the government commitment to partnerships quickly disappears after a PPP is launched. ...
The determination of the concession period (CP) in public-private partnership (PPP) infrastructure projects presents complexities to decision makers because various critical success factors (CSF) are involved which may be overlooked. This paper outlines a system dynamics (SD)-based approach to provide an in-depth understanding of CSFs that determines PPP projects' CP and models them for localized use. The CSFs are obtained from published literature, duly vetted through a survey of 56 experts, and used to develop a quantitative and qualitative SD model, validated by simulating case studies of five infrastructure projects. A total of 59 concession-affecting CSFs are highlighted that are reduced and compared for localized infrastructure projects. The findings indicate that CP should be dynamic instead of fixed and static, and warrant an extension of the originally proposed concession in three cases and reduction in the remaining two. The decision-making implications of this study target the three key stakeholders: the public body through reduced financial risks, the private organization through increased confidence and reassessment of concession during project life, and the end user through nominal tolls.
... Therefore, it is better to look at PPP in terms of the principal features that distinguish it from other types of agreements between the government and private organizations, keeping in view its unique contractual aspects. According to Mouraviev and Kakabadse (2017a), some of the legal challenges faced by PPP CPs are incomplete and inconsistent legislation surrounding partnerships, weak institutional development, virtually nonexistent civil participation, underdeveloped financing institutions and unclear stance from the government regarding approaches to PPP project preparation. Other legal challenges include lack of PPP-specific governance structures and established procedures for partner interaction; tariff adjustments; dispute resolution; ambiguous government approach to risk allocation; excessive government regulation in which the government focuses on input; and a contradictory perception of a policy paradigm, which serves as an instrument for massive PPP deployment, although the government commitment to partnerships quickly disappears after a PPP is launched. ...
The determination of the concession period (CP) in public-private partnership (PPP) infrastructure projects presents complexities to decision makers because various critical success factors (CSF) are involved which may be overlooked. This paper outlines a system dynamics (SD)-based approach to provide an in-depth understanding of CSFs that determines PPP projects' CP and models them for localized use. The CSFs are obtained from published literature, duly vetted through a survey of 56 experts, and used to develop a quantitative and qualitative SD model, validated by simulating case studies of five infrastructure projects. A total of 59 concession-affecting CSFs are highlighted that are reduced and compared for localized infrastructure projects. The findings indicate that CP should be dynamic instead of fixed and static, and warrant an extension of the originally proposed concession in three cases and reduction in the remaining two. The decision-making implications of this study target the three key stakeholders: the public body through reduced financial risks, the private organization through increased confidence and reassessment of concession during project life, and the end user through nominal tolls.
Scholars have become acutely interested in how behavior driven by ideas rather than self-interest determines policy-making outcomes. This review examines the literature on this subject. It differentiates among the types of ideas that may affect policy making (i.e., cognitive paradigms, world views, norms, frames, and policy programs) and identifies some of the persistent difficulties associated with studying how ideas shape policy. In particular, studies often do a poor job pinpointing the causal mechanisms that link ideas to policy-making outcomes. More attention needs to be paid to articulating the causal processes through which ideas exert effects. Suggestions for future scholarship that might improve this situation are offered. These include identifying the actors who seek to influence policy making with their ideas, ascertaining the institutional conditions under which these actors have more or less influence, and understanding how political discourse affects the degree to which policy ideas are communicated and translated into practice.
The article deals with the questions of the emergence, persistence and change of policy paradigms. It focuses on the role that policy networks play in this process and draws on the literature of problem definition to explain this role. The paper investigates water policy in Israel in the years 1948-1997. The paper distinguishes among two water policy paradigms that have prevailed: the earlier paradigm was one of expanding water resources and agricultural production, followed by a paradigm of priority of agricultural expansion over water conservation. The paper also distinguishes among periods of anticipatory and reactive water policy and highlights the role of policy networks in formulating public policies.
In many countries, limitations upon the public funds available for infrastructure have led governments to invite private sector entities to enter into long-term contractual agreements for the financing, construction and/or operation of capital intensive projects. For the public procurer, there is an obvious need to ensure that value-for-money has been achieved. To the project sponsors, such ventures are characterised by low equity in the project vehicle and a reliance on direct revenues to cover operating and capital costs, and service debt finance provided by banks and other financiers. Risk evaluation is complex, requiring the analysis of risk from the different perspectives of the public and private sector entities. This paper analyses the principles involved, drawing on practical experience of evaluating such projects to present a framework for assessing the risks, and using as illustration a case study of a waste water treatment facility in Scotland which is typical of most PPP projects.
