A study of the operationalization of management controls in United Kingdom Private Finance Initiative contracts

Utilizing evidence from a United Kingdom (UK) road case study Private Finance Initiative (PFI) project, this article considers how the UK central government's infrastructure strategy is operationalized through accounting‐based performance measures and incentive systems, and articulates how the...

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Bibliographic Details
Published in:Public administration (London) 2020-03, Vol.98 (1), p.92-108
Main Authors: Ahmad, Salman, Connolly, Ciaran, Demirag, Istemi
Format: Article
Language:English
Subjects:
Case studies
Central government
Contractors
Contracts
Control systems
Cooperation
Finance
Incentives
Infrastructure
Performance indicators
Public finance
Public policy
Risk management
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Summary:Utilizing evidence from a United Kingdom (UK) road case study Private Finance Initiative (PFI) project, this article considers how the UK central government's infrastructure strategy is operationalized through accounting‐based performance measures and incentive systems, and articulates how the adoption of such systems is moderated by trust practices. The findings indicate that initial government policy objectives, translated as performance indicators in the case study, failed to offer adequate incentives for contractors and created tensions. However, controls were later developed through inter‐party trust practices for managing performance and relational risk. These findings have important implications for PFI policy and practice, including that negotiation can: (i) lead to pragmatic controls being introduced to foster cooperation and trust‐building; and (ii) provide opportunities for adapting the monitoring and incentive mechanisms. This study also contributes to the previous literature where PFI control systems were largely regarded as inadequate for dealing with unforeseen conflicts between parties.
ISSN:0033-3298
1467-9299
DOI:10.1111/padm.12401