The Diffusion of Risks in Public Private Partnership Contracts

Purpose The UK government argues that the benefits of public private partnership (PPP) in delivering public infrastructure stem from: transferring risks to the private sector within a structure in which financiers put their own capital at risk; and, the performance based payment mechanism, reinforced by the due diligence requirements imposed by the lenders financing the projects (HM Treasury, 2010). Prior studies of risk in PPPs have investigated ‘what’ risks are allocated and to ‘whom’, that is to the public or the private sector. The purpose of this study is to examine ‘how’ and ‘why’ PPP risks are diffused by their financiers. Design/methodology/approach This study focuses on the financial structure of PPPs and on their financiers. Empirical evidence comes from interviews conducted with equity and debt financiers. Findings The findings show that the financial structure of the deals generates risk aversion in both debt and equity financiers and that the need to attract affordable finance leads to risk diffusion through a network of companies using various means that include contractual mitigation through insurance, performance support guarantees, interest rate swaps and inflation hedges. Because of the complexity this process generates, both procurers and suppliers need expensive expert advice. The risk aversion and diffusion and the consequent need for advice add cost to the projects impacting on the government’s economic argument for risk transfer. Limitations and implications The empirical work covers the private finance initiative (PFI) type of PPP arrangements and therefore the risk diffusion mechanisms may not be generalisable to other forms of PPP, especially those that do not involve the use of high leverage or private finance. Moreover, the scope of this research is limited to exploring the diffusion of risk in the private sector. Further research is needed on how risk is diffused in other settings and on the value for money implication of risk diffusion in PPP contracts. Originality/value The expectation inherent in PPP is that the private sector will better manage those risks allocated to it and because private capital is at risk, financiers will perform due diligence with the ultimate outcome that only viable projects will proceed. This paper presents empirical evidence that raises questions about these expectations. Key words: public private partnership, risk management, diffusion, private finance initiative, financiers

Novel bioassays to examine the host-finding ability of plant-parasitic nematodes

We present two novel bioassays to be used in the examination of plant-parasitic nematode host-finding ability. The host-finding 'pipette-bulb assay' was constructed from modelled Pasteur pipette bulbs and connecting barrels using parafilm fastenings. This assay examines the direction of second-stage juvenile (J2) migration in response to a host seedling, through a moistened sand substrate, which underlies terminal upward-facing 'seedling bulbs', one containing a host seedling in potting compost, the other with only potting compost. An equal watering regime through both upward-facing seedling bulbs creates a directional concentration gradient of host diffusate chemotactic factors. Positive chemotactic stimuli cause the J2 to orientate and migrate towards the host plant. We present validation data collected from assays of the root-knot nematode, Meloidogyne incognita, and the potato cyst nematode, Globodera pallida, which indicate a highly significant positive attraction of J2 of both species to respective host plants. This represents a simple, quick and inexpensive method of assessing host-finding behaviour in the laboratory. We consider that the pipette-bulb assay improves on previous host-finding/chemo-attraction assays through creating a more biologically relevant environment for experimental J2; analysis is quick and easy, allowing the straightforward interpretation of results. In addition, we have developed an 'agar trough' sensory assay variant which we believe can be used rapidly to ratify nematode responses to chemical gustatory or olfactory cues. This was constructed from a water agar substrate such that two counting wells were connected by a raised central trough, all flooded with water. Two small water agar plugs were dehydrated briefly in an oven and then hydrated in either an attractant, repellent or water control; these plugs were then placed in the terminal counting wells and subsequently leached the attractant or repellent to form a concentration gradient along the central trough, which contained the initial J2 innoculum. Our data show that both M. incognita and G. pallida J2 are positively attracted to host diffusates. In addition, they displayed a strong repulsion in response to 1 M NaCl2. J2 of M. incognita displayed a mild aversion to a non-host oak root diffusate, whereas G. pallida J2 displayed a strong aversion to the same non-host diffusate; neither species responded to a compost leachate. We believe that the agar trough assay improves on previous methods by facilitating rapid diffusion of attractant or repellents. Both of the aforementioned assays were designed as tools to assess the impact of RNAi-based reverse genetics screens for gene targets involved in chemosensory orientation.

Individual and couple decision behavior under risk: evidence on the dynamics of power balance

This article reports results of an experiment designed to analyze the link between risky decisions made by couples and risky decisions made separately by each spouse. We estimate both the spouses and the couples' degrees of risk aversion, we assess how the risk preferences of the two spouses aggregate when they make risky decisions, and we shed light on the dynamics of the decision process that takes place when couples make risky decisions. We find that, far from being fixed, the balance of power within the household is malleable. In most couples, men have, initially, more decision-making power than women but women who ultimately implement the joint decisions gain more and more power over the course of decision making.

