With respect to the impact of changes to consortia partners, PF14 states that, in practice, there is often little adverse risk exposure to government (although such changes may be challenging for the private partner) even if the departure of a consortium member is enforced due to under-performance or default. RK11 elaborates:
"...usually the difficulties in PPP actually demonstrate how strong the model is rather than the opposite, even with what's happening now at BrisConnections where the SPV or the equity provider loses money, the state is beautifully protected. All of that [financial] risk is transferred - that's the reason why we do PPPs. So rather than it showing that the PPP model is flawed, it shows you how strong the model is. The losses are quarantined - it's superb".
A change to the composition of a consortium (e.g. the introduction of a new equity investor) - a fairly common occurrence (PT11) - can potentially present an opportunity to improve VfM outcomes (RK06) depending on the organisation's tolerance to risk (RK05) and its ability to manage change situations i.e. the willingness of its decision-makers to enter into contract variations requested by the state. Conversely, a new consortium member may be less receptive to the notion of taking on additional risk because it may have different organisational drivers and / or internal policies compared with its predecessor (RK10), as RK05 explains:
"A passive investor might want to basically sit back and lead a quiet life and collect dividends out of the project company. They will be concerned that a high level of performance is maintained but they will be unwilling to entertain variations and the like. Government always has the right to require variations but if you are going through those processes with a reluctant party that doesn't have the right capacity and capability to deal with those issues then, potentially, this can detract from VfM outcomes".
Typically, pension funds have a conservative risk profile and are attracted to PPPs that are likely to produce a stable return on investment over the long-term e.g. regular income that can be generated from patient care and cleaning in hospitals (PT11 and PT07). As a result, pension funds are more likely to be 'passive investors', and generally speaking, less likely to seek higher exposures to risk.
On the public sector-side, 'machinery of government' changes that affect a public authority, for example, can be disruptive to effective PPP oversight (PT03). These events may be further exacerbated due to uncertainty in decision-making and poor communication (PF08) with employees and other stakeholders during change processes. Such developments may also heighten the risk of failing to achieve intended VfM outcomes because of staff turn-over and / or the loss of critical knowledge (PT03) (see 'Organisational culture' and 'Employee capability and expertise', above) unless these risks are adequately managed.
Changes to the public authority tasked with governance of PPPs during the operational phase are not comprehensively dealt with in the literature. The case studies (see Chapter 5) show that this may occur more frequently than might be expected. While changes may reflect the outcomes of larger structural 'machinery of government' changes, there also appears to be a principle of locating operational governance according to PPP type e.g. health facility PPPs in a hospital authority or health department; correctional facility PPPs in a justice department; and transport infrastructures in a road or rail authority. The PPP case studies in Chapter 5 show that, in such examples, the public governance in PPP development and delivery phases may emanate from a specialised government major projects unit. The governance re-location principle justifies the need for a generic integrated operational management model for PPP which can be adopted and tailored to suit different types of projects. The benefit of this principle is that specialised knowledge is brought to bear on operational management. The downside is the potential effect on the maturity of partnership management, and the risk that the transfer of PPP governance skills and knowledge may not be fully effective. These are important findings for this research.