The Private Finance Initiative (PFI) is frequently portrayed as a vehicle for change for the UK construction sector. Significant change in the working practices of construction companies is predicted as new business models based on whole-life value creation emerge. This paper shifts the focus of discussion from projected ideals and possible developments to the current situation. More specifically, it focuses on the challenges that large firms participating in both PFI and traditional markets face. The analysis focuses on the relations between business units and on day-to-day challenges to greater long-term commitment, through life-service provision and increased integration between construction and service provision. The paper offers insights into the effects of PFI on construction practice and their implications for theorizing on organizational and strategic change. It suggests abandoning a simplistic model of the centralized, homogenous firm and instead capturing the dynamics of decentralized, large firms working in multiple markets on a variety of projects. This would assist in the provision of more realistic and fruitful models of how to realize the PFI vision. L'Initiative Financière Privée (Private Finance Initiative – PFI; contrats de concession d'ouvrages publics à paiements publics) est fréquemment dépeinte comme un moyen de faire évoluer l'industrie britannique du bâtiment. D'importants changements dans les pratiques de travail des entreprises du bâtiment sont à prévoir au fur et à mesure qu'apparaissent de nouveaux modèles d'entreprise basés sur la création de valeur pour toute la durée du cycle de vie. Cet article déplace le centre de la discussion des idéaux envisagés et des développements possibles à la situation actuelle. De manière plus précise, il se concentre sur les défis auxquels se trouvent confrontées les grandes entreprises qui participent à la fois aux marchés PFI et aux marchés traditionnels. L'article porte principalement sur les relations entre les Business Units et sur les défis qui se posent au quotidien par rapport à un engagement à long terme plus grand, au maintien de la qualité des prestations pendant la durée du cycle de vie, à une plus grande intégration entre la construction et les prestations fournies. L'étude de cas et l'analyse élargie qui sont présentées permettent une évaluation de l'effet des contrats PFI sur les pratiques du bâtiment et une théorisation sur les organisations et les changements stratégiques. L'article suggère d'abandonner le modèle simpliste de l'entreprise homogène, centralisée, et de s'inspirer plutôt de la dynamique des grandes entreprises décentralisées opérant dans de multiples marchés sur des projets variés. Cela contribuerait à fournir des modèles plus réalistes et féconds permettant de savoir comment concrétiser la vision PFI. Mots clés: travail collaboratif entreprises de construction solutions intégrées marchés multiples Initiative Financière Privée (PFI) initiative financière publique création de valeur
The policy regarding the management of national road networks in Indonesia has been centrally programmed and managed by the Directorate General Bina Marga, under the Ministry of Public Works. Under such policy, the national road and bridge system is planned, programmed and financed by the central government, whereas the implementation of construction and rehabilitation/maintenance of roads and bridges are delegated to local authorities. In exercising its authority, the government of Indonesia has relied on traditional design-bid-build approach for delivery of road and highway construction and maintenance projects. Under this approach, program development and engineering were prepared by the central agency (DGBM) whereas the biding and construction process will be carried out by local authorities at provincial level. This paper discusses result of preliminary study on alternative delivery method for road projects in Indonesia. The study attempts to identify the potential application of design-build delivery method, as well as performance based contract to the current management structure of national road network system. In particular, this study aims at investigating the impact of organizational structure and decentralization mechanism at both central and local authorities to current state of application of traditional design-bid-build delivery method in road construction projects.
