خطرات و منابع مالی PPP: دیدگاه های سرمایه داران

Public private partnerships (PPP) are an established model for most governments internationally to provide infrastructure-based services, using private finance. Typically the public authority will sign a contract with a special purpose vehicle (SPV), which, because of the holistic nature of PPP, in turn sub-contracts the finance, design, construction, maintenance and soft services to companies that are often related to its shareholders. Thus there is a considerable network of linked organisations that together procure and provide the PPP project. While there is an increasing body of research that examines these PPP projects, much of it is interview or case study based so that the evidence is drawn from a small number of interviews or cases in specific sectors. It also focuses on the public sector procurer and the private sector contractor in the network of organisations. Although it has been recognised that the perceptions of the financiers may vary from those of other key PPP players there is much less research that focuses on the financiers. In this paper we report the results of a postal questionnaire survey, administered to 109 providers of senior debt and equity, from which the response rate was just less than 40%. We supplement these findings with a small number of illustrative quotes from interviewees, where the cited quote represents a commonly held view. We used SPSS and Nvivo to analyse the data. The findings show that when assessing PPPs financiers perceive a very wide range of risks as important, and that it is important to them that many of these risks are either insured or allocated to sub-contractors. When considering participating in PPPs, financiers agree that working with familiar partners on familiar projects and in familiar sectors is important, which may raise barriers to entry and undermine competitive processes.

Public private partnerships (PPP) are an established model for governments internationally to provide infrastructure-based services, using private, as opposed to public, finance. Although the involvement of the private sector in public infrastructure projects is not a new phenomenon, the PPP model enables and encourages private sector involvement in the provision of public services and the scale of private finance is unprecedented. Globally, the PPP market reached a record high of $68.6 billion in 2007 (Project Finance, 2008), and although PPP financing continued to be strong throughout 2008, by 2009 the impact of the credit crunch began to take effect so that the market was worth $55.5 billion by the end of 2009 (Project Finance, 2010). While other markets are significant in size especially in Europe, and India, where there has been rapid growth (Project Finance, 2008), the UK is recognised as a global leader in the use of PPP. The previous Labour administration used PPP as a means of shifting traditional responsibilities for providing public services from central and public control to private sector companies. Since the inception of the policy in the 1990s, over 900 projects worth over £70 billion have been procured in the UK (PartnershipsUK, 2009). By 2010 when it lost power the Labour administration’s spending on PPP represented some 10%–15% of total government investment. While the investment plans of the new coalition government are currently under review and likely to be less expansive, politically both constituent parties are committed to private sector involvement in the provision of public services. The PPP concept is thus important internationally and in the UK. PPPs involve a clearly defined project financed by the private sector, which shares the associated risks and rewards with the public sector. While PPPs may take a variety of forms, this paper is concerned only with the time and cost specific (English, 2007) long-term contractual arrangements under the UK’s Private Finance Initiative (PFI). In these projects the private sector designs, builds, finances and operates infrastructure assets, such as roads, hospitals, and schools, in return for a revenue stream that is used to repay debt, fund construction and operations, and provide a return to investors (Pollock & Price, 2004). This revenue stream takes the form of an annual unitary charge paid by the public sector procurer. In terms of the contractual arrangements, typically the public authority will sign a contract with a special purpose vehicle (SPV) which is usually formed specifically to undertake the project. The SPV is normally owned by a consortium which, because of the holistic nature of the contracts, will typically include two or three companies with the range of skills necessary to finance, build and operate the required facilities. The SPV, which is usually a shell company, in turn sub-contracts the finance, design, construction, maintenance and