Family caregivers' ideal expectations of Canada's Compassionate Care Benefit

We present the findings of 57 interviews conducted in 2007-2008 with Canadians who have cared for a dying family member to examine their ideal expectations of the Compassionate Care Benefit (CCB) - a social programme providing job security and income support for workers caring for a dying person. Our aims are to (1) appreciate how intended users and other family caregivers view the programme's very nature; (2) identify programme challenges and improvements that emerge from considering family caregivers' ideal expectations; and (3) contribute to a larger evaluative study designed to make policy-relevant recommendations for CCB improvement. Review of transcripts across three respondent groups reveals four categories of ideal expectations: (1) eligibility, (2) informational, (3) timing and (4) financial. Ideal expectations were typically derived from respondents' experiences of care-giving, their knowledge of the programme and, for some, of applying for and/or receiving the CCB. Findings reveal that there are gaps between respondents' ideal expectations and their experienced realities. Such gaps may lead to disappointment being experienced by those who believe they should be eligible for the programme but are not, or should be entitled to receive some form of support that is not presently available. This analysis plays an important role in identifying potential changes for the CCB that may better support family caregivers, in that the ideal expectations serve as a starting point for articulating desirable programme amendments. This analysis also has wider relevance. For jurisdictions looking to create new social programmes to support caregivers based upon labour policy strategies and legislation, this analysis identifies considerations that should be made at the outset of development. For jurisdictions that already have employment-based caregiver support programmes, this analysis demonstrates that programme challenges may not always be met through legislative changes alone but also through measures such as increasing awareness. © 2011 Blackwell Publishing Ltd.

The Art of Refusal: The Experiences of Grant Makers and Grant Seekers

This research project explores the communications’ experiences and practices of
selected grant making and grant seeking organisations, at the point of grant refusal. It was funded by the Charities Aid Foundation, and undertaken through collaboration with the Association of Charitable Foundations (ACF).
The research context is the enhanced competition for funding in which many grant seeking organisations experience the disappointment of refusal; whilst grant makers also face multiple pressures, in responding to grant seekers’ needs. This is an operating environment in which subsequent organisational learning appears demanding.
The aims of the research were to:
- Increase understanding of the communications demands, challenges and
opportunities in giving, receiving and sharing news of grant refusal
- Identify opportunities for organisational learning in these situations, for grant
makers and grant seekers
- Contribute to future practice improvement and development, by drawing on
the reported experiences and practices of participating respondents.

The research focuses on private, formal grant makers (foundations and trusts); and their grant seeking organisational constituencies. It excludes study of public grant makers’ grant refusal processes and those of individuals making personal gifts, direct businesses’ grant making, and grant making by community foundations and by other operating and fundraising charities. A staged research process began in 2008, and field research completed in 2009/2011.

Swift and Conversational Culture

Swift often noted his aversion to coffee-house conversation and to tavern talk, to gossip and company, and to being buried in Dublin in the years of his Deanship. Yet the popular myth of a morose, unsociable Swift belies both his engagement with various literary and political clubs in his early career and his participation in collaborative and experimental poetic games in his Dublin circles. This essay considers Swift’s involvement with three clubs in London (the Saturday Club, the Brothers’ Club, and the Scriblerians) and his writings on a number of fictional clubs (the Athenian Society, the Calves-Head Club, and a putative Society for the correction of the English language). While Swift wrote very little of his experience of actual clubs, the latter three, in addition to the Scriblerian Club as an imagined, rather than actual clubs, resulted in a number of defining poems and works in his career. When Swift settled in Dublin, poetry written and exchanged in a number of sociable circles characterised much of his published verse and gave glimpses of the circles and informal clubs which he formed among friends there. Although these poems are often dismissed as ‘trifles’, the essay argues that the poems are crucial for our understandings of ‘conversational culture’ or sociability in Swift’s Dublin.

Risk-aware Planning in BDI Agents

The ability of an autonomous agent to select rational actions is vital in enabling it to achieve its goals. To do so effectively in a high-stakes setting, the agent must be capable of considering the risk and potential reward of both immediate and future actions. In this paper we provide a novel method for calculating risk alongside utility in online planning algorithms. We integrate such a risk-aware planner with a BDI agent, allowing us to build agents that can set their risk aversion levels dynamically based on their changing beliefs about the environment. To guide the design of a risk-aware agent we propose a number of principles which such an agent should adhere to and show how our proposed framework satisfies these principles. Finally, we evaluate our approach and demonstrate that a dynamically risk-averse agent is capable of achieving a higher success rate than an agent that ignores risk, while obtaining a higher utility than an agent with a static risk attitude.

