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W. Richard Scott

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W. Richard Scott, Raymond E. Levitt and Michael J. Garvin

We do not subscribe to a goal of unconstrained development for its own sake; but assuring an adequate supply of civic infrastructure (including housing, roads and public transport, power, water supply and sanitation) is essential to meet the needs of developing countries where populations are growing and becoming more urbanized, as well as those of developed countries where infrastructure is aging and in need of repair and/or replacement. Important as it is, however, providing the necessary infrastructure confronts severe difficulties. Governments of emerging market countries face enormous shortfalls in financial and governance capacity in delivering sorely needed new infrastructure for their growing populations. At the same time, financially strapped governments of mature market economies are struggling to upgrade and retrofit their aging and obsolete infrastructure. Societies at both ends of the development spectrum need more robust project governance structures that can enable new forms of financing coupled with improved systems of managerial oversight and control. Infrastructure is central to societal welfare, and the high cost of replicating the “last mile of pipe or wire” often requires a monopolistic state provision or regulated private provision strategy. We would thus ordinarily expect that the state would play a major role in its prioritization, funding, development and operation. However, historically this has not always been the case. Specific countries vary in their experience, but the United States (US) is not atypical. As Miller and Floricel (2000) point out, during much of the nineteenth century US transportation systems and power networks were built by private entrepreneurs, with minimal public involvement. Toward the end of the century, large corporate groups replaced the entrepreneurs but still experienced only modest public oversight. However, during the Progressive era of the early twentieth century, private initiatives were increasingly regulated and, over time, nationalized as public enterprises. For the greater part of the century, federal, state and local authorities planned, funded, built and operated the bulk of infrastructure. However, during the 1980s, buoyed by a more conservative political wave, calls intensified for the privatization of these enterprises. From that period to the present, varying combinations of private and public entities have partnered to provide these facilities and services.

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Witold J. Henisz, Raymond E. Levitt and W. Richard Scott

To confront the extreme governance challenges posed by large, multi-phased infrastructure projects, the authors propose the application of a theoretical framework to construct a structure composed of regulative, normative and cognitive elements. The right combination of these institutional elements can allow participants to counteract problems such as displaced or “broken” agency _ in which later participants suffer from agreements crafted by earlier decision-makers holding different interests _ contracts that are overly rigid or brittle, and the absence of a shared purpose or mission. Sociological, political and psychological concepts and arguments are employed to supplement the economic and legal perspectives now dominating project governance. The harnessing of practices such as relational contracting, work group norms, network systems of decision-making, reputational capital, procedural justice and shared identities can lead the way toward crafting a more flexible, robust and effective governance structure.

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Carter B. Casady, Kent Eriksson, Raymond E. Levitt and W. Richard Scott

Globally, public_private partnerships (PPPs) have risen in popularity as an alternative procurement model for infrastructure development projects. The development of infrastructure PPPs depends to a large extent on institutional maturity, where mature institutions are characterized by well-established norms and coordination procedures for infrastructure PPP developments. While PPPs have been widely researched and remain subject to extensive debate, the role of institutional maturity in PPP governance has been largely overlooked in the field of engineering project organization (EPO). To address this knowledge gap, this chapter evaluates how institutional settings affect the public sector’s governance capacity to effectively develop infrastructure PPPs. It concludes with normative recommendations for institutional reform of PPP governance in the United States.