A study of the operationalization of management controls in United Kingdom Private Finance Initiative contracts

Abstract

Utilizing evidence from a United Kingdom (UK) road case study Private Finance Initiative (PFI) project, this article considers how the UK central government's infrastructure strategy is operationalized through accounting‐based performance measures and incentive systems, and articulates how the adoption of such systems is moderated by trust practices. The findings indicate that initial government policy objectives, translated as performance indicators in the case study, failed to offer adequate incentives for contractors and created tensions. However, controls were later developed through inter‐party trust practices for managing performance and relational risk. These findings have important implications for PFI policy and practice, including that negotiation can: (i) lead to pragmatic controls being introduced to foster cooperation and trust‐building; and (ii) provide opportunities for adapting the monitoring and incentive mechanisms. This study also contributes to the previous literature where PFI control systems were largely regarded as inadequate for dealing with unforeseen conflicts between parties.

The role(s) of accounting and performance measurement systems in contemporary public administration

“…In this context, management control systems have to fulfil various roles of assessment, monitoring, managing, reporting, accountability and policy direction (see Andon ) to reconcile the multiple, and sometimes also conflicting, interests of different players. The case study by Ahmad et al () not only highlights the shortcomings of operationalizing and incentivizing the achievement of contract objectives but also uncovers the significant challenge of balancing the tensions between different functions of control systems (i.e., monitoring and penalizing versus incentivizing functions). The authors show that pragmatism and trust‐based practices play an enabling role in mediating these tensions, and also contribute to further sustaining inter‐party relationships by providing opportunities for adapting the monitoring and incentive mechanisms.…”

“…The latter, being set in a networked context, observes how external regulatory strategies and multiple accountability arrangements affect the implementation of performance management. Ahmad et al (), in contrast, explore the effects of a performance management regime in a hybrid model of public service delivery by analysing its potential to influence the behaviour of service delivery organizations in order to achieve desirable or predetermined outcomes. While the first‐mentioned study focuses mainly on the organizational level, the latter two point to the relevance of accounting in mediating the relationship between different organizations, be they separate institutions or networked ones.…”

“…In a similar vein, but focusing on the transport sector, Ahmad et al () examined how UK road PFI contracts are managed during their operational stages (i.e., PPPs in action; see Andon ). The authors analyse the potential of a performance management regime in influencing the behaviour of actors in a hybrid model of public service delivery to achieve desirable or predetermined outcomes.…”

Devlet Bütçesi̇ Açisindan Kamu Özel İşbi̇rli̇ği̇ Projeleri̇nde Hi̇bri̇d Yöneti̇şi̇m Standartlarinin Geli̇şti̇ri̇lmesi̇ni̇n Önemi̇

“…Güvenin, her yönetişim kontrolünde önemli bir unsur olduğu bilinmektedir (Langfield ve Smith, 2003;Dekker, 2004;Coletti vd., 2005;Busco vd., 2006;Emsley ve Kidon, 2007;Free, 2008;Velez vd., 2008;Ditillo vd., 2015;Zahir-ul-Hassan vd., 2016), ancak bu bağlantılarda hala bilinmeyen yönler vardır (Caglio ve Ditillo, 2008;Baldvinsdottir vd., 2011, Ahmad, Connolly ve Demirag, 2018. Bunlardan en önemlisi kontrol sistemlerinin ve güvenirliliğin birbirlerini güçlendirdikleri mi, yoksa birbirlerinin yerine mi geçtikleridir.…”

“…Baldvinsdottir vd. 'nin (2011) belirtiği gibi akademik araştırmalar güvenirlilik ve kontrol sistemleri arasında daha çok kontrol sistemleri üzerine yoğunlaşmıştır, onun için güvenirlilik, kontrol sistemleri etkilerinden daha çok araştırılması gereken alandır (Ahmad, Connolly ve Demirag 2018). Böyle bir araştırma konusu bilhassa uzun zamanlı KÖİP projeleri için geçerlidir, çünkü kontrol sistemlerinin taraflar arası güvenden veya güvensizlikten nasıl etkilendikleri, bunların neticeleri, böyle uzun bir süre * Dünyada ve Türkiyede Kamu Özel İşbirliği Uygulamalarına İlişkin Gelişmeler 2017, Kalkınma Bakanlığı içinde çalışılması gerekli konulardır (English ve Baxter 2010; Demirağ ve Burke 2015, Ahmad, Connolly ve Demirag 2018 ).…”