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AN EXPLORATION OF PUBLIC PRIVATE PARTNERSHIP IN INFRASTRUCTURE
DEVELOPMENT IN SOUTH AFRICA
By
Murendeni Liphadzi
A DISSERTATION
Submitted in fulfilmentOf the requirements for the degree
BACHELOR OF TECHNOLOGY
In
QUANTITY - SURVEYING
In the
FACULTY OF ENGINEERING AND THE BUILT ENVIRONMENT
at the
UNIVERSITY OF JOHANNESBURG
SUPERVISOR: MR C.O. AIGBAVBOA
2013
AN EXPLORATION OF PUBLIC PRIVATE PARTNERSHIP IN
INFRASTRUCTURE DEVELOPMENT IN SOUTH AFRICA
MURENDENI LIPHADZI
SUPERVISOR: MR C.O. AIGBAVBOA
A dissertation submitted in partial fulfillment of the requirements for the award of
a Baccalaureate Technologiae in Quantity Surveying to the Faculty of Engineering
and the Built Environment, Department of Construction Management and Quantity
Surveying, University of Johannesburg, Republic of South Africa.
JOHANNESBURG, OCTOBER 2013
i
DECLARATIONI, Murendeni Liphadzi, hereby declare that the content of this dissertation represents my own
work, unless otherwise indicated by appropriate references. The dissertation has not previously
been submitted for academic examination towards any qualification. Furthermore, it represents
my own opinion and not necessarily that of the University of Johannesburg.
_________________________ ____________________
Signature Date
ii
ACKNOWLEDGEMENTS
Firstly I would like to thank God, who made it possible for me to come this far. I am truly
thankful for the strength and courage that he restored in me throughout this journey.
I would further like to express my sincere thanks as follows.
- To my family and friends, for the support and the encouragement gave me throughout my
studies, especially my dad who assisted me in editing the dissertation.
- Mr C. Aigbavboa, my supervisor, for his encouragement, motivation, invaluable insights,
direction, as well as timeous and honest feedback ; and
- All the respondents who participated in the research process.
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ABSTRACT
Purpose
Public-Private Partnerships (PPPs) are generally envisaged by countries around the world as a
major innovative policy tool that will remedy the lack of dynamism in traditional public service
delivery by increasing investment in infrastructure, as well as improving the delivery of social
services. To this end, the South African Government since 1999 through the National Treasury
has adopted the use of PPPs as an integral strategy in its national and international
developmental plan. Therefore, if the government needs to complement its developmental
aspirations, there is a need to instill the confidence and competitiveness amongst bidders to use
PPPs, as a coherent development orientated best value tool to deliver services and infrastructures
to the people. This research therefore, explores the relevance of PPP’s in South Africa and the
challenges facing the PPP legal framework and suggests some techniques that could serve in
fast- tracking infrastructure.
Methodology
The data used in this research were derived from both primary and secondary sources. The
secondary data were collected via a detailed review of related literature. The primary data was
collected through a structure questionnaire aimed at 50 construction government and private
officials who have the knowledge of PPPs.
Findings
Findings from the study revealed that PPPs is a viable option for infrastructure delivery in South
Africa and should be better explored; as it was also found that PPPs is currently unpopular
because it has been under-explored. Also, the respondents informed that current PPP regulations
in South Africa may have to be changed or better adapted to be effective in the administration of
PPP transactions.
Originality
Based on the outcomes of this study of Public Private Partnership in infrastructure development,
this research calls out to government to pay special attention to the creation of skills within
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government to deal with PPPs and have equal responsibility to play in ensuring that PPP is
promoted amongst the private sector during the procurement phase of the PPP by creating an
enabling environment which is fair.