Kenya’s Constituency Development Fund (CDF) Act has been hailed as one of the most critical legislations and indeed one of the few landmark achievements of the ninth parliament and indeed of the NARC Government. Increasingly, however, concerns about the utilization of funds under this program are emerging. Most of them revolve around issues of allocative efficiency, rampant abuse and mismanagement in CDF operations, which has given rise to an increasing number of complaints from the public. \nHowever, while majority of CDF Committees countrywide are embroiled in acrimony and even legal battles, a few enjoy appreciation from their constituents and have even been recognized by various stakeholders for best management practices. These Committees have had excellent performances in the management of the funds towards the achievement of the intended purpose and as such have been able to attain real economic and resources decentralization. The question therefore is why some Constituencies are doing well in managing CDF. \nThe specific objective of the study was to assess the extent to which achievement of CDF objectives has been a success factor in the management of CDF in Gatanga Constituency, one of those that have been rated among the successful ones in the management of CDF. The study, which took place between June, 15 jmd July 31, 2009 adopted a cross sectional survey to meet its objectives. The population of interest was the various stakeholders in the CDF activities and the data collected was analyzed using descriptive and correlation types of data analysis. \nThe study noted that Constituents generally felt that if CDF was well managed, it would change the face of the country in terms of providing social infrastructure. The study also revealed that though majority of the constituents were generally satisfied with CDF management since it was established in the year 2004. However, management needs improvement in terms of both the projects and resources. Planning, organizing, compositions of CDF committees also require major improvement to bring about more successful completion of specific project goals and objectives. The CDF’s National Management Committee (NMC) and Ministry of Finance should also ensure committee compliance to laid out procedures for project selection. It is hoped that the findings of this study will inform national policy dialogues and reforms in the CDF management.
Abstract The Canadian province of British Columbia has been widely recognized as the North American leader in employing Design, Build, Finance Operate public–private partnerships to create new public infrastructure. Canada is one of the most decentralized federations in the world. Provinces exercise considerable autonomy and have powerful revenue raising power at their disposal. Although Canadian local governments are generally seen as substantially inferior to the two senior levels of government, those in British Columbia have in fact managed to achieve quite a bit of autonomy due to non-constitutional factors. Large infrastructure projects, for which municipalities and other local government agencies must look to the province for financial support are among the most controversial of issues within the provincial–local government relationship. The introduction of public–private partnerships represents a classic example of a political entrepreneur changing the rules of the game to favour their desired outcomes. In this case, a government leader determined to pursue an infrastructure program that the province lacked the capital to support and the re-structuring of the state along New Public Management lines. However, even though the rule change favoured the Premier's immediate goals, and allowed him to over-ride much local objection, it can be argued that in the long run neither local governments nor the province have necessarily gained in power by changing the rules of the game. In keeping with the general tenants of the New Public Management, the introduction of public–private partnerships has given precedence to technocratic forms of knowledge, especially those involved with finance and accounting, with the aim of pursuing public goals in the most “economically efficient” manner possible. The flip side is that democratic input is strictly limited to the initial question as to whether or not a project is desirable, not how it can be best achieved or whether, once underway, it still represents a wise move. As a result, if there are any real winners in terms of autonomy, it has been senior public managers at both the provincial and local level and their financial and accounting advisors. These actors have had the range of issues for which they are accountable markedly simplified when it comes to major infrastructure projects, even as the complexity of such projects are increased by the use of public–private partnerships. Evidence is drawn from government documents, news accounts and interviews conducted by the author with senior managers, politicians and appointed board members of local government organizations (a quasi-governmental agency and a regional municipality's transit authority) as well as a provincial ministry, which acts as a control case. By employing three cases within the same province and the same time-frame, many of the contextual factors that can confound a study of this sort have been held constant for the purpose of comparison.
