We reviewed previous studies and found that a number of Australian studies on PPPs have examined ex ante Value for Money (e.g. Fitzgerald, 2004), undertaken limited case studies (e.g. English, 2005), reviewed risk allocation practice in general (Brown, 2006), or looked at specific PPP contracting issues (Brown, 2005). While providing different insights into the process and performance of PPPs, these studies have not explicitly sought to test the ex post efficiency of PPPs against the Traditional procurement alternative in the manner of the UK's Mott MacDonald (2002) or National Audit Office (2003) studies.
The Mott MacDonald study measured 'optimism bias' as the percentage differential between the estimated project duration or capex cost at the 'Strategic Outline Case' or 'Outline Business Case' and 'Works Completion'. While the UK's PPP projects were found to exhibit relatively neutral 'optimism bias', the bias found in Traditional procurement was sometimes significant (50 percent or more). The National Audit Office (2003) found that three quarters of PPP projects were completed on time and on budget, compared with less than a third of Traditional procurement firms.
While the Mott MacDonald and NAO studies have been criticised in some quarters (Unison, 2005), the methodology applied in the current study was designed in a manner that is robust with respect to all of these concerns.