Critical uncertainty factors for efficient risk allocation in privately financed public infrastructure projects in Australia

Risk allocation in privately financed public infrastructure projects, commonly referred to as public-private partnership (PPP) projects, is a challenging job due to the nature of incomplete contracting. Choosing a risk allocation strategy could be viewed as the process of deciding the proportion of risk management attributable to the public and private partners based on a series of characteristics of the risk management service transaction in question. These characteristics can be related to the various uncertainty factors. In this study, uncertainty factors have been grouped into Institutional, Social and industrial, Economic, and Project-specific categories and examined in order to achieve efficient risk allocation and minimize risk management-related costs in a long-term view. Critical uncertainty factors for the allocation of three major risks have been identified through an industry-wide survey in Australia. These identified critical uncertainty factors are expected to help decision-makers from both public and private sectors choose efficient allocation strategies for major risks. Future research directions are also set out.

Critical uncertainty factors for efficient allocation of demand risk in privately financed public infrastructure projects in Australia

Risk allocation in privately financed public infrastructure projects, which are mainly referred as public-private partnership (PPP) projects, is a challenging job due to the nature of incomplete contracting. Among the various risks that may eventually materialise, demand risk is one of the major challenges that PPPs face. Choosing a risk allocation strategy could be viewed as the process of deciding the proportion of risk management responsibility between public and private partners based on a series of characteristics of risk management service transaction in question. These characteristics are more or less related to the various uncertainty factors. In this study, various uncertainty factors have been examined in order to achieve efficient allocation of demand risk and minimise risk management-related costs in a long-term view. Critical uncertainty factors have been identified through an industry-wide survey in Australia. Future research directions are also set out.

Exploring potential success factors for procurement of privately financed infrastructure

Australia has joined many governments to adopt public-private partnership (PPP) as a major strategy for procuring infrastructure for decades. However, failures have occurred although the market has been considered to be a mature and sophisticated one. Failures have typically been traced back to inappropriate economic evaluation and a lack of value-for-money. In particular, a literature review has identified that there was no holistic consideration on the evaluation of procurement transactions of PPP projects. The transaction costs of PPPs were not handled properly. In this paper, theories of transaction cost economics are proposed for the purpose of such a holistic institutional economic evaluation. These theories are analysed in order to identify potential critical success factors for a strategic infrastructure procurement framework. The potential critical success factors are identified and grouped into a number of categories that match the theories of transaction cost economics. These categories include (1) Asset Specificity, (2) Organizational Capability, (3) Transaction Frequency, (4) Behavioural Uncertainty, and (5) Environmental Uncertainty. These potential critical success factors may be subject to an empirical test in the future. The proposed framework will offer decision makers with an insight into project life cycle economic outcomes needed to successfully deliver PPPs.

Relationship-based procurement methods for public infrastructure – the way forward

Public infrastructure is crucial to promote and sustain a sustainable economic growth and a health community. A large amount of capital investment is generally required in infrastructure projects that motivate the involvement of the private sector in the delivery process. Various relationship-based procurement methods have been attempted to maximize value-for-money. In this paper, the problems and challenges that relationship-based procurement methods have been facing are explored. A particular focus is placed on the challenges for the public-private partnership (PPP) model. Possible strategies for adapting the PPP models in the post-Global Financial Crisis era are proposed and discussed. In addition, the challenges facing alliancing, which is one of the other important relationship-based procurement methods, are also examined. Views on infrastructure procurement in the future were sought from industry professionals via interviews and are reported in this paper as well.

Intelligent energy management for plug-in hybrid electric vehicles : the role of ITS infrastructure in vehicle electrification

The desire to reduce carbon emissions due to transportation sources has led over the past decade to the development of new propulsion technologies, focused on vehicle electrification (including hybrid, plug-in hybrid and battery electric vehicles). These propulsion technologies, along with advances in telecommunication and computing power, have the potential of making passenger and commercial vehicles more energy efficient and environment friendly. In particular, energy management algorithms are an integral part of plug-in vehicles and are very important for achieving the performance benefits. The optimal performance of energy management algorithms depends strongly on the ability to forecast energy demand from the vehicle. Information available about environment (temperature, humidity, wind, road grade, etc.) and traffic (traffic density, traffic lights, etc.), is very important in operating a vehicle at optimal efficiency. This article outlines some current technologies that can help achieving this optimum efficiency goal. In addition to information available from telematic and geographical information systems, knowledge of projected vehicle charging demand on the power grid is necessary to build an intelligent energy management controller for future plug-in hybrid and electric vehicles. The impact of charging millions of vehicles from the power grid could be significant, in the form of increased loading of power plants, transmission and distribution lines, emissions and economics (information are given and discussed for the US case). Therefore, this effect should be considered in an intelligent way by controlling/scheduling the charging through a communication based distributed control.