Keywords
Infrastructure Development, Public Private Partnership, Gauteng Province Government
v
TABLE OF CONTENTS
DECLARATION..........................................................................................................ii
ACKNOWLEDGEMENTS........................................................................................iii
ABSTRACT.................................................................................................................iv
LIST OF ABBREVIATIONS.....................................................................................xi
LIST OF FIGURES....................................................................................................xii
LIST OF TABLES....................................................................................................xiii
CHAPTER ONE...........................................................................................................1
1.1 INTRODUCTION..........................................................................................................................................................1
1.2 BACKGROUND.....................................................................................................................................................1
1.3 SIGNIFICANCE OF RESEARCH........................................................................................................................2
1.4 AIM OF THE STUDY............................................................................................................................................2
1.5 PROBLEM STATEMENT....................................................................................................................................3
1.6 RESEARCH QUESTIONS....................................................................................................................................3
1.7 OBJECTIVES.........................................................................................................................................................3
1.8 METHODOLOGY..................................................................................................................................................4
1.9 ETHICAL CONSIDERATION.............................................................................................................................4
1.10 OVERVIEW OF CHAPTERS...............................................................................................................................5
1.11 CONCLUSION.......................................................................................................................................................6
CHAPTER TWO..........................................................................................................7
LITERATURE REVIEW....................................................................................................................................................7
vi
2.1 INTRODUCTION..............................................................................................................7
2.2 HISTORY AND RELEVANCE OF PUBLIC PRIVATE PARTNERSHIPS.............7
2.3 DEFINING PPPs TOWARDS INFRASTRUCTURE DEVELOPMENT..................8
2.4 CONVENTIONAL VS. PPP PROCUREMENT..........................................................9
2.5 DIFFERENT TYPES OF PPP’S................................................................................12
2.5.1 Supply and management contracts..............................................................................12
2.5.2 Turnkey contracts Build, Operate, Transfer (BOT) and Design, Build, Operate (DBO)12
2.5.3 Affermage/Lease.........................................................................................................13
2.5.4 Concessions.................................................................................................................13
2.5.5 Private Finance Initiative (PFI) and Private ownership..............................................13
2.6 PPP PROCESS – HOW IT WORKS.........................................................................14
2.7 ADVANTAGES AND DISADVANTAGES OF PPP’S...........................................15
2.8 SOUTH AFRICAN REGULATIONS FOR PPPS.....................................................16
2.8.1 The Public Financial Management Act.........................................................................16
2.8.2 Treasury Regulation 16.................................................................................................16
2.9 THE ROLE OF PPPS IN INFRASTRUCTURE DEVELOPMENT..........................21
2.10 PPP – SA EXPERIENCE...........................................................................................22
CHALLENGES FACED BY PUBLIC PRIVATE PARTNERSHIP IN THE DEVELOPMENT OF SOUTH
AFRICAN INFRASTRUCTURE.......................................................................................................................................24
2.11 PPP UNIT CHALLENGES.........................................................................................24
2.12 PRIVATE SECTOR MISTRUST...............................................................................25
2.13 SKILLS SHORTAGE................................................................................................25
2.14 UNCERTAINTY IN THE SERVICE AGREEMENTS.............................................25
2.15 INADEQUATE STANDARDISATION OF PROJECT DOCUMENTS..................26
2.16 POLITICAL INTERFERENCE..................................................................................27
vii
2.17 RISK TRANSFER......................................................................................................27
SUCCESS FACTORS WITHIN IMPLEMENTING PPP’S TOWARDS INFRASTRUCTURE
DEVELOPMENT. .................................................................................................................................29
2.18 OVERVIEW OF PRINCIPLES FOR PPP SUCCESS...............................................29
2.19 CAREFUL SELECTION OF PARTNER...................................................................30
2.20 FOCUSED PURPOSE................................................................................................30
2.21 COMMITMENT, SUPPORT AND INVOLVEMENT BY ALL PARTIES INVOLVED...........................................................................................................................31
2.22 CREATING SKILLS..................................................................................................31
