An Investigation into Critical Factors Impacting on the Successful Implementation of Public-Private Partnerships (PPPs) in New Zealand

Abstract

Recent studies show that the New Zealand’s infrastructure adequacy level lags behind other OECD countries, which might be a bottleneck for future economic growth and productivity. Being aware of the problem, the government has reformed its infrastructure development policy, with a focus on adopting innovative procurement methodologies, such as Public-Private Partnerships (PPPs), to achieve better value for money in public sector procurement. Despite the worldwide use, PPPs have been rarely practised in New Zealand. There has been a lack of existing studies investigating the PPP application specific to New Zealand, by taking the country-specific social, economic and policy environments into consideration. This research examined the PPP application in New Zealand, identified the drivers for PPP adoption and investigated the critical factors that impact on the successful implementation of PPPs, based on which the thesis makes recommendations on how PPPs can be improved for better outcomes in New Zealand. The research adopted a qualitative research methodology using a combination of industrywide interviews within New Zealand and multiple case studies, in the sector of exhibition and event venue, prison and school, based in Hong Kong Special Administrative Region, Australia and New Zealand, to identify critical factors leading to project success or failure. The results show that the critical factors affecting the PPP implementation vary across jurisdictions given the differences in social, economic and legal environments and the maturity level of PPP development. Also, different sectors’ needs are varied due to their special characteristics for the provision of relevant assets and services. Despite the differences across jurisdictions and sectors, the critical factors impacting on the successful implementation of PPPs generally fall into seven categories: (1) General political, legal and economic conditions; (2) Business case development; (3) Procurement process; (4) Contract administration and management; (5) Public sector capacity and governance structure; (6) Private sector market depth, capability and structure; and (7) Risk analysis and allocation. The research concludes by providing best practice guidelines for using PPPs in New Zealand and specific recommendations for the three sectors examined. The research contributes to the body of knowledge by adding the New Zealand case to PPP best practice frameworks and showing that different sectors’ needs vary. It is hoped that the recommendations will provide useful policy, organisation and management implications for policy makers, public sector authorities and private sector participants.