Infrastructure Engineering - Theses
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ItemEnhanced value for money outcomes through alliance techniques: a framework for public private partnerships in Australia( 2007)While much of Australia's current infrastructure has been traditionally provided by the public sector, there is a recent trend towards private organisations providing infrastructure services. Governments have realised that to maintain economic competitiveness along with social cohesion, the value of private finance within infrastructure development can not be understated, whereby the private sector invests in infrastructure and provides related services to the public sector at a reasonable cost. Whilst there are a multitude of variations, this concept is commonly known as a Public Private Partnership (PPP). Recent Public Private Partnership projects in the developed world have focussed heavily on achieving Value for Money (VfM) outcomes for governments through the application of robust polices and guidelines. This study has investigated current Australian PPP policies (both State and Federal) to determine whether enhanced Value for Money outcomes can be achieved through the integration of Alliance techniques. Value for Money in a theoretical sense is defined as the functional performance achieved for a given consumption of resources. The actual quantum of Value for Money calculated is not important; the focus being on the relativity between the traditional PPP model and a model that utilises Alliance techniques. Specific techniques and perceptions of Alliance Contracting were investigated through a series of surveys with direct users from both the public and private sectors, and the level of applicability to a PPP process was established. A detailed review of Australian and UK PPP projects was undertaken and a series of in depth case studies were investigated to better understand the practical implications and the current shortcomings in current PPP policy approaches. The framework for a new approach was developed and further tested and refined through an industry workshop with key PPP representatives from a variety of sectors. The study concludes with drafting new guidelines for PPP projects, to enhance Value for Money outcomes for all parties. Whilst it was found that not all Alliance techniques would enhance Value for Money outcomes, a number of key areas were identified where improvements could be made to current practices, namely: • Development of policies to mandate interaction between the State, bidders and end users at critical stages of PPP projects. Proposed enhancements to the current PPP policy model have been developed, including: • Incorporation of relationship based Alliancing techniques to assist with the complex and varied contractual nature of a PPP project; • A credit based abatement regime which incentivises parties to outperform specific outputs in the form of credits which can then be used against underperforming areas; and • The appointment of an Independent Reviewer to oversee the long term management of the contract.
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ItemGetting a fair deal: efficient risk allocation in the private provision of infrastructure( 2000)Over the last decade there has been an increasing trend by governments in Australia and throughout the world to use the skills and expertise of the private sector in developing and implementing infrastructure projects. The agreement for these projects must allocate responsibility for dealing with the risks which may arise to either the government directly, or on behalf of consumers, or to the private sponsor. This thesis investigates risk allocation in the private provision of infrastructure, particularly in build-own-operate (BOO) and build-own-operate-transfer (BOOT) projects. Its primary objective is to identify a framework for efficient risk allocation so that decision makers can assess the efficiency of the risk allocation in past projects and can attempt to increase the efficiency of the risk allocation in future projects. This thesis defines an efficient situation as one where the risk allocation cannot be varied without the total risk premium for the entire project being increased, and approach based on Pareto optimality. As it is almost impossible to determine the true risk premium charged by parties for risk bearing, risks should be allocated to the party best able to control and manage them. This is explained to mean the party which is best able to control or manage the likelihood of the risk occurring or the size of its consequences if it does occur. It also means the party with the best access to reasonable mitigation techniques and the party which is least risk averse. Those exogenous risks which are not easily allocated in this way should be shared so that both parties, the sponsor and the government, have an incentive to manage them. Some of the options for sharing these risks are examined. The application of the theory of efficient risk allocation is simplified by using a categorical risk framework. This approach is then tested on seven case studies of recent Australian projects spanning several industry sectors. Finally, the theoretical hypotheses and assumptions are tested in a survey of key participants in the Australian private infrastructure industry. This survey not only confirms that the basic theory for efficient risk allocation is valid but also identifies the key areas of concern to the private sector when it considers project risk allocation. Risks of concern are identified and possible options for risk sharing are investigated. This thesis concludes that it is possible to achieve efficient risk allocations in practice, and that by achieving this outcome transaction costs can be reduced, allowing cheaper infrastructure services to be supplied to the community. However, several hurdles to achieving this outcome are identified. These include the peculiar characteristics of banks and their position in projects funded using non-recourse project finance, and the fact that most private firms fail to value potential upside risks as highly as they fear potential losses due to downside risks. More work is needed to understand and overcome these hurdles if efficient risk allocation is to be achieved in the real world. It is only then that governments can be sure that they are providing private sector infrastructure services to the community at the lowest overall cost.