Rethinking value for money in Public Private Partnerships: a critique, analysis and model for transport infrastructure projects

Zhao, Jianfeng (2022) Rethinking value for money in Public Private Partnerships: a critique, analysis and model for transport infrastructure projects. Doctoral thesis, Northumbria University.

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Abstract

Value for Money (VfM), as the rationale for the use of Public Private Partnership (PPP), is controversial and often poorly understood by the public sector for their infrastructure projects. This study, therefore, aims to develop a decision-making model for public sector bodies to better understand and assess VfM of their transport infrastructure projects. Specifically, four research objectives were formulated, comprising: (1) establishing the state-of-the-art VfM assessment practices in global PPP markets and evaluating them in the light of common critical reactions; (2) proposing a new VfM concept based on value and stakeholder theories, and developing a comprehensive framework for assessing VfM; (3) refining and validating the proposed VfM framework; and (4) applying the developed VfM assessment model to a real-world infrastructure project.

To address those objectives, under the auspice of a mixed methods research design, semi-structured interviews were first undertaken with 13 highly experienced professionals (with an average of 23-year working experience) with knowledge of infrastructure procurement. The interview results (analysed via a thematic analysis) showed that public VfM (i.e., service/ functionality, environment, distribution, resilience, and social inclusion) and traditional VfM (i.e., cost, quality, and time) together create a more meaningful concept of VfM, which was subsequently refined and further developed into a VfM assessment framework that was underpinned by theories of value and stakeholder theory. Second, using purposive sampling, a questionnaire survey of 31 industry experts who assume extensive experience with infrastructure procurement in the United Kingdom was conducted. The survey data, which was analysed through Analytical Hierarchy Process, resulted in a quantified relationship between VfM assessment variables. Finally, the developed VfM assessment model was applied to a real-world transport infrastructure project to examine its VfM decision-making and monitoring practices.

By criticising current VfM assessment practices, analysing the collected data, and proposing a comprehensive assessment model, this study sets a robust foundation for the public sector to rethink VfM in PPPs. As a result, it has made contributions to theory and practice. Theoretically, this study has: (1) expanded the existing VfM definition by arguing that traditional VfM and public VfM together create a more meaningful VfM concept; (2) advanced a consistent VfM assessment and channelled it into the transport sector; and (3) extended the ex-ante VfM assessment to include ex-post VfM assessment by developing a model that can be tailored to suit the procuring body’s and the project’s needs. In practical terms, it has provided a common language of VfM in infrastructure procurement and presented a VfM assessment model that can be readily utilised by the public sector for their transport infrastructure projects.

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