soft services to companies that are often related to its shareholders. Thus there is a considerable network of linked organisations that together procure and provide the PFI project. There is an increasing body of research that examines these projects. While a small number of papers, reviewed below, examine the financiers in this network of organisations, more typically, such work focuses on the public sector procurer and the private sector contractor (see for example, Bing et al., 2005a, Bing et al., 2005b, Broadbent and Laughlin, 2002, Broadbent and Laughlin, 2003, Broadbent and Laughlin, 2005, Broadbent et al., 2003, Broadbent et al., 2004, Demirag, 2004, Demirag et al., 2005, Edwards and Shaoul, 2003a, Edwards and Shaoul, 2003b, Edwards and Shaoul, 2004, Edwards et al., 2004, Froud, 2003, Khadaroo, 2005, Khadaroo, 2008, Shaoul, 2005a, Shaoul, 2005b and Shaoul et al., 2008). The paucity of research focussing on financiers is an important omission because they are one of the more important stakeholder groups and their perceptions may vary from those of other players (Broadbent, Gill, & Laughlin, 2004). In particular, they may have different perceptions of the risks, returns and structures necessary for PFI compared with other stakeholders (Gallimore, Williams, & Woodward, 1997). Attitudes to risk are especially significant because, although PFI was not originally devised as a policy for managing risk, risk has emerged as a key feature that legitimates the shift in public services management (Froud, 2003). Risk has been defined as ‘the probability that a particular adverse event occurs during a stated period of time or results from a particular challenge’ (Royal Society, 1983, p.22), but it also involves an activity or decision where either the outcome or consequence is less than certain, and at times both of these are uncertain (McKim, 1992). Although PFI may rest on a conceptual conflation of risk and uncertainty (Froud, 2003), HM Treasury (1997, p.36) does acknowledge this distinction describing risk as ‘referring to the likelihood of something going wrong’, and uncertainty as occurring when ‘the outcome of a course of action is indeterminate or subject to doubt’. While there is little agreement on what these two terms mean, the distinction is centrally concerned with ‘calculable probabilities’ (Froud, 2003, p.569). Where there is no possibility of placing a numerical probability on whether an event will occur or not, the unclear future state is referred to as an ‘uncertainty’, whereas risk involves the possibility of placing some ‘calculable probability’ on a future event occurring (Broadbent, Gill, & Laughlin, 2008). However, Helliar, Lonie, Power, and Sinclair (2001) argue that managers tend to ignore probabilities and do not calculate expected values for different decision outcomes. Instead, they argue, managers focus on the size of any possible loss; they exhibit loss, rather than risk, aversion.Furthermore, in practice uncertainties may be buried deep in the PFI contracts rather than being explicitly considered as part of decision-making in either the public or private sectors (Broadbent et al., 2008). This paper focuses on the financiers and contributes to the literature by focussing on the factors that cause them to participate in a PFI project, their perceptions about the risks in PFI, and the ways in which they limit those risks. The multiplication of the notion of risk in hybrid organisational forms identified by Miller, Kurunmaki, and O’Leary (2008) is especially true of PFI. Early categorisations provided by the NAO (1999) and HM Treasury (1999) include risks associated with: design and construction; commissioning and operating; demand; residual value; technology/obsolescence; regulation; project finance; contractor default; and political/business. Recently, despite the claims that IFRS reporting standards would remove the possibility of off balance sheet accounting for PFI, Asenova and Beck (2010) identify availability and demand risk together with residual value risks as being most important in the context of PFI because they are most likely to affect the goal of off balance sheet project treatment. To the early categorisations of risk Grimsey and Lewis (2002) added force majeure and environmental risks. Our study focuses on the 21 specific categories of risks in PFI projects identified by HM Treasury (2003a), which include risks of an economic, technological, political, legislative and financing nature, each of which may vary in their significance over the project’s life cycle. The rest of the paper is organised into four further sections as follows. In the next (second) section we briefly review relevant literature and in the third section describe our research methods. Section four presents the empirical evidence and the final section offers a discussion and some concluding remarks.