2.23 TRANSPARENT PROCUREMENT PROCESSES...................................................32
2.24 ENABLING POLITICAL AND STATUTORY ENVIRONMENT..........................32
2.25 PPP LEADERSHIP.....................................................................................................32
2.26 THE CONTRACT: THOUGHT OUT PLAN.............................................................33
2.27 CAPACITY.................................................................................................................33
2.28 RISK TRANSFER......................................................................................................33
2.29 MARKETING OF PPP’s............................................................................................34
2.30 CASE STUDY ANALYSIS: LESSONS LEARNED FROM THE GAUTRAIN......34
2.30.1 INTRODUCTION......................................................................................................34
2.30.2 GAUTRAIN: OVERVIEW........................................................................................34
2.31 CONCLUSION...........................................................................................................37
CHAPTER THREE....................................................................................................38
RESEARCH METHODOLOGY.....................................................................................................................................38
3.1 Introduction......................................................................................................................38
3.2 Research design................................................................................................................38
3.2.1 Types of research methods............................................................................................38
viii
3.2.2 Target population..........................................................................................................38
3.2.3 Sampling........................................................................................................................39
3.2.4 Sample size....................................................................................................................40
3.2.5 Research instrument......................................................................................................40
3.2.5.1 Questionnaire design..................................................................................................40
3.3 THE RESEARCH PROCESS..........................................................................................41
3.3.1 The Administration of questionnaires...........................................................................41
3.3.2 Collection of questionnaires..........................................................................................41
3.3.3 Data analysis..................................................................................................................42
3.3.4 Reliability and validity..................................................................................................42
3.4 Conclusion........................................................................................................................43
CHAPTER FOUR......................................................................................................44
DATA ANALYSIS AND DISCUSSIONS OF THE DATA...........................................................................................44
4.1 Introduction......................................................................................................................44
4.2 Data Analysis..............................................................................................................44
4.2.1 Section A: Background Information Of Respondents...................................................45
4.2.2 Section B: Relevance of PPP towards Infrastructure Development..............................51
4.2.3 Section C: Challenges facing PPP towards Infrastructure Development in South Africa (Gauteng)................................................................................................................................53
4.2.4 Section d: Possible success factors within implementation of PPPs.............................54
4.3 Conclusion........................................................................................................................56
CHAPTER FIVE........................................................................................................57
DISCUSISION OF FINDINGS.........................................................................................................................................57
5.1 Introduction......................................................................................................................57
5.2 Background information results of respondents...............................................................58
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5.2.1 Biographical data results...............................................................................................58
5.3 RESEARCH QUESTION 1.............................................................................................59
5.3.1 Findings.......................................................................................................................59
5.4 RESEARCH QUESTION 2........................................................................................60
5.4.1 Findings.......................................................................................................................60
5.5 RESEARCH QUESTION 3........................................................................................61
5.5.1 Findings......................................................................................................................61
5.6 Conclusion...................................................................................................................62
CHAPTER SIX...........................................................................................................63
CONCLUSION AND RECOMMENDATIONS.............................................................................................................63
6.1 Introduction.................................................................................................................63
6.2 RESEARCH OBJECTIVE 1.......................................................................................63