Gestão LEAN aplicada ao terceiro setor

A conjuntura atual económica, financeira e social tem pressionado o uso racional dos recursos existentes, seja pelo setor privado ou pelo setor público. Contudo, nem sempre as empresas e organizações conseguem fazê-lo da melhor forma possível, seja por falta de experiência, por falta de conhecimento ou simplesmente pela aversão à mudança. É no contexto de redução de custos/ gastos que a gestão Lean tem vindo a afirmar-se como um método/filosofia eficaz e o suficientemente flexível e robusta para se adaptar a diferentes realidades organizacionais. Nesse seguimento, este relatório testemunha a introdução da gestão Lean numa organização do Terceiro Setor – Centro Social e Paroquial da Vera Cruz, e questiona o seu valor acrescentado mesmo se implementada numa lógica parcelar e numa organização ainda globalmente longe de estar organizada segundo uma lógica Lean. Os resultados obtidos no âmbito do projeto em questão parecem apontar para uma operação bem sucedida e com boas perspetivas futuras, caso a referida organização dê continuidade à sua implementação.

Generation Y : salutogenes unternehmerisches Engagement und Work-Life-Balance Maßnahmen als Auslöser affektiven Mitarbeiter-Commitments

In einem Artikel der Zeitschrift Die Zeit wird die Generation Y, die Generation deren Angehörige derzeit zum Großteil ihre akademische Ausbildung beenden und sich dem Arbeitsmarkt zuwenden, auch als Generation Pippi, angelehnt an Astrid Lindgrens Kinderbuchheldin Pippi Langstrumpf, bezeichnet (Bund et al., 2013: 1). Individualität, eine ausgeprägte Abneigung gegenüber Autoritätspersonen, der Wunsch nach Spaß und Abwechslung sowie das Bestreben, sich selbst zu verwirklichen, charakterisieren Pippi Langstrumpf (Bund et al., 2013: 1). Diese Charakterbeschreibungen werden z. T. auf die Generation Y übertragen und stellen Unternehmen vor eine Herausforderung: Um Arbeitnehmer der Generation Y affektiv zu binden, so dass sich in diese getätigte und noch zu tätigenden Investitionen rentieren, müssen neue Strategien entwickelt werden. Innerhalb dieser Bachelorarbeit konnten erste Erkenntnisse dahingehend gewonnen werden, dass u. a. Work-Life-Balance Maßnahmen, (gesundheitsorientierte) Führung, ein positives Arbeitsklima und Mitbestimmung als Auslöser affektiven organisationalen Commitments der Generation Y fungieren können. Bei der nachfolgend dargestellten Arbeit handelt es sich um eine überarbeitete Version der gleichnamigen Bachelorarbeit, die von Prof. Dr. Sven Litzcke sowie von Prof. Dr. Dr. Daniel Wichelhaus betreut wurde.

A risk-averse optimization model for trading wind energy in a market environment under uncertainty

In this paper, a stochastic programming approach is proposed for trading wind energy in a market environment under uncertainty. Uncertainty in the energy market prices is the main cause of high volatility of profits achieved by power producers. The volatile and intermittent nature of wind energy represents another source of uncertainty. Hence, each uncertain parameter is modeled by scenarios, where each scenario represents a plausible realization of the uncertain parameters with an associated occurrence probability. Also, an appropriate risk measurement is considered. The proposed approach is applied on a realistic case study, based on a wind farm in Portugal. Finally, conclusions are duly drawn. (C) 2011 Elsevier Ltd. All rights reserved.

A short-term risk management tool applied to OMEL electricity market using particle swarm optimization

Short-term risk management is highly dependent on long-term contractual decisions previously established; risk aversion factor of the agent and short-term price forecast accuracy. Trying to give answers to that problem, this paper provides a different approach for short-term risk management on electricity markets. Based on long-term contractual decisions and making use of a price range forecast method developed by the authors, the short-term risk management tool presented here has as main concern to find the optimal spot market strategies that a producer should have for a specific day in function of his risk aversion factor, with the objective to maximize the profits and simultaneously to practice the hedge against price market volatility. Due to the complexity of the optimization problem, the authors make use of Particle Swarm Optimization (PSO) to find the optimal solution. Results from realistic data, namely from OMEL electricity market, are presented and discussed in detail.

Contribuição do setor segurador para a internacionalização das empresas portuguesas: estudo de caso da Somelos Tecidos, S.A.