This paper, which forms part of a larger study of risk in PFI projects, reports the findings of a questionnaire survey administered to providers of equity and debt finance for PFIs. These findings have been supplemented by a small number of quotations from interviewees, chosen as they illustrate a point directly relevant to a specific question in the survey. The contribution of the work is that we focus on financiers, whereas most prior literature has tended to focus on the public sector and the contracting partners, or where it has related to financiers has not examined the distinctions between debt and equity. Because of the questionnaire methodology we have a larger number of respondents across a wider range of sectors than has been typical of previous work, which has mainly relied upon interviews. All research methods have their limitations and in this study the focus is on one specific PPP type; the UK’s PFI, which is a long-term cost specific contractual relationship. As PFI was one of the earliest forms of PPP and has been mimicked internationally experiences from it may have relevance elsewhere. However, any generalisation of results to the different environments of other countries must be made cautiously, because the cost of UK PFIs is borne by the government, not service users, so that revenue streams are low risk. Furthermore, any changes to the PFI project take the form of amendments to the legally binding contract, which will be subject to additional charges or conditions, so that there is limited flexibility without the financiers’ consent. Alternative forms of PPP that allow greater flexibility in the project specifications or provide income streams that are sourced, in full or in part, from service users would increase the financiers’ risk and could change their attitudes to and management of such risks. A second limitation of this study is our focus on the financiers who have been arguably one of the most vociferous and well organised groups within the PFI network and like other industry participants may well have a proprietorial interest in stating particular views. Furthermore, the financiers are not a homogenous group. While we have asked respondents to distinguish between their roles as debt and equity providers, it is also the case that the equity providers’ activities and the size of their participation in PFI takes rather different forms; that of large financial institutions and of construction, facilities management or support services company, which range from the largest international operators to much smaller locally based organisations. Therefore interpretation of these views must be made carefully. Despite these limitations we are able to make a number of comparisons with prior literature, and to identify further areas of research. Dixon et al. (2005) argue that one of the SPV’s main objectives is to minimise risk. The empirics in this present study, drawn from financiers with experience across a wide range of sectors, confirm the report from Asenova and Beck’s (2010) single banker that this may be achieved by passing risk to sub-contractors. The empirics also confirm Akintoye and Chinyio’s (2005) findings in healthcare that transferring risk to sub-contractors and buying insurance cover are the most prominent strategies for managing and mitigating risks in PFIs. The implication of these findings is that PFI risk is diversified through a number of private sector companies, not all of which are members of the immediate PFI network, so that there is scope for duplication or over diversification of risk. Furthermore, the involvement of too many third parties may of itself increase risk. By way of contrast the financiers identify reputational risks, which cannot necessarily be transferred, as an important non-financial decision-making criterion for becoming involved in a PFI. This may be driving the importance reported here of the direct agreement between the senior debt holders and the procurer, enabling the senior debt holder to step-in to take control over a failing contract. Reputation may also be driving the expressed preferences for working with familiar partners on familiar project types. But in so doing the reputational effect may be maintaining barriers to entry identified by Ezulike et al in their 1997 article. These authors found that small contractors suffered from a lack of credibility and contacts in the market place, which excluded them from joining syndicates, whereas medium and large contractors were likely to bid selectively for projects inhibiting the extent of their involvement in the industry, and thereby reducing competition. Thirteen years later our study focuses on the financiers and finds that they are also inclined to bid selectively for projects, and to prefer working with familiar partners. These findings confirm Ezulike et al.’s prediction that a lack of credibility in the marketplace would continue to act as a barrier to entry irrespective of the level of maturity of the PFI market. In the credit crunch era it is likely that this ‘credibility’ barrier to entry for small companies has risen, as there are a smaller number of more risk-averse financial players willing to lend, and deals are more likely to require several banks lending as part of a syndicate all of whom will be concerned about the choice of partner. Currently, the construction industry is suffering in the economic recession increasing the likelihood of small contractor bankruptcy, which has been identified as a major concern for lenders. Furthermore, in 