6.2.1 Conclusion...................................................................................................................63
6.3 RESEARCH OBJECTIVE 2.......................................................................................64
6.3.1 Conclusion...................................................................................................................64
6.4 RESEARCH OBJECTIVE 3.......................................................................................64
6.4.1 Conclusion...................................................................................................................65
6.5 CONCLUSIONS.........................................................................................................65
6.6 RECOMMENDATIONS............................................................................................65
6.7 CONCLUSION...........................................................................................................66
REFERENCE LIST...................................................................................................67
QUESTIONNAIRE DESIGN....................................................................................72
x
LIST OF ABBREVIATIONS
PPP Public Private Partnerships
PFMA Public Finance Management Act
SPV Special Purpose/Project Vehicle
xi
LIST OF FIGURES Page
Figure 2.1 PPP models…………………………………………………………………...14
Figure 2.2 PPP Project life cycle………………………………………………………...20
Figure 2.3 Gautrain PPP Structure……………………………………………………….35
Figure 4.1 Respondents on Gender………………………………………………………45
Figure 4.2 Respondents ethnicity………………………………………………………...46
Figure 4.3 Respondents Highest qualifications………………………………………......46
Figure 4.4 Respondents sectors of working…………………………………………........47
Figure 4.5 Divisions deployed in…………………………………………………………47
Figure 4.6 Respondents current position in the selected sector and division…..... ……...48
Figure 4.7 Respondents who worked in the construction industry….................................48
Figure 4.8 Construction related degree………………………….......................................48
Figure 4.9 Industry Experience by Respondents…………………………………………49
Figure 4.10 PPP experience………………………………………………………………49
Figure 4.11 PPP sphere…………………………………………………………………...49
Figure 4.12 Role in the selected PPP sector……………………………………………...50
Figure 4.13 Success of a PPP ……………………………………………………………54
xii
LIST OF TABLES
Page
Table 1.1 Traditional Procurement vs. PPP’s ………………………………………………11
Table 4.1 Relevance of PPP towards infrastructure development ……………….............51
Table 4.2 PPP tests …………………….…………………………………………………...52
Table 4.3 Challenges facing Public Private Partnerships ………………………..……….53
Table 4.4 Success conditions of a Public Private Partnership………………………....….55
xiii
CHAPTER ONE
1.1 INTRODUCTION
The Public-Private Partnership (PPP) is a popular instrument for infrastructure development. It
has become the traditional form of delivering infrastructure and services; PPP is an alternative
form of delivering infrastructure. Many challenges have been experienced in the South African
PPP fraternities that have contributed to the stagnation of value-adding projects being
implemented. In spite of these challenges, some developed countries have successfully
implemented PPP projects which have concurrently presented opportunities and lessons that
South Africa can draw from. This research studies PPP within South Africa towards
infrastructure development and also looks into the fundamental causes of the challenges.
1.2 BACKGROUND
Public Private Partnerships or PPPs as they are commonly referred to are arrangements for
procuring infrastructure, goods and services by government through a joint venture with the
private sector (Malao, 2011:16). Infrastructure development is taking on new momentum in
South Africa. The reasons for this are many and varied. They range from fixing the dilapidated
and aged infrastructure to job creation, as well as to respond to the global economic crisis. PPPs
in South Africa are an important service delivery mechanism because they can facilitate rapid
infrastructure delivery as envisaged under the Accelerated and Shared Growth Initiative for
South Africa (Budget speech, Trevor Manuel, 2006:14).
In October 2007, the Public-Private Partnership Unit of the South African National Treasury had
73 registered public-private partnership (PPP) projects on its books. Of these 73 projects, 18
were already active and had a joint value of more than R31 billion (PPPU, 2007; 21). In January
2011, the list of national and local PPPs in South Africa stood at 75 and the construction phase of
the R25 billion Gautrain PPP project was nearing completion (PPPU, 2011; 11).
PPPs should be seen as a catalyst for providing basic infrastructure services that have the intent
of improving the quality of lives for ordinary citizens. PPP also operates in a manner that the
private party uses its own funds to ensure that the construction is completed on time and within
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budget. Within South Africa most infrastructure development has traditionally been done by the
state through tax revenue collection, which is why the use of PPPs as a way of mobilizing
economic development and infrastructure spend needs significant consideration (Malao, 2011:2).
As the PPP market grows in South Africa, it is clear that the public sector needs to improve its
understanding of PPPs and in which sectors they should be pursued, to complement traditional
procurement practices (National Treasury PPP Unit, 2007:23). It is imperative that the public and
private sectors move towards a greater shared vision of the role that PPPs can play in delivering
infrastructure and services in South Africa. The onus is on both parties to make PPPs viable
through a genuine spirit of co-operation that produces trust (Akintoye, 2005:459).
1.3 SIGNIFICANCE OF RESEARCH
PPP is very important in developing the infrastructure of the country. If South Africa wants to
remain globally competitive and ahead of its emerging market counterparts, there needs to be a
complete change of priorities regarding procurement methods used. The purpose of this study is
to assess PPP towards infrastructure development in South Africa with regards to how PPP has
affected the construction spectrum and the way forward in building a more developed country. I
believe this research can be helpful to the nation and development agencies in bringing new
procurement strategies.
