Developing a best practice framework for implementing public private partnerships (PPP) in Hong Kong

Public Private Partnership (PPP) is a well established methodology for procuring public works projects. By incorporating the private sector’s expertise, efficiency, innovation, business sense, risk sharing, financing etc. into public works projects, the quality of public services and facilities can be uplifted. Like many jurisdictions, Hong Kong is also keen to take aboard this methodology which is so familiar but yet so distant. Although they have been one of the first jurisdictions to utilise the private sector in public works projects, their comfortable financial reserves has meant that there has been no urge to push the movement until recently. PPP has become increasingly popular amongst governments. The Hong Kong Special Administrative Region (HKSAR) government is no exception. Some of the more active works departments have commissioned studies to investigate the best ways to deliver these projects, others have even trialed the method themselves. The efficiency Unit of the HKSAR government has also become an active arm in conducting research in this area. Although so, the information that is currently available is still very broad. Building from their works there is a need to develop a best practice framework for implementing PPP projects in Hong Kong by incorporating international experiences. To develop a best practice framework will require thorough investigation into the benefits, difficulties and critical success factor of PPP. PPP should also be compared with other procurement methods. In order to do so it is important to clearly understand the local situation by an analysis of projects conducted to date. Lessons learnt can further be derived from other countries and incorporated to those derived locally. Finally the best conditions in terms of project nature, complexity, types, and scales for adopting PPP should be derived. The aim and objectives of this study were achieved via a comprehensive literature review, in-depth case analyses, interview survey with experts from both Hong Kong and overseas, and finally a large scale data collection was conducted via a questionnaire survey with PPP practitioners. These findings were further triangulated before they were used as the basis to form the best practice framework presented in this thesis. The framework was then further validated by PPP experts to ensure it is comprehensive, objective, reliable and practical. This study has presented a methodology that can be adopted for future studies. It has also updated our knowledge on the development trends of PPP as well as opened up the experiences of other jurisdictions. The findings have shown that the local industry is familiar with “what” should be done in PPP projects but they are unsure of “how” these goals can be achieved. This framework has allowed this further knowledge to be delivered to PPP practitioners. As a result, the development of this framework can help to resolve the current economic crisis by encouraging more developments and business opportunities for the private sector. In addition, the correct projects can be delivered by PPP, the advantages of PPP can be maximised, and the general public can benefit from the private sector’s participation.

The innovation deficit in public services : the curious problem of too much efficiency and not enough waste and failure

It has long been recognised that government and public sector services suffer an innovation deficit compared to private or market-based services. This paper argues that this can be explained as an unintended consequence of the concerted public sector drive toward the elimination of waste through efficiency, accountability and transparency. Yet in an evolving economy this can be a false efficiency, as it also eliminates the 'good waste' that is a necessary cost of experimentation. This results in a systematic trade0off in the public sector between the static efficiency of minimizing the misuse of public resources and the dynamic efficiency of experimentation. this is inherently biased against risk and uncertainty and therein, explains why governments find service innovation so difficult. In the drive to eliminate static inefficiencies, many political systems have susequently overshot and stifled policy innovation. I propose the 'Red Queen' solution of adaptive economic policy.

The public sector’s perspective on procuring public works projects : comparing the views of practitioners in Hong Kong and Australia

