Delivering value for money in the procurement of public sector major infrastructure : a new first-order decision making model

The significant challenge faced by government in demonstrating value for money in the delivery of major infrastructure resolves around estimating costs and benefits of alternative modes of procurement. Faced with this challenge, one approach is to focus on a dominant performance outcome visible on the opening day of the asset, as the means to select the procurement approach. In this case, value for money becomes a largely nominal concept and determined by selected procurement mode delivering, or not delivering, the selected performance outcome, and notwithstanding possible under delivery on other desirable performance outcomes, as well as possibly incurring excessive transaction costs. This paper proposes a mind-set change in this particular practice, to an approach in which the analysis commences with the conditions pertaining to the project and proceeds to deploy transaction cost and production cost theory to indicate a procurement approach that can claim superior value for money relative to other competing procurement modes. This approach to delivering value for money in relative terms is developed in a first-order procurement decision making model outlined in this paper. The model developed could be complementary to the Public Sector Comparator (PSC) in terms of cross validation and the model more readily lends itself to public dissemination. As a possible alternative to the PSC, the model could save time and money in preparation of project details to lesser extent than that required in the reference project and may send a stronger signal to the market that may encourage more innovation and competition.

A comparative review of quantitative VFM methodology for PPP infrastructure project in Indonesia and Australia

The Government of Indonesia (GoI) increasingly relies on the private sector financing to build and operate infrastructures through public private partnership (PPP) schemes. However, PPP does not automatically provide the solution for the financing scheme due to value for money (VFM) issues. The procurement authority must show whether a PPP proposal is the optimal solution that provides best VFM outcome. The paper presents a literature review of comparing quantitative VFM methodology for PPP infrastructure project procurement in Indonesia and Australia. Public Sector Comparator (PSC) is used to assess the potential project VFM quantitatively in Australia. In Indonesia, the PSC has not been applied, where the PPP procurement authority tends to utilize a common project evaluation method that ignores the issues of risk. Unlike the conventional price bid evaluation, the PSC enables a financial comparison including costs/gains and risks. Since the construction of PSC is primarily on risk management approach, it can facilitate risk negotiation processes between the involved parties. The study indicates that the quantitative VFM methodology of PSC is potentially applicable in Indonesia for water supply sector. Various supporting regulations are available that emphasize the importance of VFM and risk management in infrastructure investment. However, the study also reveals a number of challenges that need to be anticipated, such as the need of a more comprehensive PPP policy at both central and local government level, a more specific legal instrument for bidding evaluation method and the issue of institutional capacity development in PPP Units at the local level.

The regulation of insurance intermediaries in the Australian financial services market

The insurance industry discharges a critical role in the Australian economy and is a significant part of the Australian financial services market. The industry relies upon intermediaries, the principal types being brokers and agents, to promote, arrange and distribute their products and services in the market. The pivotal role that they play in this context and sensitivities associated with the consumer oriented products, such as house and contents insurance, has ensured close regulatory attention. Of particular importance was the passage of the Insurance (Agents and Brokers) Act 1984 (Cth), a comprehensive attempt to address the responsibilities of intermediaries as well as particular problem areas associated with the handling of money. However, with the introduction of financial services and market reform early in the new millennium this insurance intermediary specific regulatory approach was abandoned in favour of a market-wide strategy; that is, market reform was based upon across-the-board licensing, disclosure, conduct and fairness standards, and all financial products and services are now regulated at a generic level under Ch 7 of the Corporations Act 2001 (Cth). This article briefly explores the categories of insurance intermediaries and the relevant distinctions between them but focuses mainly upon the regulatory context in which they operate. This context transcends a strictly legal framework as the regulatory body, the Australian Securities and Investments Commission (ASIC), has sought to inform and guide the market through Policy Statements and Regulatory Guides. The usefulness of these guides as an adjunct to the legislation in explaining the scope and operation of regulatory framework is examined. In addition, the article looks at the self-regulatory and dispute resolution practices in this area and their impact. In conclusion an assessment of this across-the-board regulatory regime is advanced.

