A model of output specifications for public-private partnership projects

Pao Yue-kong Library Electronic Theses Database

A model of output specifications for public-private partnership projects


Author: Javed, Arshad Ali
Title: A model of output specifications for public-private partnership projects
Degree: Ph.D.
Year: 2013
Subject: Public-private sector cooperation.
Specification writing.
Hong Kong Polytechnic University -- Dissertations
Department: Dept. of Building and Real Estate
Pages: xxiv, 426 p. : ill. ; 30 cm.
InnoPac Record: http://library.polyu.edu.hk/record=b2639096
URI: http://theses.lib.polyu.edu.hk/handle/200/7076
Abstract: An output specification is an integral part of the contract documentation for procuring and monitoring Public-Private Partnership (PPP) projects throughout their lifecycles. The output specification stipulates what is required from the project rather than how it should be delivered. It defines details of outputs (assets and services) as required by the client. At the bidding stage, an output specification prepared by the public sector client or its consultants guides the private sector contractor in designing and pricing the works and services. At the works and services execution stage, it becomes a monitoring and performance assessment tool. The contractor is paid a unitary charge as a reward for providing the outputs according to the required standards, failing which deductions will be made. At the handover of the facility back to the client after the concession period, the output specification is used to ensure that the client receives the facility in the expected fit-for-purpose state. A clear output specification is therefore a key success factor in any PPP project. There is little in the literature which deals with the pitfalls that exist in output specification documents. Due to the long-term nature of PPP projects, changes in the facilities and service provisions are inevitable. Guidelines are needed for managing the changes and facilitating negotiation from a lifecycle perspective. These are the knowledge gaps identified, which form the subject of this research. This research is aimed at investigating the best practices for developing a clear, concise and comprehensive model of output specifications for PPP projects. Hence, the specific objectives of this research are as follows: i. identify the pertinent issues and potential pitfalls of output specifications for Public-Private Partnership projects, and recommend solutions based on a whole-life approach; ii. establish strategies for managing potential changes of contract requirements to tackle the "incomplete contract" situation by facilitating negotiation within the long-term project lifecycle; and iii. develop a generic model of output specifications incorporating the solutions and strategies with potential application for a selected type of PPP project.
These objectives have been achieved through a comprehensive literature review, in-depth analysis of case studies from the UK (where the name of Private Finance Initiative "PFI" is more often used), Hong Kong and Singapore, interviews with international stakeholders, questionnaire surveys conducted in Australia, Hong Kong and the UK, and all targeting social and economic PPP/PFI infrastructure projects. An economic experiment was conducted by inviting practitioners from the public and private sectors to negotiate cost sharing for changes in requirements under different output specification scenarios via computers, and this was repeated with undergraduate students as a control group. Their behaviors in cost sharing were analyzed, together with the time taken for settlement using the 'z-Tree' software (a multi-stage ultimatum bargaining game). A post-experiment questionnaire was administered to find out the relative effectiveness of the change management strategies. The results are consolidated into a generic model, incorporating the strategic elements for preparing output specifications. The model was validated by the experts. The research has contributed to new knowledge for preparing output specifications and negotiating changes for PPP/PFI projects in the following three areas: (1) the results of the quantitative analysis of questionnaire surveys can help both the public and private sectors understand the relative occurrences of pitfalls in output specifications and their effects on PPP projects. The qualitative analysis of case studies and interviews provide examples of best practices how to avoid pitfalls; (2) the use of game theoretical analysis can help both the public and private sectors in negotiating changes during the concession period. Experimental results show that a clear and detailed set of output specifications incorporating mechanisms for additional cost sharing and saving reduces negotiation time and paves a smoother trail in managing changes; and (3) the model may be used by public sector clients as a reference for developing a framework of output specifications for selected PPP/PFI projects, such as hospitals (an example is shown in this thesis) with adjustments according to their particular characteristics.

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