Comparative performance of PPPs and traditional procurement in Australia

Abstract

Empirical research comparing projects procured as public-private partnerships (PPPs) with other methods of procurement is important because Australian governments plan to spend $320 billion on infrastructure over the next decade and PPPs are perceived to be an appropriate form of delivery. Estimating cost and risks in Australian capital projects is often characterized by optimism bias—the tendency to be overly optimistic about planned actions—and is too often based on insufficient historical data on which to make decisions. Given this broad context it is important to begin to understand in detail how PPPs have performed against other forms of procurement. To achieve this, a detailed study has been undertaken to compare the project time and cost outcomes observed in the Australian PPP market with those projects delivered by governments via traditional procurement methods. Two sets or pools of projects were compared based on a detailed analysis of publicly available data for a sample of 21 PPP projects and 33 traditional projects. This selection was based on a consideration of previous studies, time and cost metrics, project size and the relative complexity of different project types. In comparing the two sets PPPs demonstrated superior cost efficiency over traditional procurement, which ranged from 30.8% when measured from project inception, to 11.4% when measured from contractual commitment to the final outcome. Between the signing of the final contract and project completion, PPPs were found to be completed 3.4% ahead of time on average, while traditional projects were completed 23.5% behind time. The overall conclusion is that PPPs provide superior performance in both the cost and time dimensions, and that the PPP advantage increases (in absolute terms) with the size and complexity of projects.PPPs, PFI, time and cost performance, procurement, infrastructure,

Risk Management for Build-Transfer Plus Land Usage Fee Reimbursement Delivery Method in China

“…In the past decades, PPP has become a hot research field for different construction types and in different countries. Some researchers care about one certain aspect of PPP/BOT application, such as critical success factors (Chan et al 2010a;Dulaimi et al 2010;Tang et al 2013), performance evaluation (Yuan et al 2010;Raisbeck et al 2010;Cheung and Chan 2011), implementation obstacles (Chan et al 2010b;Yuan et al 2012), and risk management (Wang et al 2000a(Wang et al , 2000bChoi et al 2010;Ke et al 2012;Hwang et al 2013), and try to find a reasonable execution scheme for PPP/BOT projects. The questionnaire survey method is frequently used so as to widely hear experts' opinions and suggestions.…”

Achieving Value for Money: An Analytic Review of Studies on Public-Private Partnerships

“…Thus, a number of studies continually strive to explore empirical evidence to prove the value for money. From the value proposition, many researchers (Aziz 2007;Grimsey and Lewis 2005;McKee et al 2006;Raisbeck et al 2010) most likely tried to use the cost and time evidence to certify the success of PFI. The authors collected some evidence that the PPP outperformed over tradition procurement in Table 1.…”

Data Review of Transportation Infrastructure Public–Private Partnership: A Meta-Analysis

“…Focusing on P3s that include capacity development, some studies compared cost and schedule overruns between public procurement and P3s. For instance, Raisbeck, Duffield, and Xu (2010) analyzed data in the public domain regarding 21 P3 projects and 33 publicly procured infrastructure projects in Australia, in terms of their schedule milestones and original bidding prices. They found that the variance of actual costs and schedules relative to the original plans was much larger for publicly procured projects than for P3s.…”