Informational city

Many cities worldwide face the prospect of major transformation as the world moves towards a global information order. In this new era, urban economies are being radically altered by dynamic processes of economic and spatial restructuring. The result is the creation of ‘informational cities’ or its new and more popular name, ‘knowledge cities’. For the last two centuries, social production had been primarily understood and shaped by neo-classical economic thought that recognized only three factors of production: land, labor and capital. Knowledge, education, and intellectual capacity were secondary, if not incidental, factors. Human capital was assumed to be either embedded in labor or just one of numerous categories of capital. In the last decades, it has become apparent that knowledge is sufficiently important to deserve recognition as a fourth factor of production. Knowledge and information and the social and technological settings for their production and communication are now seen as keys to development and economic prosperity. The rise of knowledge-based opportunity has, in many cases, been accompanied by a concomitant decline in traditional industrial activity. The replacement of physical commodity production by more abstract forms of production (e.g. information, ideas, and knowledge) has, however paradoxically, reinforced the importance of central places and led to the formation of knowledge cities. Knowledge is produced, marketed and exchanged mainly in cities. Therefore, knowledge cities aim to assist decision-makers in making their cities compatible with the knowledge economy and thus able to compete with other cities. Knowledge cities enable their citizens to foster knowledge creation, knowledge exchange and innovation. They also encourage the continuous creation, sharing, evaluation, renewal and update of knowledge. To compete nationally and internationally, cities need knowledge infrastructures (e.g. universities, research and development institutes); a concentration of well-educated people; technological, mainly electronic, infrastructure; and connections to the global economy (e.g. international companies and finance institutions for trade and investment). Moreover, they must possess the people and things necessary for the production of knowledge and, as importantly, function as breeding grounds for talent and innovation. The economy of a knowledge city creates high value-added products using research, technology, and brainpower. Private and the public sectors value knowledge, spend money on its discovery and dissemination and, ultimately, harness it to create goods and services. Although many cities call themselves knowledge cities, currently, only a few cities around the world (e.g., Barcelona, Delft, Dublin, Montreal, Munich, and Stockholm) have earned that label. Many other cities aspire to the status of knowledge city through urban development programs that target knowledge-based urban development. Examples include Copenhagen, Dubai, Manchester, Melbourne, Monterrey, Singapore, and Shanghai. Knowledge-Based Urban Development To date, the development of most knowledge cities has proceeded organically as a dependent and derivative effect of global market forces. Urban and regional planning has responded slowly, and sometimes not at all, to the challenges and the opportunities of the knowledge city. That is changing, however. Knowledge-based urban development potentially brings both economic prosperity and a sustainable socio-spatial order. Its goal is to produce and circulate abstract work. The globalization of the world in the last decades of the twentieth century was a dialectical process. On one hand, as the tyranny of distance was eroded, economic networks of production and consumption were constituted at a global scale. At the same time, spatial proximity remained as important as ever, if not more so, for knowledge-based urban development. Mediated by information and communication technology, personal contact, and the medium of tacit knowledge, organizational and institutional interactions are still closely associated with spatial proximity. The clustering of knowledge production is essential for fostering innovation and wealth creation. The social benefits of knowledge-based urban development extend beyond aggregate economic growth. On the one hand is the possibility of a particularly resilient form of urban development secured in a network of connections anchored at local, national, and global coordinates. On the other hand, quality of place and life, defined by the level of public service (e.g. health and education) and by the conservation and development of the cultural, aesthetic and ecological values give cities their character and attract or repel the creative class of knowledge workers, is a prerequisite for successful knowledge-based urban development. The goal is a secure economy in a human setting: in short, smart growth or sustainable urban development.

Design and implementation of sensor networks for the observation and research of harmful algal blooms in southern California coastal waters