Hong Kong has been one of the early jurisdictions to adopt Public Private Partnership (PPP) model for delivering large public infrastructure projects. The development of this procurement approach in Hong Kong has followed an intricate path. As such, it is believed that there are a number of areas which are interesting to unveil. As part of a comprehensive research study looking at implementing PPPs, interviews with experienced local industrial practitioners from the public sector were conducted to realize their perspective on the topic of procuring public works projects. Amongst these interviews, fourteen were launched government officials and advisers. The interview findings show that the majority of the Hong Kong and Australian interviewees had previously conducted some kind of research in the field of PPP. Both groups of interviewees agreed that “PPPs gain private sector’s added efficiency/expertise/management skills” when compared to projects procured traditionally. Also, both groups of interviewees felt that projects best suited to use PPP are those that have an “Economic business case”. The interviewees believed that “Contractor’s performance” could be used as key performance indicators for PPP projects. A large number of critical success factors were identified by the interviewees for PPP projects; two of these were similar for both groups of interviewees. These included “Project objectives well defined” and “Partnership spirit/commitment/trust”. Finally it was found that in-house guidance materials were more common in the organizations of the Australian interviewees compared to the Hong Kong ones. This paper studies the views of the public sector towards the topic of PPPs in Hong Kong and Australia, which helps to answer some of the queries that both academics and the private sector in these jurisdictions are keen to know. As a result the private sector can be more prepared when negotiating with the public sector and realise their needs better, academics on the other hand are provided a wider perspective of this topic benefiting the research industry at large.

The researcher’s perspective on procuring public works projects

Purpose: As part of a comprehensive research study looking at implementing PPPs, interviews with experienced researchers were conducted to realize their views on private sector involvement in public works projects. Design / methodology / approach: Amongst these interviews, five were launched with academics from Hong Kong and Australia, and two were conducted with Legislative Councillors of the Hong Kong Special Administration Region (HKSAR) government. Findings: The interview findings show that both Hong Kong and Australian interviewees had previously conducted some kind of research in the field of PPP. The interviewees highlighted that “Different risk profiles” and “Private sector more innovative / efficient” were the main differences between projects that were procured by PPP and traditionally. Other differences include risk transfer. In a PPP arrangement the public sector passes on a substantial amount of the project risks to the private sector, whereas in a traditional case the public sector would take the largest responsibility in bearing these risks. Another common feature of the private sector is that they tend to be more efficient and innovative when compared to the public sector hence their expertise is often reflected in PPP projects. The interviewees agreed that the key performance indicators for PPP projects were unique depending on the individual project. The critical success factors mentioned by both groups of interviewees included “Transparent process”, “Project dependent” and “Market need”. Due to the fact that PPP projects tend to be large scaled costly projects, adequate transparency in the process is necessary in order to demonstrate that a fair selection and tendering process is conducted. A market need for the project is also important to ensure that the project will be financially secure and that the private sector can make a reasonable profit to cover their project expenditure. Originality / value: The findings from this study have enabled a comparative analysis between the views of researchers in two completely different jurisdictions. With the growing popularity to implement PPP projects, it is believed that the results presented in this paper would be of interest to the industry at large.

Suitability of procuring large public works by PPP in Hong Kong

Purpose : The Hong Kong Special Administrative Region (referred to as Hong Kong from here onwards) is an international leading commercial hub particularly in Asia. In order to keep up its reputation a number of large public works projects have been considered. Public Private Partnership (PPP) has increasingly been suggested for these projects, but the suitability of using this procurement method in Hong Kong is yet to be studied empirically. The findings presented in this paper will specifically consider whether PPPs should be used to procure public works projects in Hong Kong by studying the attractive and negative factors for adopting PPP. Design/methodology/approach : As part of this study a questionnaire survey was conducted with industrial practitioners. The respondents were requested to rank the importance of fifteen attractive factors and thirteen negative factors for adopting PPP. Findings : The results found that in general the top attractive factors ranked by respondents from Hong Kong were efficiency related, these included (1) ‘Provide an integrated solution (for public infrastructure / services)’; (2) ‘Facilitate creative and innovative approaches’; and (3) ‘Solve the problem of public sector budget restraint’. It was found that Australian respondents also shared similar findings to those in Hong Kong, but the United Kingdom respondents showed a higher priority to those economic driven attractive factors. Also, the ranking of the attractive and negative factors for adopting PPP showed that on average the attractive factors were scored higher than the negative factors. Originality/value : The results of this research have enabled a comparison of the attractive and negative factors for adopting PPP between three administrative systems. These findings have confirmed that PPP is a suitable means to procure large public projects which are believed to be useful and interesting to PPP researchers and practitioners.