This book, Financing cities, emphasized case studies on different topics to look at the interactions of a range of variables and factors and to see how they fit together. Rather than require each case to follow the same format, the authors have structured their papers around the issues that matter most from their perspective in addressing the topic in hand. The first part of this book presents case studies describing the framework established at the national level to promote urban infrastructure finance while ensuring fiscal discipline and reviewing recent experience as well as future challenges. The subjects covered include the impact of political and fiscal decentralization, limitations on borrowing, managing moral hazard, the role of the financial sector, the achieving of the right balance between stringent controls and encouragement of local governments taking responsibility for fiscal discipline coupled with market discipline. The cases featured include three of the world's largest decentralized nations; together the five countries featured in the conference account for nearly a third of the world's urban population. Part I includes case studies for each of the five countries featured in the conference: Brazil (Chapter 1), China (Chapter 2), India (Chapter 3), Poland (Chapter 4) and South Africa (Chapter 5). Part II then shifts from the frameworks for fiscal discipline to urban infrastructure investments and the strategies used to mobilize investment funding. Chapters 6 and 7 examine the financing strategies for urban infrastructure in Shanghai and Brazil respectively. The next two chapters focus on specialized intermediaries offering urban infrastructure finance in cities. One is a fully private venture in South Africa (Chapter 9) while the other, in Tamil Nadu, India (Chapter 8), is a spin-off of a government fund with minority private ownership. The final two chapters examine experiences with two other mechanisms for mobilizing funding for infrastructure investments from the private sector, land leasing and sales (Chapter 10) and private participation in infrastructure operations (Chapter 11).
Since South Africa held its first democratic elections in 1994, it has given significant attention to building an effective system of decentralization including provincial and local government. While provincial governments are responsible mainly for the implementation of social services such as health and education, the provision of much of the urban infrastructure is the responsibility of local government. Although many challenges remain, the country has made significant progress over the past decade in addressing urban service backlogs in poor areas. At the same time, it has greatly improved macroeconomic fundamentals. The system of financing local government seeks to place accountability firmly at the local level, with most revenues in the larger urban centers raised locally through a combination of local taxes and fees for services, while poorer regions are predominantly grant funded. The objective has been to encourage the financing of capital infrastructure through local borrowing based on sustainable, transparent local finances rather than national repayment guarantees, which are outlawed. There is some indirect subsidization of loans through the state-owned Development Bank of Southern Africa. But the emphasis is on achieving redistribution through transparent, formula-based grants paid directly from national to local governments. While further bedding down of the system is needed, the approach is proving largely successful. The paper concludes by recommending that the existing division between provinces as providers of social services and local governments as the key locus of responsibility for services related to the built environment should be strengthened, particularly through the devolution of more urban transport related functions. A number of key risks are also highlighted, including issues related to the reform of local business taxes.
Historically, infrastructure funds have been strongly debated for infrastructure policies in developing countries. With fiscal austerity and tighter budgets, off government budget cost recovery mechanisms raise interest for the infrastructure policies of rich countries as well. The paper will explore the economic and political rational for infrastructure funds. It will argue that infrastructure funds may be considered to be a mechanism to avoid failures to coordinate between different interests in transport infrastructure policies, leading to distorted infrastructure policies and a waste of resources by political players. Infrastructure policy without politics. In a first part the paper will set the classical public finance arguments on optimal capacity choice and finance of indivisible but congestible goods like infrastructure facilities. It will be shown that in this idealized world, where governments perfectly aggregate the preferences of the infrastructure users and taxpayers, a centralized budget process and a decentralized quasi-market for infrastructure services (like an infrastructure fund) lead to identical outcomes. It will be shown that this outcome depends on assumptions on the feasibility of counterfactual tax and transfer policies. In practice, substantial differences are observed between planned expenditure levels for transport infrastructure, for new investment and particular for maintenance. A dominant explanation of this gap is the weakness of transport policy relative to other portfolios in the policy decision making process. Lobbying and infrastructure policies. Isolating the influence of special interest groups in the political process, the paper will show that, if governments seek campaign contributions and a high share of votes of the population, the lobbying activities lead to a political outcome that is identical to the infrastructure policy in the absence of lobbying activities. That is, the lobbying parties are caught in a prisoners' dilemma from which they would want to withdraw could they do so unilaterally. Wasteful but inconsequential lobbying continues, however, as the lobbying parties fail to coordinate to withdraw from influencing the outcomes of the budget process. The existence of infrastructure funds would enable the society to save the resources wasted in rent seeking activities. Lobbying and the entry of citizen-candidates. In the context of a mobile party structure, where citizen-candidates with own policy profiles might enter party politics, lobbying might lead to a reaction of candidatures for political offices that lead even to a worse outcome for the lobbying contenders than in the case of an agreed abstention from lobbying. In this case, a coordination not to lobby between special interest groups would lead to the avoidance of resources spent in rent seeking activities, a distortion of infrastructure investment and maintenance levels from inducing countervailing party positions and a loss of income of the lobbying parties. Benefits transport infrastructure funds. The paper will argue that establishing transport infrastructure funds can be considered a solution to the distorting influences resulting from lobbying and induced reactions in the party system on infrastructure policy. An initiative to establish infrastructure funds could enable lobbying parties to escape the prisoners' dilemma of being unable to coordinate. For the covering abstract see ITRD E135582.
