Flexibility in public private partnership

: literature survey and a theoretical and practical review of concepts

Abstract

In this dissertation the concept of flexibility as it applies to Public Private Partnership (PPP), aiming at describing the costs and benefits of introducing flexibility is reviewed. Fundamental advantages and disadvantages of task bundling, risk allocation and project valuation of an ordinary project approach are compared with financial, legal and physical flexibility by highlighting the level of complexity and resulting cost effects. Moreover, certain theoretical observations are matched with results form expert interviews in order to predict the practical viability of flexibility in PPP. For this purpose literature focusing on the concepts that help to explain the main terms of PPP is reviewed. Particularly, agency problems under the consideration of incomplete contracting, the value for money (VFM) and the difficulty of long-term project maturities or rather risk estimation are examined. In addition, it will be analysed how and to what extent flexibility is used by interviewing responsibles from the respective national PPP units in Germany, Portugal and the UK. In conclusion, it is evident that flexibility is currently not being used in an extensive form in PPP projects. Suchlike forms of flexibility would be able to reduce the renegotiations and its resulting costs. However, they would increase certain project’s complexity. It is not possible to completely avoid project revisions. Instead the focus has to be on a processes improvement of certain unavoidable renegotiations.

Date of Award	2015
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Ricardo Reis (Supervisor) & Joaquim Miranda Sarmento (Co-Supervisor)