Public-Private Partnership Networks: Exploring Business-Government Relationships in United Kingdom Transportation Projects

Abstract

Since the early 1990s, U.K. governmental policy has formally encouraged the delivery of infrastructure through private finance initiatives, a model of public‐private partnership in which the design, construction, financing, operation, and maintenance of facilities are bundled into a long‐term contract with a single consortium of firms. Drawing on an analysis of governmental records of the firms that participated in every U.K. project between 1987 and 2009, this article traces the extent to which stable partnerships are used to produce private finance transportation initiatives. The findings highlight an important tension between the benefits and drawbacks of repeat collaborations on one‐off projects. On the one hand, the extensive use of repeat‐partnership relationships lowers transaction costs, encourages innovation, and supports learning from past experiences. On the other hand, deep embeddedness within social networks that encourages frequent repeat collaborations can reduce competition within the industry and contribute to higher delivery costs and lower‐quality public services. Through this analysis, the article addresses the key economic geography literatures that are related to project ecologies, embeddedness, and repeat collaborations within networked production processes.

Risk management by SPV partners in toll road public private partnerships

“…The SPV also consists of a number of firms with different competencies such as facilities management, project finance and risk management expertise. A lot of the tasks will be undertaken by the SPV with further tasks subcontracted to other companies (Siemiatycki 2011). In PPPs, many of the contractors and engineering companies have also become equity investors and generally the equity will equate to 10% of the total investment with the remaining 90% comprising of debt (Siemiatycki 2011).…”

“…A lot of the tasks will be undertaken by the SPV with further tasks subcontracted to other companies (Siemiatycki 2011). In PPPs, many of the contractors and engineering companies have also become equity investors and generally the equity will equate to 10% of the total investment with the remaining 90% comprising of debt (Siemiatycki 2011). Specialist financial institutions, including private equity and investment groups may also invest equity specifically in infrastructure (Demirag et al 2011).…”

“…Where international firms have entered the UK PFI market, in half of the contracts, they have formed a relationship with a large domestic UK contractor with wholly international owned consortiums only evident in six cases. Also, no design and build contractor entered into business in more than four PPP projects and in only one third of the Highways Agency's PFIs did the SPV consist of two or more of the same contractors (Siemiatycki 2011). Shaoul et al (2008) found that some markets are more closed to international companies than others.…”

“…Finance was sourced on this project from a number of prominent international financiers (NRA, 2009). (Adapted from Akinyemi et al 2009;Beck 2003, 2010;Ortiz and Buxbaum 2008;Siemiatycki, 2011Siemiatycki, , 2012bSiemiatycki, , 2015Chung et al 2010;Demirag et al 2012) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59…”

“…Loosemore and Cheung (2015) highlight that these stakeholders are often treated in isolation regarding how they manage risk hence the interdependencies between each group in PPP projects may be ignored. Furthermore, the partners within SPVs often have complex international relationships (Siemiatycki 2011) and the relationships between international partners can be collaborative or adversarial (Siemiatycki 2012a). This could affect how risk is managed, transferred and who is ultimately held responsible for these risks in a PPP project.…”