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

An Evaluation of the Effectiveness of an FE/HE Partnership in the Delivery of a Preparation for Practice Module within an Undergraduate Social Work Degree Programme

The Preparation for Practice module at the University of Ulster is delivered to 170 first year students via a collaborative arrangement between higher and further education institutions. In each of the five sites, students receive large group and small group teaching facilitated by social work training agency workers and academic tutor dyads. An evaluation of the module sought the perceptions of the agency and academic facilitators regarding the overall collaborative arrangement and the model of co-teaching involving social work academics and agency partners. Respondents were asked to complete a semi-structured questionnaire, which generated data from a Likert scale and also invited qualitative commentary. The Likert scale data were analysed via SPSS and the qualitative information was scrutinised using a manual thematic analysis technique. Findings indicated that continuous communication, consistency in programme content and the acknowledgement of the differences in organisation resources were key to a successful collaborative arrangement. It was also noted that a co-teaching model should be viewed as a positive vehicle for achieving module objectives in a safe learning environment.

Service-user involvement in nurse education: partnership or tokenism?

Following on from the Francis Report (2013) the need for a framework of service user involvement is required not just in the Health Service but also in Higher Education. There are wide variances globally on the levels of service user interaction and involvement in healthcare education. Health policy internationally has indicated a move towards developing partnerships with service users but to date this still remains elusive with the majority of user involvement consultative in approach. This paper aims to discuss the Health policy background and the current approaches taken in the involvement of service users in healthcare education.