An asymmetric learning in complex public-private projects

DOIhttps://doi.org/10.1108/JOPP-08-03-2008-B004
Pages334-355
Publication Date01 Mar 2008
AuthorJurong Zheng,Nigel Caldwell
SubjectPublic policy & environmental management,Politics,Public adminstration & management,Government,Economics,Public Finance/economics,Texation/public revenue
JOURNAL OF PUBLIC PROCUREMENT, VOLUME 8, ISSUE 3, 334-355 2008
AN ASYMMETRIC LEARNING IN COMPLEX PUBLIC-PRIVATE PROJECTS
Jurong Zheng and Nigel Caldwell*
ABSTRACT. This paper investigates how symmetrical learning activity is,
between the public client and the private contractor in the contracting and
operation of complex, long-term infrastructure projects. Drawing on
empirical material from two United Kingdom (UK) private finance initiative
(PFI) cases, the paper analyses differences in the absorptive capacity and
learning capability between parties. It suggests the private contractor
appears to be better equipped to acquire, embed and renew their learning.
These findings reflect less than 5 years of a 30-year contract, suggesting a
skewed (imbalanced) relationship, where the contractor gains more learning
capabilities than the client. The paper concludes with implications for
management practice and suggestions for future research directions.
INTRODUCTION
Many governments have increased private sector involvement in
financing, developing and providing public infrastructure, facilities
and services. UK governments have taken a leading role in this
development (Confederation of British Industry, 2007) using the
private finance initiative (PFI) and public-private-partnership (PPP) as
the principal methods for procuring long-term (multi decade) public
sector capital projects and delivering associated services (Broadbent
& Laughlin, 2005).
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* Jurong Zheng, Ph.D. and Nigel Caldwell Ph.D., are Research Fellows,
Centre for Research in Strategic Purchasing and Supply, University of Bath
School of Management. Dr. Zheng’s research interests include inter-
organisational supply network management, governance mechanisms in
complex supply arrangements, and information system integration in supply
chains. From a general interest in how organisations manage their input
requirements (supply), Dr. Nigel is increasingly involved with how complex
bundles of products and services are contracted for, and the risks and
incentives inherent in such complex contract performance.
Copyright © 2008 by PrAcademics Press
AN ASYMMETRIC LEARNING IN COMPLEX PUBLIC-PRIVATE PROJECTS 335
The PPP label covers a number of different arrangements
including PFI first established by the UK government in 1992. There is
a growing number of European nations (the UK, Portugal and Spain),
and non-European countries (Australia and the US), that make
significant use of private sector capabilities and capital in a range of
infrastructure-related projects such as bridges, tunnels, rails, roads,
airports and canals (Confederation of British Industry, 2007; Walder
& Amenta, 2004). According to a European Investment Bank report,
more than one thousand PPP contracts have been signed in the EU in
the last 15 years, representing a capital value of almost 200 billion
euro (Blanc-Brude, Goldsmith & Välilä, 2007). These major
externalised infrastructure projects demand new capabilities for
contracting and managing complex, long-term supply arrangements in
both public clients and private contractors. For both sectors
managing complex multi-decade projects raises new issues about
developing, embedding and renewing key capabilities associated with
performing the contract. Therefore, learning is a central challenge in
achieving effective public-private partnerships and achieving
innovative outcomes from these long-term contractual arrangements.
Whilst a broad literature has developed around some of these
issues such as dynamic learning in alliances (Kumar & Nti, 1998),
relative absorptive capacity (Lane & Lubatkin, 1998; Cohen &
Levinthal, 1990), and learning to build project capabilities (Brady &
Davies, 2007), what has been less well developed conceptually and
empirically is the assumption that the challenges of making these
public-private partnerships work are symmetric (i.e. the same for
public and private sector managers). To date understanding of
asymmetric capability development in dyadic supply relationships
appears to be limited. This paper investigates how the public client
and private contractor acquire and embed learning from PFI practice
focusing here on when the construction is up and running and the
contract is focused on operational delivery. Drawing on work on
absorptive capacity (Cohen & Levinthal, 1990), asymmetric
development of capabilities is defined here in terms of the learning
needed to design, embed and renew factors critical to performing the
contract.
In order to access the phenomena of dyadic client/contractor
learning in what are complex supply relationships, two parallel

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