Harmful Algal Blooms (HABs) have become an important environmental concern along the western coast of the United States. Toxic and noxious blooms adversely impact the economies of coastal communities in the region, pose risks to human health, and cause mortality events that have resulted in the deaths of thousands of fish, marine mammals and seabirds. One goal of field-based research efforts on this topic is the development of predictive models of HABs that would enable rapid response, mitigation and ultimately prevention of these events. In turn, these objectives are predicated on understanding the environmental conditions that stimulate these transient phenomena. An embedded sensor network (Fig. 1), under development in the San Pedro Shelf region off the Southern California coast, is providing tools for acquiring chemical, physical and biological data at high temporal and spatial resolution to help document the emergence and persistence of HAB events, supporting the design and testing of predictive models, and providing contextual information for experimental studies designed to reveal the environmental conditions promoting HABs. The sensor platforms contained within this network include pier-based sensor arrays, ocean moorings, HF radar stations, along with mobile sensor nodes in the form of surface and subsurface autonomous vehicles. FreewaveTM radio modems facilitate network communication and form a minimally-intrusive, wireless communication infrastructure throughout the Southern California coastal region, allowing rapid and cost-effective data transfer. An emerging focus of this project is the incorporation of a predictive ocean model that assimilates near-real time, in situ data from deployed Autonomous Underwater Vehicles (AUVs). The model then assimilates the data to increase the skill of both nowcasts and forecasts, thus providing insight into bloom initiation as well as the movement of blooms or other oceanic features of interest (e.g., thermoclines, fronts, river discharge, etc.). From these predictions, deployed mobile sensors can be tasked to track a designated feature. This focus has led to the creation of a technology chain in which algorithms are being implemented for the innovative trajectory design for AUVs. Such intelligent mission planning is required to maneuver a vehicle to precise depths and locations that are the sites of active blooms, or physical/chemical features that might be sources of bloom initiation or persistence. The embedded network yields high-resolution, temporal and spatial measurements of pertinent environmental parameters and resulting biology (see Fig. 1). Supplementing this with ocean current information and remotely sensed imagery and meteorological data, we obtain a comprehensive foundation for developing a fundamental understanding of HAB events. This then directs labor- intensive and costly sampling efforts and analyses. Additionally, we provide coastal municipalities, managers and state agencies with detailed information to aid their efforts in providing responsible environmental stewardship of their coastal waters.

Networked robotic sensor platform deployments for use in coastal environmental assessment in southern California

Mobile sensor platforms such as Autonomous Underwater Vehicles (AUVs) and robotic surface vessels, combined with static moored sensors compose a diverse sensor network that is able to provide macroscopic environmental analysis tool for ocean researchers. Working as a cohesive networked unit, the static buoys are always online, and provide insight as to the time and locations where a federated, mobile robot team should be deployed to effectively perform large scale spatiotemporal sampling on demand. Such a system can provide pertinent in situ measurements to marine biologists whom can then advise policy makers on critical environmental issues. This poster presents recent field deployment activity of AUVs demonstrating the effectiveness of our embedded communication network infrastructure throughout southern California coastal waters. We also report on progress towards real-time, web-streaming data from the multiple sampling locations and mobile sensor platforms. Static monitoring sites included in this presentation detail the network nodes positioned at Redondo Beach and Marina Del Ray. One of the deployed mobile sensors highlighted here are autonomous Slocum gliders. These nodes operate in the open ocean for periods as long as one month. The gliders are connected to the network via a Freewave radio modem network composed of multiple coastal base-stations. This increases the efficiency of deployment missions by reducing operational expenses via reduced reliability on satellite phones for communication, as well as increasing the rate and amount of data that can be transferred. Another mobile sensor platform presented in this study are the autonomous robotic boats. These platforms are utilized for harbor and littoral zone studies, and are capable of performing multi-robot coordination while observing known communication constraints. All of these pieces fit together to present an overview of ongoing collaborative work to develop an autonomous, region-wide, coastal environmental observation and monitoring sensor network.

Polybrominated diphenyl ether (PBDE) concentrations decrease with age : analysis of pooled human blood serum in the Australian population

Introduction Polybrominated diphenyl ethers (PBDEs) are considered to be a cost effective and efficient way to reduce the possibility of product ignition and inhibit the spread of fire, thereby limiting harm caused by fires. PBDEs are incorporated into a wide variety of manufactured products and are now considered an ubiquitous contaminant found worldwide in biological and environmental samples1 . In comparison to “traditional” persistent organic pollutants (POPs), the exposure modes of PBDEs in humans are less well defined, although dietary sources, inhalation (air/particulate matter) and dust ingestion have been reported 2-4. Limited investigations of population specific factors such as age or gender and PBDE concentrations report: no conclusive correlation by age in adults; higher concentrations in children ; similar concentrations in maternal and cord blood; and no gender differences. After preliminary findings of higher PBDE concentrations in children than in adults in Australia11 we sought to investigate at what age the PBDE concentrations peaked in an effort to focus exposure studies. This investigation involved the collection of blood samples from young age groups and the development of a simple model to predict PBDE concentrations by age in Australia.

Leveraging R&D investment for the Australian built environment

This paper discusses a current research project building new understandings and knowledge relevant to R&D funding strategies in Australia. Building on a retrospective analysis of R&D trends and industry outcomes, an industry roadmap will be developed to inform R&D policies more attuned to future industry needs to improve research investment effectiveness. The project will also include analysis of research team formation and management (involving end users from public and private sectors together with research and knowledge institutions), and dissemination of outcomes and uptake in the Australian building and construction industry. The project will build on previous research extending open innovation system theory and network analysis and procurement, focused on R&D. Through the application of dynamic capabilities and strategic foresighting theory, an industry roadmap for future research investment will be developed, providing a stronger foundation for more targeted policy recommendations. This research will contribute to more effective construction processes in the future through more targeted research funding and more effective research partnerships between industry and researchers.