1.4 AIM OF THE STUDY
The aim of this study is to explore and access the Public Private Partnership in South Africa. It is
known that PPP has been successful in other countries with regard to service delivery, so we
access its challenges as we develop the success factors.
1.5 PROBLEM STATEMENT
In South Africa infrastructure development needs special attention from both the public and
private sectors. Thus, this research will evaluate the use of the Public Private Partnership
procurement method in infrastructure development in South Africa in order to find out its
challenges and how PPP can be used to fast track infrastructure development. The study is a case
study of the Gauteng Province.
2
1.6 RESEARCH QUESTIONS
In this research, the following questions have been developed in line with the research problem
statement, which are:
1. What is the relevance of Public Private Partnership towards infrastructure development
in South Africa?
2. What are the challenges faced by Public Private Partnership in the development of the
South African infrastructure?
3. Which conditions are necessary for the successful implementation of Public Private
Partnership and to what extent can this implementation fast track the delivery?
1.7 OBJECTIVES
The objectives of this study can be highlighted as follows:
1. To investigate the relevance of PPP to infrastructure development in the Gauteng
Province.
2. To assess the challenges that Public Private Partnership in infrastructure development
are facing in South Africa.
3. Possible success factors within implementation of PPP’s, and to suggest solutions for the
challenges faced by South African Public Private Partnership.
3
1.8 METHODOLOGY
This research will adopt a quantitative approach which will comprise of a questionnaire. The
target population was the government and private officials who have the knowledge of PPPs.
This will comprise of company officials who worked on different PPP projects. The
questionnaire will be delivered to different people. The number of targeted respondents will be
50 for this survey, final sample size and analysis will depend on the responses of those officials.
The format of the questionnaire will have three sections. The first section will be based on
demographic data of the professionals and officials; this reflects the experience in the field,
gender, race, and professional status. Section two comprises of questions relating to the
relevance of PPP towards infrastructure development and that will be based on the Likert scale,
ranging from 1 (strongly disagree) to 5 (strongly agree). Section two will deal with the
challenges facing PPPs with regard to infrastructure development. The third section consists of
questions and statements relating to possible conditions needed for fast tracking infrastructure
through PPPs.
1.9 ETHICAL CONSIDERATION
The researcher will take into account the obligations to the professionals in the industry whose
work contributed in the literature by being properly cited and acknowledged. The requirement to
the participants in the research questionnaire, is that their input will be kept confidential a,nd
only used for academic purposes. Respondents to the questionnaire will have the right not to
answer questions that they feel are not appropriate without any intimidation.
4
1.10 OVERVIEW OF CHAPTERS
This study consists of the following six chapters:
CHAPTER 1: Introduction
This chapter defines the problem that the researcher seeks to investigate and shows how the
investigation of the problem is going to be done. The introduction gives an overview of the
problem and the research sub-questions. This chapter, therefore, give a plan of how the research
is going to be carried out.
CHAPTER 2: Literature review
In this chapter, past and present literature will be reviewed on Public Private Partnerships. The
literature will indicate the knowledge and ideas that different scholars have established on the
topic, as well as the strengths and weakness regarding the topic towards infrastructure
development.
CHAPTER 3: Research Methodology
In this chapter the research design, sampling method, sampling procedure and analysis will be
defined. The independent and dependent variables will also be outlined, as well as the way in
which data will be analysed so that the data used can meet the research objectives.
CHAPTER 4: Findings and Analysis
Once an appropriate design and suitable means of measuring relevant variables have been
identified and adopted, the findings will be analyzed using an appropriate procedure. Therefore
this chapter will elaborate on the findings, which will be acquired by means of questionnaires.
The findings will be analyzed in detail.
CHAPTER 5: Discussion of findings
In this chapter the findings analyzed in Chapter 4 will be discussed and linked to the literature
review in order to establish if the research questions have been answered.
5
CHAPTER 6: Conclusion and Recommendations
In this chapter after critically analysing all relevant literatures and data of the study, conclusions
are drawn and then recommendations will be discussed.