Marketing VM services to achieve competitive advantage in the Malaysian Construction Sector

Value Management (VM) has been proven to provide a structured framework, together with supporting tools and techniques that facilitate effective decision-making in many types of projects, thus achieving ‘best value’ for clients. It is identified at International level as a natural career progression for the construction service provider and as an opportunity in developing leading-edge skills. The services offered by contractors and consultants in the construction sector have been expanding. In an increasingly competitive and global marketplace, firms are seeking ways to differentiate their services to ever more knowledgeable and demanding clients. The traditional demarcations have given way, and the old definition of what contractors, designers, engineers and quantity surveyors can, and cannot do in terms of their market offering has changed. Project management, design and cost and safety consultancy services, are being delivered by a diverse range of suppliers. Value management services have been developing in various sectors in industry; from manufacturing to the military and now construction. Given the growing evidence that VM has been successful in delivering value-for-money to the client, VM would appear to be gaining some momentum as an essential management tool in the Malaysian construction sector. The recently issued VM Circular 3/2009 by the Economic Planning Unit Malaysia (EPU) possibly marks a new beginning in public sector client acceptance on the strength of VM in construction. This paper therefore attempts to study the prospects of marketing the benefits of VM by construction service providers, and how it may provide an edge in an increasingly competitive Malaysian construction industry.

Inter-sector leader transitions and organisation transformation : a research agenda

Faced with the need for strategic change, structural and cultural realignment, innovation and value-adding, many public sector organisations are tapping into a wider senior leadership talent pool and attracting successful leaders from other sectors (Flynn and Thompson, 2009). Leadership renewal has resulted, in some cases, in the external recruitment of whole senior leadership teams (Hockridge, 2008), raising issues about the influence of context on leader success (Pawar and Eastman, 1997) and potential leader transition failure, a costly outcome for leaders and organisations (Howard, 2001). There is little research on inter-sector leader transitions, which is surprising given the significant costs associated with leader acquisition and failure(Conger, 2010; Day and Halpin, 2004). For example, it is not clear what organizations do (or do not do) to ensure the outcomes of their significant investment in inter sector transitions are realised. In addition, it is not clear how the individual leader manages the challenging transition into a new leadership context and how their approach to leadership facilitates or inhibits successful transition (Avolio, 2010). Leader assimilation programs have been developed to assimilate new leaders (Manderscheid, 2008); however, assimilation is not necessarily a desired organisational outcome (Denis and Pineault, 2000). In this paper we critically review the limited literature on inter-sector leader transitions and transformational change outcomes and argue for a mutual accommodation approach. We draw on our own initial empirical work to propose the elements of a program for achieving this outcome from the perspective of the public organisation and the inter-sector appointee.

The risks and returns of new public management : political business

Purpose – This article aims to consider success in terms of the financial returns and risks of new public management (NPM) in state-owned enterprises (SOEs). Design/methodology/approach – Financial returns of New Zealand SOEs were examined through a review of their annual reports over a five-year period. Dimensions of risk were examined through interviews conducted in two phases over a two-year period with senior executives from 12 of the (then) 17 SOEs operating in New Zealand. Findings – Findings indicate the potential for SOEs to operate as profitable government investments, with clear support for positive financial returns under NPM. However, variations noted within individual SOEs also indicate that profitable and commercial operations may not be possible in all cases. An examination of the risks associated with SOEs’ operations reveals a number of dimensions of risk, encompassing financial, political (including regulatory), reputational, and public accountability aspects. Practical implications – There is a need for an enhanced awareness on the part of internal and external stakeholders (such as the government and general public) of the risks SOEs face in pursuing higher levels of profitability. Also required, is a more acute understanding on the part of internal and external stakeholders (e.g. government and the public) of the need for SOEs to manage the range of risks identified, given the potentially delicate balance between risk and return. Originality/value – While previous studies have considered the financial returns of SOEs, or the risks faced by the public sector in terms of accountability, few have addressed the two issues collectively in a single context.