1997, Ezulike et al. argued that the need to contribute equity finance was a further potential barrier to entry to small companies. Since one effect of the credit crunch has been to increase the proportion of equity in PFI deals, this raises the entry barrier in respect of any small contractors whose Balance Sheets could not sustain the pre- credit crunch equity requirements. In 2008 most financiers reported that risk transfer to the private sector had increased over the last four years, apparently reflecting their perception that it was public sector policy prior to the credit crunch to increase the transfer of risk to the private sector. While the credit crunch may have forced a change in attitudes to risk transfer by the public sector (Bailey et al., 2009), it is notable that a substantial minority of respondents believe projects could not go ahead without either implicit (36%) or explicit (28%) government guarantees. This raises questions about a key assumption of PFI that the private sector is well placed to take on the risks of procuring assets which may be inherently more risky than other business activities. It remains to be seen how risks will be allocated when the economy recovers. Abednego and Ogunlana (2006) argue that PFI partners typically have different perceptions of risk allocation, and our empirics provide an illustration of this by way of comparison with previous work. Based on their case study of a hospital, Edwards et al. (2004) reported that public sector interviewees were concerned about lack of clarity in some risk sharing arrangements, but that the SPV manager had no such concerns. Our financiers, the vast majority of whom believe that risk allocation is clear, confirm the SPV manager’s perception, suggesting a divide between public and private sector players.The perceptions of finance industry insiders that risk allocation is clear do not necessarily negate Ng and Loosemore’s (2007) contrary arguments that: (i) risk allocation is difficult because of the technical, legal, political and economic complexity of PFI; and, (ii) the way risk profiles change over the duration of projects is not well known. Industry insiders could present an overly confident assessment of their own abilities. Since risk transfer is a critical element of PFI, more empirical evidence of how it operates in practice would be useful to policy makers, procurers and service providers. While this paper has focused on one specific PPP type that has been used to deliver large scale infrastructure projects, various new types of PPP arrangements have been developed in the UK to expand the market for private finance, for example, involving joint venture partnerships between a public authority and a long-term private partner. In the schools sector such partnerships have been designed specifically to overcome the difficulties PFI poses for smaller value contracts which cannot sustain the high bidding costs associated with PFI. Internationally governments have designed their own variations and prior to the credit crunch there was rapid growth in the volumes and $ values of PPP type contracts, as governments sought new ways to deliver their infrastructure projects. While the effects of the credit crunch and economic recession had begun to slow this growth by 2009, the factors that underpin the industry remain intact. Globally there is a huge demand for new or refurbished infrastructure, and politically in many Western governments and Supra-national organisations such as the OECD, the IMF and the World Bank there is a commitment to private sector involvement in its provision. Thus while the form of PPP may evolve and the credit crunch and economic recession may slow the rate at which projects reaching financial close, this remains and is likely to remain an important industry. Consequently, the paper closes by suggesting two further areas for future research. Firstly, one of the surprising outcomes of the survey is the high proportion of respondents who indicate the importance of a very wide range of potential risks when assessing a PFI project. Interviewees suggest that PFI decision-makers focus on a full range of risks because the costs of missing targets in PPP projects are higher than for other projects. In terms of overall ranking, design and development was ranked as the highest risk in the pre-financial close and construction phases of PFIs and interviewees suggest this is because of the high penalty costs associated with missing construction targets. Finance risk was ranked as the second highest risk in both these phases and in the operating phase. Clearly, risk pricing strategies for these risks are an area where future research would be valuable, as these are likely to have an important influence on project costs. Secondly, one clear message from this survey is the importance financiers attach to working with familiar partners on familiar projects and in familiar sectors, so that research that identifies the characteristics of successful networking would be valuable. However, while such practices may serve to reduce risk they may also act as barriers to new entrants. This risk mitigation strategy has possible adverse impacts on the competitive processes that are essential if the PFI policy is to create incentives for the private sector to provide better performance than traditional procurement achieves. Again research that investigates whether or not new entrants are able to create and/or participate in successful bidding syndicates in practice would be invaluable.