Decision-Making on Mega-Projects

Decision-Making on Mega-Projects

Cost–benefit Analysis, Planning and Innovation

Transport Economics, Management and Policy series

Edited by Hugo Priemus, Bent Flyvbjerg and Bert van Wee

This book enlarges the understanding of decision-making on mega-projects and suggest recommendations for a more effective, efficient and democratic approach. Authors from different scientific disciplines address various aspects of the decision-making process, such as management characteristics and cost–benefit analysis, planning and innovation and competition and institutions. The subject matter is highly diverse, but certain questions remain at the forefront. For example, how do we deal with protracted preparation processes, how do we tackle risks and uncertainties, and how can we best divide the risks and responsibilities among the private and public players throughout the different phases of the project?

Chapter 10: Public–Private Partnership and Mega-Projects

Joop Koppenjan

Subjects: business and management, operations management, development studies, development economics, economics and finance, development economics, public sector economics, regional economics, transport, environment, transport, urban and regional studies, transport


Joop Koppenjan 10.1 INTRODUCTION Public–private partnership (PPP) in mega-projects has attracted increasing attention worldwide and is seen as a promise for the future (Pollit, 2002). It is often considered to be a third option for preparing and managing public infrastructure projects, in addition to traditional public project development and privatisation. Traditional preparation and management of public projects consists in general of governments preparing the projects, contracting out the construction and taking care of the maintenance and operation themselves or contracting these out separately. Despite the popularity of PPP, this is still the dominant method of working in, for example, projects in the transport and water sector worldwide. Although there are examples showing that public service provision is successful, for instance in the field of water management, it is often associated with government failure (Johnstone and Wood, 2001). Public decisionmaking stands for ‘pork-barrel policies’ in which public funds are channelled into lobbies of alliances of private company, public organisations and politicians, a selection of uneconomic projects and major budget overspending and time overruns (Bruzelius et al., 2002). The cost overspend of 84 per cent (£3.5 billion instead of the planned £1.9 billion) on the new Jubilee Line extension of the London Underground which was delivered in 2000, six years after the initially intended date, is a well-known example (Joosten, 2005). Public service provision is considered to involve poor quality and efficiency, inadequate innovation and, particularly in developing and transitional economies, low levels of cost coverage, neglect of poor sections...

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