Meng X, H F (2013) The application of whole life costing in PFI/PPP projects. In: Smith, S D and Ahiaga-Dagbui, D D (eds.) Proceedings of 29th Annual ARCOM Conference, 2-4 September 2013, Reading, UK.
Abstract
The concept of private finance initiative (PFI), later known as public-private partnership (PPP), was introduced into the UK in the early 1990s. Under the PFI/PPP scheme, a special purpose vehicle (SPV) from the private sector is generally responsible to design, build, finance and operate a public project for 20-30 years. For this reason, an emphasis is placed on the use of whole life approaches, such as whole life costing (WLC) or life cycle costing (LCC). However, few studies to date have investigated the application of WLC/LCC in PFI/PPP projects. Therefore, there is a knowledge gap in this particular field. To bridge the gap, an empirical investigation was made in the UK. The aim of this study was to explore PFI/PPP practice in terms of WLC/LCC. This study adopted a combination of a literature review, two case studies and a questionnaire survey. Qualitative data collected from the case studies and quantitative data collected from the questionnaire survey are analysed in this paper. The analysis of empirical data shows a wide embrace of WLC/LCC in PFI/PPP projects due to full control over lifetime expenditure and long-term value for money. Although WLC/LCC has been widely applied in PFI/PPP projects today, there are still some factors that affect its successful application. In order to overcome the barriers, efforts are needed from both public clients and private companies. The success of WLC/LCC in PFI/PPP practice depends on client driven optimisation, good awareness of WLC/LCC, encouragement of WLC/LCC through competitive bidding, integration of all key stakeholders into WLC/LCC, early involvement of construction and facilities management (FM) teams in design, well-established procedures and methodologies, reliability and accuracy of data, and regular monitoring the implementation of WLC/LCC.
| Item Type: | Conference Paper (Paper) |
|---|---|
| Uncontrolled Keywords: | barrier; critical success factor; effectiveness; private finance initiative; whole life costing |
| Index terms: | whole-life costing, value-for-money, facilities management, costing, implementation, critical success factor, public client, questionnaire, investigation, effectiveness, public project, monitoring, integration, private finance initiative, methodology, encouragement, accuracy, survey, private sector, literature review, partnership, life cycle, competitive bidding, special purpose vehicle, case study |
| Subjects: | infrastructure engineering, evaluation, professional development, accounting and finance, performance management, research methods, management, industry analysis, occupational health, sociology, partnership management, organizational analysis, value management, control systems, data collection methods, financial and cost management, contractual arrangements, data analysis and analytics, bidding |
| Topics: | Organizational Design, Site Management, Value Management, Human Resources, Quality Management, Procurement, Stakeholder Management, Information Management, Engineering Principles, Project Management, Research Practice, Health and Safety, Business Strategy, Cost Management |
| Descriptive scope: | 5 PCTEA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here