This publication, Who has the yam and who has the knife, seeks to illustrate and address the creative tension needed to ensure an equitable distribution of power over the development process, by examining how putting the yam (resources) and the knife (the Financing Agreement) in the hands of the central, and district bureaucracies, and communities respectively can contribute to democratic decentralization. Three Social Action Funds (SAFs) in Africa are examined in this regard - in Malawi, Tanzania and Uganda. The Community Sub-project Cycle (CPSC), an integral part of the SAFs, is analyzed to show how a demand-driven process with in-built mutual accountability can result in communities realizing their aspirations while remaining accountable to government, and vice versa. The more formal way of capturing the issue would be to ask if governance can be broadened and deepened so that community needs become an intrinsic and measurable part of district and national plans. This"party line"on decentralization is that it is, in general, the way to go - all hindrances to it must be addressed and removed. The question that is very rarely asked is - how does this square with some of the Bank's other dominating approaches, such as Community-Driven Development ? This publication, based on experience from the field, outlines and responds to the challenges posed by this"dual"development. By putting some flesh on the bones of the"party line, "it provokes the intelligence without insulting it, and tells us that often, the real"poverty"is that of ideas and vision.
This study aims at assessing the performance of local government in Palestine in regard to fiscal and administrative decentralization. Data was gathered from the Ministry of Local Government, Ministry of Finance and a questionnaire was sent to 12 municipalities' key officials. It was found that the government is organized into the central government headed by the president, the cabinet, the governorates, mayors and village councils. The main functions of the local governments are to provide the necessary needed services. It was found that there is a degree of decentralization in providing the intended services as the functions of each level is clearly defined by the law, even though there is an overlapping amongst these functions due to the current situation instability The study explains several aspects including organization of the local government, decision making process, functional responsibilities, partnership among local government and the performance of these partnerships, employment, training programs, the most urgent issues regarding decentralization process, local government finances, financial standing of municipalities, relationship between central and local governments, and decentralization reforms under preparation, The study ends up with conclusions and recommendations. تهدف هذه الدراسة إلى تقييم أداء الهيئات المحلية في فلسطين فيما يتعلق باللامركزية الإدارية والماليـة. وقد تم جمع البيانات اللازمة للدراسة من وزارة الحكم المحلي ووزارة المالية، إضافة الى استبانة كانت قد أرسلت إلى 12 مسئولاً من مسئولي 12 بلدية. وتبين من البحث أن التنظيم الإداري للحكومة يتكون من الحكومة المركزية والمحافظات والبلديات والمجالس القروية. ووجد أن وظائف الهيئات المحلية تتركز في تقديم الخدمات الأساسية للمواطنين. وتبين أن لدى هذه الهيئات درجة كبيرة من اللامركزية في تقديمها لهذه الخدمات، لأن وظائف هذه الهيئات محددة بشكل واضح في قانون الحكم المحلي الفلسطيني، إلا أن هناك بعض التداخل في بعض الصلاحيات نتيجة للظروف الحالية. وأوضحت الدراسة العديد من القضايا الخاصة باللامركزية المالية والإدارية منها: التنظيم الإداري للهيئات المحلية، وعملية اتخاذ القرارات، والمسئوليات الوظيفية، والتعاون بين الهيئات المحلية في تقديم الخدمات، القوى العاملة في الهيئات المحلية والتدريب والحوافز، والقضايا الملحة فيما يتعلق باللامركزية، وتمويل الهيئات المحلية، والأوضاع المالية لهذه الهيئات وعلاقاتها بالحكومة المركزية، والإصلاحات الجارية الخاصة باللامركزية. وانتهت الدراسة بالخلاصة وعدد من التوصيات.
