Interpreting risk allocation mechanism in public-private partnership projects : an empirical study in a transaction cost economics perspective

Risk allocation in public-private partnership (PPP) projects is currently claimed as capability driven. While lacking theoretical support, the claim is often 'violated' by current industrial practice. There is thus a need for formal mechanisms to interpret why a particular risk is retained by government in one project while transferred to private partners in another. From the viewpoint of transaction cost economics (TCE), integrated with the resource-based view (RBV) of organizational capabilities, this paper proposed a theoretical framework for understanding risk allocation practice in PPP projects. The theories underlying the major constructs and their links were articulated. Data gathered from an industry-wide survey were used to test the framework. The results of multiple linear regression (MLR) generally support the proposed framework. It has been found that partners' risk management routine, mechanism, commitment, cooperation history, and uncertainties associated with project risk management could serve to determine the risk allocation strategies adopted in a PPP project. This theoretical framework thus provides both government and private agencies with a logical and complete understanding of the process of selecting the allocation strategy for a particular risk in PPP projects. Moreover, it could be utilized to steer the risk allocation strategy by controlling certain critical determinants identified in the study. Study limitations and future research directions have also been set out.

Height and construction costs of residential buildings in Hong Kong and Shanghai

A widely recognised theme of construction economics suggests that the cost of construction per square metre increases as building height rises. However, after many years, research conducted regarding the height and cost issue have established a classic relationship between those two, well known as a U-shaped curve. This paper describes the study of height-cost relationship of high-rise residential buildings in Shanghai and Hong Kong. Initial findings indicated that the curved relationships of height-cost of residential buildings in Shanghai and Hong Kong exhibit different profiles. The differences suggest that, Hong Kong contractors have more expertise in multi-storey and high-rise construction than contractors in Shanghai. The dissimilarities also imply that different sets of criteria should be applied in the judgement of height affects cost in different locations. Many factors could be contributors, such as the history and experience in constructing residential high-rise buildings, location, linkage and relationships to the neighbourhood provinces, design and construction regulations, and government policy on residential construction.

Agency theory and accounting research : an overview of some conceptual and empirical issues

This chapter aims to give the reader an overview of agency theory (AT) and its application in accounting research. It delineates the basic assumptions and concepts of AT and identifies the various measures that can be undertaken to minimise agency costs. The chapter also provides a summary of the commonalities and differences across the three major paradigms adopted by accounting researches when using an agency framework: Principal-Agent, Transaction Cost Economics and Positivist (Rochester) model. Further, a review of some recent theoretical and empirical studies on the design of optimal contracts, namely those relating to implicit contracts, multi-agents and multi-period issues is undertaken. Several suggestions are made for future studies adopting an AT-based approach.

Outcomes and costs of primary care surveillance and intervention for overweight or obese children : the LEAP 2 randomised controlled trial

Objective To determine whether ascertainment of childhood obesity by surveillance followed by structured secondary prevention in primary care improved outcomes in overweight or mildly obese children.

Design Randomised controlled trial nested within a baseline cross sectional survey of body mass index (BMI). Randomisation and outcomes measurement, but not participants, were blinded to group assignment.

Setting 45 family practices (66 general practitioners) in Melbourne, Australia.

Participants 3958 children visiting their general practitioner in May 2005-July 2006 were surveyed for BMI. Of these, 258 children aged 5 years 0 months up to their 10th birthday who were overweight or obese by International Obesity Taskforce criteria were randomised to intervention (n=139) or control (n=119) groups. Children who were very obese (UK BMI z score 3.0) were excluded.

Intervention Four standard consultations over 12 weeks targeting change in nutrition, physical activity, and sedentary behaviour, supported by purpose designed family materials.

Main outcomes measures Primary measure was BMI at 6 and 12 months after randomisation. Secondary measures were mean activity count/min by 7-day accelerometry, nutrition score from 4-day abbreviated food frequency diary, and child health related quality of life. Differences were adjusted for socioeconomic status, age, sex, and baseline BMI.

Results Of 781 eligible children, 258 (33%) entered the trial; attrition was 3.1% at 6 months and 6.2% at 12 months. Adjusted mean differences (intervention – control) at 6 and 12 months were, for BMI, –0.12 (95% CI –0.40 to 0.15, P=0.4) and –0.11 (–0.45 to 0.22, P=0.5); for physical activity in counts/min, 24 (–4 to 52, P=0.09) and 11 (–26 to 49, P=0.6); and, for nutrition score, 0.2 (–0.03 to 0.4, P=0.1) and 0.1 (–0.1 to 0.4, P=0.2). There was no evidence of harm to the child. Costs to the healthcare system were significantly higher in the intervention arm.

Conclusions Primary care screening followed by brief counselling did not improve BMI, physical activity, or nutrition in overweight or mildly obese 5-10 year olds, and it would be very costly if universally implemented. These findings are at odds with national policies in countries including the US, UK, and Australia.

Effectiveness of a modified mother–infant transaction program on outcomes for preterm infants from 3 to 24 months of age

Mothers of hospitalised preterm infants were randomised into an intervention or control condition. Intervention mothers received a modified Mother–Infant Transaction Program over seven sessions prior to infant discharge and two sessions over the next 3 months. Infant temperament, mother–infant interaction and parenting stress were assessed at 3 and 6 months and infant development was measured by parental report at 24 months. Intervention compared with control dyads showed enhanced mother–infant interactions, infants were temperamentally more “approaching” and “easier”, had fewer regulatory problems (colic, sleep, excessive crying), and had more developed communication skills, while mothers were less stressed by their infant at 3 months. These early gains in the development of preterm infants and in the relationship with and adjustment of their mothers, may explain the process by which intervention infants in the original study showed increasing cognitive advantages to 9 years of age [Rauh, V. A., Nurcombe, B., Achenbach, T., & Howell, C. (1990). The mother–infant transaction program. Clinical Perinatology, 17, 31–45].

Allocating risks in public-private partnership projects using a transaction cost economics approach - a case study

Public-private partnership (PPP) projects are often characterised by increased complexity and uncertainty due to their idiosyncrasy in the management and delivery processes such as long-term lifecycle, incomplete contracting, and the multitude of stakeholders. An appropriate risk allocation is particularly crucial to achieving project success. This paper focuses on the risk allocation in PPP projects and argues that the transaction cost economics (TCE) theory can integrate the economics part, which is currently missing, into the risk management research. A TCE-based approach is proposed as a logical framework for allocating risks between public and private sectors in PPP projects. A case study of the Southern Cross Station redevelopment project in Australia is presented to illustrate the approach. The allocation of important risks is put under scrutiny. Lessons learnt are discussed and alternative management approaches drawing on TCE theory are proposed.