Public–private partnerships (PPPs) are new in Russia and represent project implementation in progress. The government is actively pursuing PPP deployment in sectors such as transportation and urban infrastructure, and at all levels including federal, regional and especially local. Despite the lack of pertinent laws and regulations, the PPP public policy quickly transforms into a policy paradigm that provides simplified concepts and solutions and intensifies partnership development. The article delineates an emerging model of Russia's PPP policy paradigm, whose structure includes the shared understanding of the need for long-term collaboration between the public sector and business, a changing set of government responsibilities that imply an increasing private provision of public services, and new institutional capacities. This article critically appraises the principal dynamics that contribute to an emerging PPP policy paradigm, namely the broad government treatment of the meaning of a partnership and of a contractual PPP; a liberal PPP approval process that lacks clear guidelines and consistency across regions; excessive emphasis on positive PPP externalities and neglect of drawbacks; and unjustifiably extensive government financial support to PPPs. Whilst a paradigm appears to be useful specifically for the policy purpose of PPP expansion, it may also mask inefficiencies such as higher prices of public services and greater government risks.
Literary sources regarding public—private partnerships (PPPs) often mention the importance of conducting a value for money (VfM) analysis to determine the value of pursuing a project through a PPP versus a traditional procurement; however, few sources detail how agencies actually use this analysis in practice. This article provides a state-of-the-practice review of VfM analysis using examples from Australia, Canada, Europe, Africa, and Asia, focusing particularly on the VfM model used by agencies such as Partnerships Victoria, The United Kingdom's Her Majesty Treasury Department, and Partnerships British Columbia. Despite its growing applications in PPP projects from all different sectors, VfM has faced significant criticisms from academics and practitioners. This article evaluates reviews of VfM, noting the weaknesses and strengths of the methodology. Using the information derived from the evaluation, this article provides a guided reference for public agencies looking to adopt this VfM methodology in their current PPP decision-making framework.
The conventional paradigm of state economic development policy focused on the attraction of firms from outside the state. Since the early 1970s, the states have expanded their concern to include development of the state economy as a whole. Out of the ad hoc experimentation of the past 2 decades is emerging a new paradigm of state economic development policy with three principal elements. The first is a concept of economic development as a process rooted in a market-driven private sector. The second is a new set of state responsibilities, including a wide range of public actions that affect the process of development. And the third is a set of new institutional capacities required for shaping and carrying out those new responsibilities. During the 1980s, states attempted to devise economic strategies that accounted for their new responsibilities, which had been only dimly defined. In the 1990s, states also will need institutional change strategies required to develop the capacity to more sharply define and carry out those responsibilities.
This article examines the model of social learning often believed to confirm the autonomy of the state from social pressures, tests it against recent cases of change in British economic policies, and offers a fuller analysis of the role of ideas in policymaking, based on the concept of policy paradigms. A conventional model of social learning is found to fit some types of changes in policy well but not the movement from Keynesian to monetarist modes of policymaking. In cases of paradigm shift, policy responds to a wider social debate bound up with electoral competition that demands a reformulation of traditional conceptions of state-society relations.
In PFI transactions the private companies which take on the obligation to build and manage a facility usually provide only a small fraction of the project's capital requirements. Most of the capital is borrowed from banks and other financial institutions. This poses challenges to financial services providers which often have to retain untypical residual project risks. This article describes the types of risks faced by financial services providers and the strategies they use to cope with these risks. Given the often politically-sensitive nature of PFI projects, the authors suggest that financial institutions should investigate a broader set of parameters than they do at present, which relate directly to the political economy of PFI projects.
Teoriya i Metodologiya Investirovaniya Innovatsionnoy Deyatelnosti na Osnove Gosudarstvenno-Chastnogo Partnerstva (in Russian) (Theory and methodology for investment in innovation activity using public-private partnerships)
- A A Firsova
Effektivnost’ realizatsii infrastrukturnykh proektov GChP v Rossii (in Russian) (Efficiency of PPP project implementation in infrastructure in Russia) In Annual Meeting of the PPP Centre and Representatives of Regions of the Russian Federation Regarding Implementation of PPP Projects
- M Shabashevich
The logic of public problems: Evaluation in comparative policy research
- C Anderson
Public policy paradigm theory: Paradigm shifts in the EU – social and related policies
- T R Burns
- M Carson
Gosudarstvenno-Chastnoye Partnerstvo v Sovremennoy Praktike: Osnovnye Teoreticheskiye i Prakticheskiye Problemy (in Russian) (Public-private partnership in modern practice: Main theoretical and practical problems)
- A Pankratov