In this contribution, we analyse the pattern of the so-called PIP (Partnerships and Public Initiatives) that have been approved between 2000 and mid-2003 in the POE1 framework. In particular, we will evaluate the extent of decentralisation that this new instrument has generated in competitiveness policy. Partnership approaches are a relatively recent phenomenon, but partnerships have received widespread attention and support from economic and political agents, including policy makers at national, regional and local levels. In fact, the term “public-private partnership” covers a wide range of concepts and practices. In our contribution, we will focus on partnerships in a competitiveness policy framework. In a first section, we discuss briefly the meaning and the extent of what we call competitiveness policy. Then, in a second section, we focus our attention in public-private partnerships as a specific instrument for policy. In particular, we make a first assessment on the distinctive principles that differentiate public-private partnerships from more traditional instruments such as direct investment in public agencies or direct subventions to firms. We follow the perspective that these principles, mainly decentralization of policy, may contribute to a greater effectiveness of policy, because a more decentralised policy is supposed to increase focus and accountability and to involve agencies with specialized skills and a more narrow range of objectives. But, also, we will refer that some inefficiencies and some lack of equity may arise from the use of private-public partnerships instrument. Finally, in the main section of this contribution, we will analyse the above-mentioned questions considering the case of the 131 PIP projects approved and financed by the POE between 2000 and mid-2003. As the major part of the variables used are nominal, and in order to define the decentralization pattern induced by this new instrument, we will use multivariate data analysis techniques in order to establish associations between several variables linked to decentralisation criteria and, also, to identify clusters of projects.
A major theoretical as well as political approach to transport infrastructure investment and management is the idea that such services are public goods and should not be subject to private market considerations. However, from time to time, public provision seems to fail, which increases the importance of various forms of private sector participation. Assessing the impact of devolution on the country's road infrastructure, the author underscores the lack of coherence in the design and redistribution of resources and responsibilities, which resulted in a coordination gap between national government agencies and local government units. An important insight is that the private provision of a public good may be feasible, for as long as its consumer-beneficiaries can be made to pay a use price, such that the revenue stream to the private provider is greater than the cost of construction, administration, and upkeep of the public good.
This paper describes how the managers and financers of non-classified roads are at a junction. Behind them a centralized, poorly funded and pot holed past, in front new exciting turnings? From the highly signposted poverty reducing decentralized model of management, to the well worn path of access planning to the dusty signpost that reads 'More opportunities for corrupt local officials'. It is indeed an interesting and exciting time to be a policy maker, roads planner or executor of improvements to non-classified roads. This paper explorers some of these directions based on the experience of the Village Travel and Transport Project (VTTP) in Morogoro Rural District, Tanzania. This SDC funded project is essentially in two parts, firstly empowering communities and secondly facilitating them and their partners to improve infrastructure. The VTTP has in its three years supported and embraced the principles of Tanzania's Poverty Reduction Strategy. This has meant a partnership approach to the project, supporting communities and supplying organizations such as the District Council and Private Companies. The empowerment of communities has focused on a civic education process called UUWAMA. This has given people their rights in the constitution and the Local Government Act, as well as the responsibilities of Village and District Councils. This has been an eye opener for community members and Village Counselors, who did not know what was written in many of these documents. This process has been most valuable to the beneficiaries. The project also has a transport focus and has supported communities in the improvement of infrastructure such as roads and footbridges and means of transport such as donkeys. The majority have been through partners rather than the project. The concept being to ensure these organizations are there for communities in the future. To enable the sustainability of Village Councils the project is currently supporting them to raise revenues they previously through were the jurisdiction of the District Council, until the read the Local Government Act.
