Risk in Private Finance Initiative Projects::A Public Sector Perspective

The management of public sector risk is increasingly seen as a priority area of UK government policy. This has been highlighted recently by the Prime Minister Gordon Brown who stated that “the issue of public risk is one of the most challenging areas of policy-making for any government” (Strategic Risk, 2008). In response to these challenges, the UK Prime Minister has appointed a new body - the Risk and Regulation Advisory Council (RRAC) which is tasked with improving the way risk to the public is understood and managed. One area of particular concern with regard to the governance of public sector risks involves projects procured via the Private Finance Initiative (PFI). These projects involve long-term contracts, complex multi-party interactions and thus create various risks to public sector clients. Today, most PFI actors acknowledge the potentially adverse effects of these risks and make an effort to prevent or mitigate undesirable results. As a consequence, issues of risk allocation, risk transfer and risk management have become central to the PFI procurement process. This paper provides an overview of the risk categories and risk types which are relevant to the public sector in PFI projects. It analyses risk as a feature of uncertain future project-related events and examines potential pitfalls which can be associated with PFI risk management on the basis of a case study of a high-profile PFI hospital in Scotland. The paper concludes that, despite the trend towards diminished risk profiles during the operational phase, the public sector continues to be exposed to significant risks when engaging in PFI-based procurement.

Does the UK Local Finance Improvement Trust (Lift) Initiative Improve Risk Management in Public-Private Procurement?

The UK government introduced the Private Finance Initiative (PFI) and, latterly, the Local Improvement Finance Trust (LIFT) in an attempt to improve public service provision. As a variant of PFI, LIFT seeks to create a framework for the effective provision of primary care facilities. Like conventional PFI procurement, LIFT projects involve long-term contracts, complex multi-party interactions and thus create various risks to public sector clients. This paper investigates the advantages and disadvantages of LIFT with a focus on how this approach facilitates or impedes risk management from the public sector client perspective. Our paper concludes that LIFT has a potential for creating additional problems, including the further reduction of public sector control, conflicts of interest, the inappropriate use of enabling funds, and higher than market rental costs affecting the uptake of space in the buildings by local health care providers. However, there is also evidence that LIFT has facilitated new investment and that Primary Care Trusts (PCTs) have themselves started addressing some of the weaknesses of this procurement format through the bundling of projects and other forms of regional co-operation.

UK Public Private Partnerships and the Credit Crunch: A Case of Risk Contagion?

During the past twenty years, the UK has relied heavily on Public Private Partnerships (PPP) and especially the Private Finance Initiative in the procurement of infrastructure and services. Discussing the causes of the credit crunch and its effects on PPP, this paper notes that the provision of new public sector infrastructure and related services has been adversely affected by the impact of the credit crunch on Private Finance Initiatives (PFIs). These problems have arisen primarily from the unwillingness of commercial banks to replace collapsed PFI bond financing unless new PFI contracts reduce financial risks; which, in turn, is likely to increase the cost of these projects to the public sector. Additional financial strains have arisen for the UK government from the need to bail out collapsed PFI projects. Overall we find evidence that the UK commitment to PFI has not only increased immediate fiscal pressures on the UK when these have become least palatable, but has also created fiscal vulnerabilities at local and national levels which are likely to hamper the country’s ability to launch counter-cyclical responses to the ongoing crisis.

Perspectives on the Future of Public Private Partnership in the UK

During the past two decades the UK has played a leading position in the development and application of Public Private Partnership (PPP) based infrastructure procurement through its Private Finance Initiative model. This model had been developed during the last years of the Major Government and expanded during the early years of the Blair Government. The banking and economic crisis of 2007-09 has created major challenges to the use of PPP in the UK, making the sustainability of past levels of PPP investment and the future direction of PPP based infrastructure procurement in that country uncertain. This chapter summarises key developments in UK PPP up to the crisis; reviews the economic issues that have led up to the crisis; discusses the immediate impact of the crisis on the UK PFI and PPP market together with the transition arrangements that were put into to place by the Brown government; and, lastly, looks at recent initiatives taken by Cameron’s Conservative-Liberal Coalition Government under the designation of Private Finance 2 (PF2).

An Overview of Public Private Partnership

In many developed and developing countries there has been a move toward an increased reliance on Public Private Partnerships (PPPs) for infrastructure development. This involves an engagement with, or participation of, private companies and the public sector in the financing and provision of infrastructure. In most countries these PPP arrangements have been aimed at overcoming broad public sector constraints in relation to either a lack of public capital; and/or a lack of public sector capacity, resources and specialized expertise to develop, manage, and operate infrastructure assets.
In a number of countries Public Private Partnerships are now commonly used to accelerate economic growth, development and infrastructure delivery and to achieve quality service delivery and good governance. The spectrum of nature and types of public private partnerships (PPPs) are vast, making a precise and complete definition of a PPP difficult. However, significant developments in the use of PPP in many countries have made it increasingly important to understand these practices, as well as to unveil any underlying common principles and problems and to capture and develop a body of good practices, where such can be achieved.