The impact of ITIL (information technology infrastructure library) recommended practices on the IT outsourcing relationship

Over the last two decades, the outsourcing of IT services has become a popular topic for many IS researchers. Furthermore, managing IT services (both internally and externally provided) has become an emerging area for academic research, given the criticality of IT services in modern organizations. One of the better known IT service management frameworks is the Information Technology Infrastructure Library (ITIL) framework. While there are many claims made about the relationship between ITIL and IT outsourcing, these claims still need further empirical research. Using data gathered from a preliminary focus group, this study investigates how ITIL impacts recommended practices on the success of IT outsourcing arrangement.

Developing infrastructure projects using alliances

This research provides a deeper insight into the performance of alliances for the construction of road, rail and water projects. The principle objective of alliances is to align team member expectations so that they work together for the benefit of the project. To date, this has been a challenge, and as such this makes alliances an innovative approach to procurement of infrastructure. The paper reports on a survey of 18 public infrastructure projects across Australia that utilized the alliance form of procurement. The results were based on alliance team interviews, which addressed the most critical management issues impacting on the performance of process. The research identified a sample of stakeholders form alliance leadership teams (ALT) and the alliance management teams (AMT) that had recently completed a major infrastructure projects. Results revealed that communication and trust between the ALT and AMT teams was a major issue that impacted on the effectiveness of the alliance. Furthermore, the research identifies several key factors that were necessary preconditions for successful alliances.

Critical infrastructure systems : security analysis and modelling approach

A system security analysis and system modelling framework tool is proposed adopting an associated conceptual methodology as the basis for assessing security and conceptually modelling a critical infrastructure system incident. The intent is to identify potential system security issues and gain operational insights that will contribute to improving system resilience, contingency planning, disaster recovery and ameliorating incident management responses for critical infrastructure system incidents. The aforementioned system security analysis and modelling framework is applied to an adverse critical infrastructure system incident case study. This paper reports on the practical application of the framework to a case study of an actual critical infrastructure system failure and the resultant incident implications for the system and the wider regional communities.

A generalised data analysis approach for baggage handling systems simulation

Airport baggage handling systems are a critical infrastructure component within major airports, and essential to ensure smooth luggage transfer while preventing dangerous material being loaded onto aircraft. This paper proposes a standard set of measures to assess the expected performance of a baggage handling system through discrete event simulation. These evaluation methods also have application in the study of general network systems. Results from the application of these methods reveal operational characteristics of the studied BHS, in terms of metrics such as peak throughput, in-system time and system recovery time.

Underpricing of infrastructure of IPOs: evidence from India

This paper explores the underpricing of initial public offerings (IPOs) made by infrastructure companies in India from 2004 to 2010, and follows Dimovski who reported that in the Australian market, infrastructure IPOs did not produce underpricing returns that were statistically significantly different to zero. The objective of this paper is to investigate the underpricing of infrastructure IPOs in the emerging market of India and to explore factors that may influence the underpricing of infrastructure IPOs in India. The results show that, on average, the underpricing returns were 25.4% and statistically significantly different to zero, while money left on the table, in aggregate is not. In contrast to Australian evidence, significant underpricing in Indian infrastructure IPOs indicates greater risk of these investments. We find that oversubscription, government ownership and issue size are significant variables in explaining underpricing in Indian infrastructure IPOs.

Identifying attributes contributing to environmental sustainability of public-private partnership infrastructure projects

Due to increasing demands for new infrastructure and an aim to reduce initial public investment, Australian government agencies are increasingly using public-private partnerships (PPPs) as a form of delivery for infrastructure projects. Environmentally, there is growing pressure for the building industry in general to become more sustainable. Moreover, as the built environment continues to grow each year, the performance of buildings as a whole will need to continually improve purely for national energy consumption to remain stable. Based on a systematic and extensive review on relevant literature, this paper has identified the key attributes that will influence the environmental sustainability of infrastructure completed through a PPP. The key attributes are grouped into five groups defined by whom or what has the majority of control over the attribute. Meanwhile, the key attributes are explored and their influence on environmental sustainability justified. This paper was able to not only identify significant factors involved in creating environmental sustainability in infrastructure PPPs, but also trends of the key attributes. It has been found that (1) the longevity of the contract in a PPP project allows greater innovation into environmental sustainability than traditional methods of procurement, (2) innovation is a requirement for the improving upon environmental performance in the built environment, (3) improvements to environmental sustainability relies upon a positive relationship between economic and environmental benefits, and (4) the key attributes for PPP projects are decided upon relatively early in the contract. Due to space limit, detailed discussion on each of the identified attributes is not provided in this paper. Nonetheless, further research direction is discussed.

Time series analysis of air transportation service quality and travel demand in Japan

The evolution of domestic air travel service in Japan is a product of many factors including airline responses to the changing aviation market, government interventions in terms of regulatory/deregulatory policies, infrastructure investments, and changes in market structure. This paper presents an empirical investigation of the changing quality of passenger airline service and its implications in the domestic aviation market in Japan using qualitative review and a time series analysis of the domestic airline markets from 1986 to 2003. The results show that to meet the ultimate aim of deregulation to increase air passengers’ welfare gain, there is a need to instill measures to correct service imbalance and to create innovative airport demand-capacity management measures.