Book Review: "Mark Considine, Jenny Lewis and Damon Alexander Networks, Innovation and Public Policy : Politicians, Bureaucrats and the Pathways to Change inside Government Houndsmills, UK: Palgrave Macmillan, 2009"

Having wrung the most from workforce and workplace productivity initiaitves, innovation has come to the fore as a key goal and directive for public sector organisations to become more efficient. This clarion call for innovation can be heard all around the world, with public services everywhere taking up the message to develop better, smarter, novel, more innovative processes, programs and policies. In the current push for innovation, networks are considered to be a superior vehicle through which collective knowledge can be shared and leveraged; replacing or at least supplementing the role function previously provided by inventive leaders...

Career paths in the third sector : implications for human resource management

My interest in career paths in the third sector came from three early observations. First, the majority of workers appear to be women, in fact 77% of community sector community services in NSW (O'Donnell, 1985). Second, when asked about their career, most workers express the opinion that they have none. Third, when I examined the individual career paths of community sector workers I was struck by the stop and start nature of their paid work. Even, or perhaps especially, well qualified workers would move out of a position after about two years often to a more difficult position in a new area, with little or no salary increase and little prospect of future promotion. Indeed, there appears to be little career path available. These observations raise a number of important questions, some of which will be explored in this paper. What is the structure of the third sector labour market? What is the staff structure of third sector organisations? Is it true that career paths are unavailable, either within organisations or within the sector? If none exists, why do workers stay in the field? What motivates them? If there is a high turnover of staff, is this the reason? What are the implications of all this? If some sort of career path does exist, why do workers deny having a career? What do we mean by `career' anyway?

Disciplinary unfairness in Queensland public service legislation

A just system of discipline within an organisation requires four characteristics: a clear set of offences, proportionate punishments clearly linked to the offences, oversight and appeals from disciplinary decisions and independence from political masters. This paper examines Queensland public sector legislation and policy from 1863 to the present to demonstrate how well these four criteria are addressed. An analysis of the presence of these four characteristics in the Queensland context finds that the public sector legislation in Queensland is in breach of the guidelines that define a just and fair system in which disciplinary action is dispensed. We argue that creation of arbitrary powers to punish or dismiss staff is unjust if the legislation does not fully inform staff of what constitutes a breach of discipline, does not guarantee proportionate punishments to offences, and/or it allows the disciplinary process to be used as a tool to coerce staff to perform in a politicised or otherwise unethical manner. We conclude by making recommendations as to how this situation may be rectified.

A comparative study of governmental one-stop portals for public service delivery

The continuing need for governments to radically improve the delivery of public services has led to a new, holistic government reform strategy labeled “Transformational Government” that strongly emphasizes customer-centricity. Attention has turned to online portals as a cost effective front-end to deliver services and engage customers as well as to the corresponding organizational approaches for the back-end to decouple the service interface from the departmental structures. The research presented in this paper makes three contributions: Firstly, a systematic literature review of approaches to the evaluation of online portal models in the public sector is presented. Secondly, the findings of a usability study comparing the online presences of the Queensland Government, the UK Government and the South Australian Government are reported and the relative strengths and weaknesses of the different approaches are discussed. And thirdly, the limitations of the usability study in the context of a broader “Transformational Government” approach are identified and service bundling is suggested as an innovative solution to further improve online service delivery.

