The significance and co-dependency of 'robustness' in PFI projects : a granting authority perspective

The Private Finance Initiative or PFI since its introduction by the UKGovernment in 1992 has been widely used in the delivery of public serviceprovision. Furthermore, PFI has been encompassed under a large umbrella ofcollaboration known as Public Private Partnerships (PPP). The acceptance ofPFI as a mode of procurement has obtained mixed reviews to the extent that PFIas an option is mainly seen as being 'the only show in town'. Nevertheless thepotential of PFI in achieving effectiveness and efficiency in the delivery of publicservices has been echoed continuously by the HM Treasury. On the other hand,academia has been divided in their opinion in showing support towards PFI.The Granting Authorities are the largest providers of public service provisionand the largest consumer of the PFI procurement method. Recent analysis of thePFI indicates a decline in the number of deals signed in 2009 at 35 and valued at£4.2bn (compared to 2008 whereby 34 deals were signed and valued at £6.8bn).This achievement has been severely curtailed as it was estimated that 60 dealsper year over the next decade was required. Certain parties have indicated thatthe 2009 financial crisis has been the main contributor. Subsequently the shiftin policies pertaining to PFI with the recent 2010 general elections leading to ashift in political masters continues to raise concerns of the relevance of PFI as aprocurement method. Therefore the volatile environment, within which PFIoperates, drives this research in exploring the Robustness of PFI in the projectenvironment from the perspective of the Granting Authority.The aim of the research is to determine the significance and co-dependency ofrobustness within a PFI project environment. This is explored from theperspective of the Granting Authority as the procurer of services using the PFIprocurement model. In order to achieve the aim of the research, aconstructivist-interpretivism philosophical stance is adopted. The studyexplores operational PFI projects within a real-life setting. Hence thephilosophical perspective emphasises a great deal on the social impact broughtabout by the human factor that influences the decision making processes pertaining to PFI. The processes that are of focus are Value for Money, RiskTransfer Assessment and Affordability.A qualitative research strategy is used to execute the study. This is implementedusing a case study framework whereby multiple embedded case studies areused. The case studies are used to capture the implementation of PFI projects bythe different types of Granting Authorities in the UK mainly Local Councils andGovernment Agencies (NHS Trust). The significant contributions of the researchare the concept of Quantifying Robustness; the Robustness Model; thedocumented Case Studies and the Critical Success Factors (CSFsJ for Robustnessfor a PFI project environment. The study concludes firstly, that robustnessrepresents the permissible threshold within which a PFI project remainsprogressive subjected to endogenous and exogenous factors. Secondlyrobustness plays a significant role in ensuring the progressive nature of theproject. Thirdly the relationship between Risk Transfer Assessment, Value forMoney and Affordability are integrated and parameter hierarchical withresilience and robustness ensuring the relationship is constantly at equilibrium.Finally the CSFs for robustness identified through the study are certainty;mechanisms; relationships; resilience; reliability; project management andpeople. The key recommends of the study are firstly, that the approach ofquantifying robustness be further enhanced using advance qualitative tools.Secondly the robustness model is further validated using similar qualitativetools. Thirdly that PFI projects by Central Government be included forcomparison and that the CSFs for robustness includes the factors identified forthis projects as well and finally, human resource capabilities and capacitybuilding through training.Overall the research has provided an insight to the importance of robustnesswithin PFI projects. By understanding its role and the dynamics that areinvolved, it is inferred that the performance of PFI will be enhanced.Furthermore the volatile construction market in the UK as well as globally willbenefit largely from the robustness within PFI projects. Subsequently thestakeholders within the PFI market and the construction industry at large willbe the largest beneficiaries