The Role and Effectiveness of Public – Private Partnerships (NHS LIFT) in the Development of Enhanced Primary Care Premises and Services:Report for the National Institute for Health Research Service Delivery and Organisation programme

The research project analysed the role and effectiveness of LIFT via a multi-method study which included semi-structured interviews with policy elites and users, as well as case studies and an exploratory analysis of the financial characteristics of three LIFT Companies. While the team felt that it was able to identify key aspects relating to the advantages and drawbacks surrounding LIFT, some aspects relating to the representativeness of the study was adversely affected by a reluctance of PCTs to participate in the case study analysis and commercial confidentiality restrictions. The study was nonetheless able to identify important issues in relation to the funding and procurement of primary care premises and services.

Optimization of Controller Parameters for Energy Saving

Among various technologies to tackle the twin challenges of sustainable energy supply and climate change, energy saving through advanced control plays a crucial role in decarbonizing the whole energy system. Modern control technologies, such as optimal control and model predictive control do provide a framework to simultaneously regulate the system performance and limit control energy. However, few have been done so far to exploit the full potential of controller design in reducing the energy consumption while maintaining desirable system performance. This paper investigates the correlations between control energy consumption and system performance using two popular control approaches widely used in the industry, namely the PI control and subspace model predictive control. Our investigation shows that the controller design is a delicate synthesis procedure in achieving better trade-o between system performance and energy saving, and proper choice of values for the control parameters may potentially save a significant amount of energy

A Eulogy to Seed Sharing: Manufacturing Genuine Scarcity

Seeds are traditionally considered as common or even public goods, their traits as ‘products of nature’. They are also essential to biodiversity, food security and food sovereignty. However, a suite of techno-legal interventions has legislated the enclosure of seeds: seed patents, plant variety protections, and stewardship agreements. These instruments create and protect private proprietary interests over plant material and point to the interface between seeds, capitalism, and law. In the following article, we consider the latest innovations, the bulk of which have been directed toward genetically disabling the reproductive capacities of seeds (terminator technology) or tying these capacities to outputs (‘round-up necessary’). In both instances, scarcity moves from artificial to real.
For the agro-industrial complex, the innovations are perfectly rational as they can simultaneously control supply and demand. For those outside the complex, however, the consequences are potentially ruinous. The practices of seed-saving and exchange no longer are feasible, even covertly. Contemporary genetic controls have upped the ante, by either disabling the reproductive capacity of seeds or, through cross-pollination and outcrossing, facilitating the autonomous spread of the genetic modifications that are importantly still traceable, identifiable and therefore capable of legal protection. In both instances, genuine scarcity becomes the new standard as private interests dominate what was a public sphere.

Sharing services, saving money? Five risks to cost saving when organizations share administrative services

Shared services are a popular reform for governments under financial pressure. The hope is to reduce overheads and increase efficiency by providing support services like HR, finance and procurement once to multiple agencies. Drawing on insights from organization theory and political science, we identify five risks that shared services won’t live up to current expectations. We illustrate each with empirical evidence from the UK, Ireland and further afield, and conclude with suggestions on how to manage these risks.

Saving Energy by Delegating Network Activity to Home Gateways

Today, an ever-increasing number of devices has networking capability. The main implication of this fact is that such devices are often left fully powered yet idle just to maintain their network presence, hence leading to large energy waste. This ultimately results in higher electricity cost for consumers. This paper tackles an effective mechanism to reduce energy waste of consumer electronics, by boosting the usage of lowpower states available in most devices. The main concept is to delegate background networking routines to home gateways, which are today available in most homes and offices. The paper describes the functionality and the software architecture to be implemented by home gateways and consumer electronics, reports performance evaluation on a working prototype, and provides estimation of potential benefits for consumers.

Assessing the Potential for Saving Energy by Impersonating Idle Networked Devices

The idea of proxying network connectivity has been proposed as an efficient mechanism to maintain network presence on behalf of idle devices, so that they can “sleep”. The concept has been around for many years; alternative architectural solutions have been proposed to implement it, which lead to different considerations about capability, effectiveness and energy efficiency. However, there is neither a clear understanding of the potential for energy saving nor a detailed performance comparison among the different proxy architectures. In this paper, we estimate the potential energy saving achievable by different architectural solutions for proxying network connectivity. Our work considers the trade-off between the saving achievable by putting idle devices to sleep and the additional power consumption to run the proxy. Our analysis encompasses a broad range of alternatives, taking into consideration both implementations already available in the market and prototypes built for research purposes. We remark that the main value of our work is the estimation under realistic conditions, taking into consideration power measurements, usage profiles and proxying capabilities.