A review of PPP literature was conducted as part this project. The findings were used to determine the focus of the survey and workshop. For the full literature review please refer to Appendix B.
Australia and New Zealand are considered mature PPP markets by global standards. While the UK may be credited as the birthplace of modern PPP arrangements, governments across the world have used a mix of such public and private sector arrangements to deliver projects throughout history (Wettenhall, 2005).
Australian PPPs can be broadly classified into two time periods: pre-2000 and post-2000. The modern PPP arrangements post-2000s can be accredited to the Partnerships Victoria body within the Department of Treasury and Finance that developed some of the most comprehensive PPP policies and mechanisms used by different states throughout Australia (English, 2006). The first use of modern PPP arrangement in New Zealand can be traced to Auckland's Hobsonville Point Primary and Secondary Schools in 2012 (Infrastructure New Zealand, 2017).
The PPP model has evolved over time, with different iterations from jurisdiction to jurisdiction and project to project. However, the 'core' characteristics have remained constant, including:
• the involvement of private finance
• bundling of construction and operation into one contract, and
• the use of contracts and risk allocation to align private profit incentives with public service provision.
Numerous studies examining PPP projects in Australia and the UK are available, however there is a limited publicly available analysis of New Zealand social infrastructure PPP projects.
Various international studies conclude that the PPP procurement model has stronger incentives to minimise whole-of-life costs and improve service quality outcomes than traditional procurement approaches like Design and Construct or Construct-Only models (Hodge and Greve 2017, Saeed 2018). However, studies have also found limitations of the PPP model in regard to risk allocation, innovation and operational flexibility (Hodge and Greve 2017, Saeed 2018).
There is a gap in the literature as to whether value for money (VFM) is conclusively maintained over the long-term operational phase of PPP projects. Due to the long time-horizon of PPP projects, there has been limited opportunity for assessment in the mature stages of PPP operation. A number of Auditor General Reports14 have confirmed value for money is achieved on contract signing but decline from commenting on whether this value for money has been maintained over the life of the contract. It should be noted that many of these reports were published during the early operational years of the case study projects and they mention that retaining value is dependent on sound ongoing contract administration.
This research aims to contribute to available literature by testing previously raised limitations, such as innovation and flexibility, from the viewpoint of service providers. The research also seeks to investigate value for money in the mature stages of PPP operation.