Project governance : ethical decision making in project procurement in the Malaysian public sectors

Managing public sector projects in Malaysia is a unique challenge. This is because of the ethical issues involved during the project procurement process. These ethical issues need attention because they will have an impact on the quality, cost and time of the project itself. The ethical issues here include conflict of interest, bid shopping, collusive tendering, bid cutting, corruption and the payment game. In 2006, 17.3% of 417 Malaysian government contract projects were considered sick due to contractors' performances that failed to conduct the project according to the project plan. Some of the sick projects from these statistics are due to the ethical issues involved. These construction projects have low quality due to the selection of the contractors, done unethically due to personal relationships instead of professional qualifications. That is why it is important to govern the project procurement processes to ensure the accountability and transparency of the decision making process to ensure that these ethical issues can be avoided. Extensive research has been conducted on the ethical issues in the tendering process or the award phase of project management. There is a lack of studies looking at the role of clients, including the government client, in relation to unethical practice in project procurement in the public sector. It is important to understand that ethical issues not only involve the contractors and suppliers but also the clients. Even though there are codes of ethics in the public sectors, ethical issues still arise. Therefore, this research develops a project governance framework (PGEDM) for ethical decision making in the Malaysian public sectors. This framework combines the ethical decision making process together with the project governance principals in guiding the public sectors with ethical decision making in project procurement. A triangulation of questionnaire survey and Delphi study was employed in this research to collect required qualitative and quantitative data. A questionnaire survey was conducted among the public officials (the practitioners) who are currently working in the procurement area in the Malaysian public sectors, in identifying the ethical behaviours and factors influencing further ethical behaviour to occur. A Delphi study was also conducted with the assistance of a panel of experts consisting of practitioners that have expertise in the area of project governance and project procurement as well as academician, which further considered the relationship and the influence of the criteria and indicators of ethical decision making (EDM) and project governance (project criteria, organisational culture, contract award criteria, individual criteria, client's requirements, government procedures and professional ethics). Through the identification and integration of the factors and EDM criteria as well as the project governance criteria and EDM steps for ethical issues, a PGEDM framework was developed to promote, and drive consistent decision outcome in project procurement in the public sector. The framework contributes significantly to ethical decision making in the project procurement process. These findings not only give benefit to the people involved in project procurement but also to the public officials in guiding them to be more accountable in handling ethical issues in the future and to have a more transparent decision making process.

Race matters : Indigenous employment in the Australian public service

This thesis demonstrated that race mattered as a contributing factor to the low Indigenous participation rates within the Australian Public Service. The thesis showed that the public service reproduced social relations privileging non-Indigenous executives while positioning Indigenous executives as deficient. The thesis explains how the everydayness of racism assumes the racial neutrality of institutions because the concept of race is externalised as only having relevance to the racial other. Non-Indigenous executives regard Indigeneity as being synonymous with inferiority to explain Indigenous disadvantage. Consequently, the Indigenous experience of everyday racism is perpetuated and contributes to declining rates of employment.

Inter-sector senior leader transitions : experience and outcomes

Purpose The purpose of this article is to explore the experience of senior leaders who move into the public sector from other sectors of the economy, a process we refer to as inter-sector senior leader transitions. This is a little researched area of public sector leadership yet has significant implications for fundamental public sector reform. Design/methodology/approach We employed an interview design to elicit senior leaders' stories of their transition into the public sector. Findings The data suggest that successful senior leader transitions are more likely when a set of conditions is met; (1) the leader transitions into CEO role, rather than levels below CEO, (2) Ministers provide inter-sector transition support, (3) senior leaders develop responses to stress, (4) senior leaders reject high formalization, (5) their change processes focus on building capacity, and (6) senior leaders confront dysfunctional organizational relationships directly. Research limitations/implications The research relies on a relatively small sample. However, access to senior managers at this level can be difficult. Nevertheless, those senior managers who participated were very willing to share their stories. Practical implications If public sector organizations are to realize the value of successful leaders from other sectors, they need to invest in structured processes that facilitate the transition. A laissez-faire approach is not viable given the cost of such transitions. Originality/value The paper focuses on a little researched area of leadership experience which has significant implications for the development and change of the public sector.