Broad-focusing development programmes at a regional level have been a major thrust by governments of developing countries over the last three decades. Most of the programmes addressed here have been entirely or partly financed by donor agencies. They have tended to concentrate on augmenting activities of government line agencies, and have mainly emphasized physical and social infrastructure, standardized support facilities to enterprises and individuals, and, sometimes, land use zoning and other measures to regulate the spatial distribution of facilities and activities. This article suggests that regional development programmes may become more effective if they are designed as more flexible instruments for peoplecentred development, exploiting potential comparative advantages of innovation, networking and institution building in a broad sense. Basic organizational and management requirements for this would be a decentralized set-up, substantial freedom from government administration. flexible organizational form, process planning with compatible systems of monitoring and co-ordination, active facilitation of initiatives from below and democratically minded leaders with broad management competence.
Corruption and targeting failures in the delivery of public services in developing countries has frequently been argued to result from absence of controls on the behavior of central bureaucrats delegated authority over their implementation.This has motivated recent initiatives towards decentralization of service procurement and delivery to elected local governments that are expected to be more accountable to user interests.However, if local democracy is prone to capture by local elites, decentralization can also be subject to diversion and targeting failures.This paper presents an analytical framework to evaluate the resulting trade-off, and predict the effects of decentralization on volume and allocation of service delivery under different financing mechanisms.
Through analyzing the softness and hardness of budgeting constraints in research and development (R&D) investment under different institutions, we develop a theory of optimal R&D financing. Our theory not only provides a clear comparison of investment efficiency between centralized economies and market economies but also extends the analysis of soft budget constraints to firms in market economy. Based on this theory, we characterize optimal choices of R&D project financing in centralized and decentralized economies. Our results explain why some projects are financed internally by a large firm but others are cofinanced externally by several firms. We also explain what makes a centralized economy inefficient in R&D.
This paper is one of eight case studies in the health sector conducted under the project "Population and Urbanization: Managing the Urbanization Process Under the decentralized Governance Framework" jointly undertaken by the Philippine Institute for Development Studies, National Economic and Development Authority and Development Academy of the Philippines. This paper is a case study on Cotabato City recommended by NEDA-Region XII as a model city for health. The city has come up with the Special Project on Health and Sanitation that won a silver Award in the 1997 Health and Management Information System Contest.
Private sector involvement and user participation in water resource management are not new, say the authors. They give examples that demonstrate how willing users and the private sector are able to improve water use and play a larger role in water resources management. User participation and private sector involvement, if properly structured, can provide the incentives needed to stabilize and improve the efficiency of irrigation and water supply systems. They can add flexibility, transparency, and accountability and can reduce the state's administrative and financial burden. A 1989 World Bank review of 21 impact evaluations of irrigation projects, for example, found cost recovery to be excellent in those projects in which water management and operations and maintenance had been entrusted to water users. Greater private sector and user participation can effectively increase user responsibility for managing and financing water projects while freeing governments to focus on broader water resource management concerns. The authors provide examples of decentralized water management in developing country water supply and irrigation systems. Governments should: more actively regulate private sector exploitation of groundwater, especially for irrigation; take measures to encourage price competition among private suppliers of water for both domestic and agricultural uses; and play an active role in organizing water user associations, especially for irrigation and rural water supply systems, and in giving them technical assistance. As numerous examples highlight, such activities should be designed to reduce the transaction costs of organizing and to establish a sense of assurance and accountability within the water user community. Once this is done, the community can deal with problems associated with excludability and unwillingness to pay.