Table 9.1 shows focus group participant feedback in relation to structural considerations for the IMM. The right hand column indicates the researcher's responses.
Table 9.1 Structural Considerations.
Participant | Feedback | Researcher Response |
FG01 | Risk management is not a separate element of the management of a PPP. Rather, it is (or should be) an inherent part of how a party goes about partnership management and performance management. Consistent with the International Standard on risk management, risk management must be built upon an understanding of the context in which risk is being managed | Accepted. The importance of establishing the context of risk in this way is acknowledged. The IMM will be redeveloped to accommodate this perspective. This constitutes a major change |
FG04 | For each VfM contributor, the identified treatments have been grouped under headings and there are some common items between them. You might want to think about allocating them to the group where this action / treatment has the greatest impact | Not accepted. This would require an evidence base (i.e. established through testing treatments to determine which have the greatest impact) and is outside of the scope of this research. In any event, groups and impacts are likely to differ between PPPs; whereas the IMM is intended to be generic |
FG07 | The model could benefit from using a flowchart - a yes / no assessment through a gated approach, relating to PPP procurement, delivery, operations and termination (including a 3-year continuity plan after PPP hand-back) | Not accepted. Although operations cannot be viewed in isolation to the other PPP phases, 'governance', for the purposes of this research, is primarily focused on the operational phase. The length of a continuity plan will largely depend on specifics that relate to each PPP. Depending on how individual contracts are structured, post-end of concession hand-over continuity arrangements may already exist and be linked to 'claw-back' provisions |
Participant FG01 raises a fundamental question as to whether it is appropriate for the risk management issues and sub-issues to be considered as a distinct and separate element within the IMM. This feedback is predicated upon an assertion made by FG01 that the context of risk for the IMM be re-examined, for instance, in line with the ISO 31000 (2009) risk management standard (see Chapter 4: '4.3.2 Theoretical Frameworks'). This industry standard advocates that risk management be built upon an understanding of the context in which risk is managed (ISO 2009: p.15) and may include, for example, the relationship that a government agency has with its private partner (ISO 2009: p.15), the organisational culture it wishes to promote, as well as "the way performance and effectiveness is evaluated in the management of risk" (ISO 2009: p.16). The ISO 31000 perspective essentially argues that, since risk pervades projects in all that is undertaken in the achievement of their objectives, it is better to infuse risk management into the appropriate context. For the IMM, this would mean considering and managing risk within partnership management and within performance management.
Edwards and Bowen (2007), in supporting this view, further argue the essential context-driven nature of project risk, asserting that it is not a self-sufficient concept. Risks are most often closely associated with the decision-making undertaken in the task, technology, resourcing and organisational aspects of projects, across the lifecycle of their delivery, operational and disposal environments. In this way, therefore, risk management is not seen as a stand-alone element in the IMM, but becomes a means of dealing with risks identified and associated with either PPP partnership or PPP performance issues (or a combination of both). This would apply to positive (opportunity) risks as well as to negative (threat) risks.
Modifying the IMM on this basis also reflects a key finding of this research - that in attempting to achieve VfM outcomes, there is likely to be tension between partnership management i.e. 'give and take' relationship management, and performance management i.e. applying a 'black-letter' approach to managing the contract (see Chapter 8 - in particular, sections '8.5 Exploration and Validation of PPP Value-for-Money Issues' and '8.6.1 Organisational Culture'). FG01 offers a similar view:
"Focusing on managing the contract to the exclusion of managing the relationship is likely to result in a loss of opportunities to improve VfM outcomes. Conversely, focusing on managing the relationship to the exclusion of managing the contract is likely to undermine a party's legal position and hence also detract from VfM. The key is to manage both the contract and relationship in a way that promotes VfM outcomes".
As such, FG01 argues that by repositioning the risk context to reflect this tension, the IMM risk management issues and sub-issues can be "reframed" either as partnership or performance management issues and sub-issues. Thus, 'Reputation damage' has been absorbed into partnership management and the remaining issues were incorporated into performance management. This is because 'Reputation damage' is considered to occur as a result of governance, probity and / or compliance failure; or failure to adhere to confidentiality arrangements e.g. where an employee has not done something that he / she was supposed to do but it is not construed as a performance issue. Furthermore, 'un-anticipated / un-intended events' may harm government's reputation with key stakeholder groups or the community at large. It is acknowledged that such issues can manifest either as a partnership or performance issue (or potentially both). On balance, these sub-issues point towards partnership management for this research.
Typically, 'Implementation of transition plan', 'Contract variation', 'Managed termination' and 'End of concession hand-over' are issues that are managed as part of PPP agreements between government and its private partner. It is reasoned that these mechanisms exist in order to improve or maintain performance levels in delivering specified services. Taking 'Contract variation' as an example, a consortium partner may propose a variation because it seeks a different level or form of performance than currently provided. 'Change of consortium members' can occur due to poor performance (see Chapter 5: '5.6.2 Risk Management') and 'Change to public partner's agency authority' may result from machinery of government changes, where resources are re-allocated to another public entity considered best placed to effectively manage PPP arrangements.
In accepting this argument, a change to the structural concept of the IMM is required. Procedurally, the model application could commence with either partnership or performance management. In practice, partnership management is likely to take precedence simply because in the early stages of PPP operations, few performance data are likely to be available, whereas both public and private partners will be attempting to establish their working relationship during this early period.
Now each identified issue pertaining to partnership management is considered in terms of its associated risks, VfM implications, and management intervention action. Where relevant, cross-connections with performance management would also be dealt with. Performance management issues would be dealt with in a similar manner.
The outcomes of the structural change to the IMM are presented in Section 9.8.