Board network characteristics and company performance in Sweden : the case of Gnosjö companies and their board members in southern Sweden

When managers of entrepreneurial companies typically talk about strategies, they first consider what products to make and secondly where to locate the business. The entrepreneurial companies locate in rural areas because of a wish to maintain a certain lifestyle, or because they can combine a resource available there with certain knowledge or interest that they have (Getz and Nilsson, 2004). In addition, many managers of entrepreneurial companies are confident in locating in a rural area, because there often is economic and social structure supportive of local corporate governance. The most central part of corporate governance is the board of directors. In an entrepreneurial company in a rural area, such members of boards are most likely to be individuals in dominant positions influential in the local economy.

Nascent venture performance : linking novelty of venture ideas and commitment of firm founders as predictors

The individual-opportunity nexus emphasizes that both the characteristics of individuals and venture ideas have roles in the entrepreneurial process (Shane & Venkataraman, 2000). Following upon this assertion the present study examined whether the venture idea novelty and investment of resources can make an important part in the venture creation process. Data analysed for a sample of nascent entrepreneurs in Australia suggests that the novelty of venture ideas restricts the performance of nascent ventures. However, the more investment of time and money do not show a significant impact to the venture performance.

Ethics and Socially Responsible Investment : A Philosophical Approach

This volume breaks new ground by approaching Socially Responsible Investment (SRI) as an explicitly ethical practice in financial markets. The work explains the philosophical and practical shortcomings of ‘long term shareholder value’ and the origins and conceptual structure of SRI, and links its pursuit to both its deeper philosophical foundations and the broader, multi-dimensional global movement towards greater social responsibility in global markets. Interviews with fund managers in the Australian SRI sector generate recommendations for better integrating ethics into SRI practice via ethically informed engagement with invested companies, and an in-depth discussion of the central practical SRI issue of fiduciary responsibility strengthens the case in favour of SRI. The practical and ethical theoretical perspectives are then brought together to sketch out an achievable ideal for SRI worldwide, in which those who are involved in investment and business decisions become part of an ‘ethical chain’ of decision makers linking the ultimate owners of capital with the business executives who frame, advocate and implement business strategies. In between there are investment advisors, fund managers, business analysts and boards. The problem lies in the fact that the ultimate owners are discouraged from considering their own values, or even their own long term interests, whilst the others often look only to short term interests. The solution lies in the latter recognising themselves as links in the ethical chain.

Framework for assessing financial literacy and superannuation investment choice decisions

There is a worldwide trend towards rapidly growing defined contribution pension funds in terms of assets and membership, and the choices available to individuals. This has shifted the decisionmaking responsibility to fund members for managing the investment of their retirement savings. This change has given rise to a phenomenon where most superannuation fund members are responsible for either actively choosing or passively relying on their funds’ default investment options. Prior research identifies that deficiencies in financial literacy is one of the causes of inertia in financial decision-making and findings from international and Australian studies show that financial illiteracy is wide-spread. Given the potential significant economic and social consequences of poor financial decision-making in superannuation matters, this paper proposes a framework by which the various demographic, social and contextual factors that influence fund members’ financial literacy and its association with investment choice decisions are explored. Enhanced theoretical and empirical understanding of the factors that are associated with active/passive investment choice decisions would enable development of well-targeted financial education programs.

Financial literacy and pension investment decisions

The call for enhanced financial literacy amongst consumers is a global phenomenon, driven by the growing complexity of financial markets and products, and government concerns about the affordability of supporting an ageing population. Worldwide, defined benefit pensions are giving way to the risk and uncertainty of defined contribution superannuation/pension funds where fund members now make choices and decisions that were once made on their behalf. An important prerequisite for informed financial decision-making is adequate financial knowledge and skills to make competent investment decisions. This paper reports the findings of an online survey of the members of a large Australian public sector-based superannuation fund and shows that although respondents generally understand basic financial matters, on average, their understanding of investments concepts, such as the relationship between risk and returns, is inadequate. These results highlight the need for education programs focusing specifically on developing fund members’ investment knowledge and skills to facilitate informed retirement savings decisions.