Dissertação apresentada ao Instituto Politécnico do Porto – Instituto Superior de Contabilidade e Administração do Porto - para obtenção do Grau de Mestre em Empreendedorismo e Internacionalização Orientador: Doutor Orlando Manuel Martins Marques de Lima Rua

Otimização estocástica para a exploração de centrais de concentração solar considerando incerteza e risco

Dissertação para obtenção do grau de Mestre em Engenharia Eletrotécnica

On project finance and the first road concession in Portugal

In broad sense, Project Financing1 as a mean of financing large scale infrastructural projects worldwide has had a steady growth in popularity for the last 20 years. This growth has been relatively unscathed from most economic cycles. However in the wake of the 2007 systemic Financial Crisis, Project Financing was also in trouble. The liquidity freeze and credit crunch that ensued affected all parties involved. Traditional Lenders, of this type of financial instrument, locked-in long-term contractual obligations, were severely hit with scarcity of funding compounded by rapidly increasing cost of funding. All the while, Banks were “rescued” by the concerted actions of Central Banks and other Multi-Lateral Agencies around the world but at the same time “stressed” by upcoming regulatory effort (Basel Committee). This impact resulted in specific changes to this type of long-term financing. Changes such as Commercial Banks’ increased risk aversion; pricing increase and maturities decrease of credit facilities; enforcement of Market Disruption Event clauses; partial responsibility for project risk by Multilateral Agencies; and adoption of utility-like availability payments in other industrial sectors such as transportation and even social infrastructure. To the extent possible, this report is then divided in three parts. First, it begins with a more instructional part, touching academic literature (theory) and giving the Banks perspective (practice), but mostly as an overview of Project Finance for awareness’ sake. The renowned Harvard Business School professor – Benjamin Esty, states2 that Project Finance is a “relatively unexplored territory for both empirical and theoretical research” which means that academic research efforts are lagging the practice of Project Finance. Second, the report presents a practical case regarding the first Road Concession in Portugal in 1998 ending with the lessons learned 10 years after Financial Close. Lastly, the report concludes with the analysis of the current trends and changes to the industry post Financial Crisis of the late 2000’s. To achieve this I’ll reference relevant papers, books on the subject, online articles and my own experience in the Project Finance Department at a major Portuguese Investment Bank. Regarding the latter, with the signing of a confidentiality agreement, I’m duly omitting sensitive and proprietary bank information.

Three essays on the psychology of investment and financial markets

Préface My thesis consists of three essays where I consider equilibrium asset prices and investment strategies when the market is likely to experience crashes and possibly sharp windfalls. Although each part is written as an independent and self contained article, the papers share a common behavioral approach in representing investors preferences regarding to extremal returns. Investors utility is defined over their relative performance rather than over their final wealth position, a method first proposed by Markowitz (1952b) and by Kahneman and Tversky (1979), that I extend to incorporate preferences over extremal outcomes. With the failure of the traditional expected utility models in reproducing the observed stylized features of financial markets, the Prospect theory of Kahneman and Tversky (1979) offered the first significant alternative to the expected utility paradigm by considering that people focus on gains and losses rather than on final positions. Under this setting, Barberis, Huang, and Santos (2000) and McQueen and Vorkink (2004) were able to build a representative agent optimization model which solution reproduced some of the observed risk premium and excess volatility. The research in behavioral finance is relatively new and its potential still to explore. The three essays composing my thesis propose to use and extend this setting to study investors behavior and investment strategies in a market where crashes and sharp windfalls are likely to occur. In the first paper, the preferences of a representative agent, relative to time varying positive and negative extremal thresholds are modelled and estimated. A new utility function that conciliates between expected utility maximization and tail-related performance measures is proposed. The model estimation shows that the representative agent preferences reveals a significant level of crash aversion and lottery-pursuit. Assuming a single risky asset economy the proposed specification is able to reproduce some of the distributional features exhibited by financial return series. The second part proposes and illustrates a preference-based asset allocation model taking into account investors crash aversion. Using the skewed t distribution, optimal allocations are characterized as a resulting tradeoff between the distribution four moments. The specification highlights the preference for odd moments and the aversion for even moments. Qualitatively, optimal portfolios are analyzed in terms of firm characteristics and in a setting that reflects real-time asset allocation, a systematic over-performance is obtained compared to the aggregate stock market. Finally, in my third article, dynamic option-based investment strategies are derived and illustrated for investors presenting downside loss aversion. The problem is solved in closed form when the stock market exhibits stochastic volatility and jumps. The specification of downside loss averse utility functions allows corresponding terminal wealth profiles to be expressed as options on the stochastic discount factor contingent on the loss aversion level. Therefore dynamic strategies reduce to the replicating portfolio using exchange traded and well selected options, and the risky stock.