Enhancing value for money in public private partnership projects

Abstract

Purpose The purpose of this paper is to study the measures that enhance value for money (VFM) in public private partnership (PPP) projects from the findings achieved in a questionnaire survey. The questionnaire survey was conducted in Hong Kong (also known as the Hong Kong Special Administrative Region) and Australia, and is compared to the results conducted by other researchers in the UK. Design/methodology/approach Respondents to the questionnaire were asked to rate 18 VFM measures in PPP projects. Findings The results found that the top five VFM measures ranked by the respondents from Hong Kong included: efficient risk allocation (allocating the risk to the party best able to manage it); output‐based specification; competitive tender; private management skill; and private sector technical innovation. The first and second of these VFM measures were also found to be ranked high by the respondents from Australia and the UK, indicating that these were true for these jurisdictions. Practical implications When the risks are handled well, less pitfalls are experienced and as a result VFM is more achievable. Hence, an efficient risk allocation is vital in determining whether VFM can be achieved in PPP projects. A clear output‐based specification can enable a more obvious project design and concept hence minimizing the possibility of delivering the wrong product for the user. Therefore, this measure is also important in determining whether VFM has been achieved for a PPP venture. Despite the interest in PPP, there is need for more systematic and in‐depth research to examine the measures that enhance VFM in PPP projects in Hong Kong. Originality/value In addition, this project also forms a comparative study for the use of PPP in Hong Kong, Australia and the UK.