1.11 CONCLUSION
In this introductory chapter, the various components of the study were introduced. The research
problem, rationale, research questions, theoretical framework, definitions and the structure of the
study was discussed. It is against this background that an understanding of the present research
will be attained. This chapter also highlighted the background of PPP towards infrastructure
development.
6
CHAPTER TWO
LITERATURE REVIEW
2.1 INTRODUCTION
Infrastructure development remains a critical catalyst of development, economic growth and
social welfare in a developing country such as South Africa. The delivery of key infrastructure
through Public Private Partnership (PPP) initiatives has become an important policy instrument
by which both the public and private sectors could assist in alleviating some of the backlog in
infrastructure that exists in developing countries.
This chapter defines and describes PPP and its relevance; it further, reviews literature on the
challenges and the PPP as a procurement system. Based on previous similar research we can
draw out knowledge and an understanding on the research objectives and questions.
2.2 HISTORY AND RELEVANCE OF PUBLIC PRIVATE PARTNERSHIPS
PPP arrangements, which are commonly known as Public Finance Initiatives (PFI) in the United
Kingdom, have their origins in the late seventeenth century where there was a clear need for the
construction of roads, canals and public railway systems, albeit the limitation of funds from
government (Malao, 2011:4).
Procurement of projects is something that has been happening in the past, but the burden to
change the standard model of public procurement arose primarily from concerns about the level
of public debt, which grew rapidly during the macroeconomic dislocation of the 1970s and
1980s. Initially, most public–private partnerships were negotiated individually, as one-off deals,
and much of this activity began in the early 1990s (Quium, 2011:8).
Since 1999, Public Private Partnerships (PPPs) in South Africa have been regulated under the
Public Finance Management Act (PFMA), providing a clear and transparent framework for
government and its private sector partners to enter into mutually beneficial commercial
transactions, for the public good. At the heart of the South African PPP structure is the National
7
Treasury’s PPP Unit constituted in 2000. This dedicated PPP unit plays a key role particularly in
the creation of PPPs where it has the final authority in the approval of PPP agreements. It has
this authority even though the initiative and ultimate management of PPP agreements originates
and rests with individual government departments and respective provinces (Malao, 2011:8).
Even though these partnerships are now common, it is normal for both private and public sectors
to be critical of the other’s approach and methods. It is at the merger of these sectors that we see
how a unified partnership has immediate impact on the development of communities and the
provision of public services (Spackman, 2002:123).
2.3 DEFINING PPPs TOWARDS INFRASTRUCTURE DEVELOPMENT
PPP is described as a long-term contract between the public and private sectors where
government pays the private sector to deliver infrastructure and related services on behalf, or in
support, of government’s broader service responsibilities. The private sector participation should
not replace government, but should complement government capacity. PPP projects cover
economic and social infrastructure and typically include both a capital component and an
ongoing service delivery component of non-core services (Malao, 2011:23).
PPP projects are part of a broader spectrum of contracted relationships between the public and
private sectors to produce an asset or deliver a service. However, the intention is to apply the
private provision of services for which there is a public infrastructure element and a private
financing element called Public Private Contracts co over different forms of long-term contracts
drawn-up between legal entities and public authorities (Sagalyn, 2007:23).
Public Private Partnerships covers all current legal/economic forms that make it possible for
private funds to invest in public infrastructure and services. Typically in a PPP, a public
authority (federal or local) entrusts a private operator with the long-term implementation of a
project. Frequently, this involves large-scale and complex construction and operations.
Thomas.M Wonga (2007) cited in (Chege 2011; 23).
It is no longer in doubt that the introduction of private management within the public sphere
brings tangible savings and proven service quality. Managing services and public infrastructure
8
by way of a PPP represents optimum public management: the private sector regains its historical
role in delivering public services and the public sector gains by the efficiencies delivered. The
public sector loses none of its authority since private operators need to be supervised not only for
the sake of sound contract management but also to ensure that service quality is maintained
(Malao, 2011:23).
2.4 CONVENTIONAL VS. PPP PROCUREMENT
Conventional procurement has traditionally been endorsed as a standardized procurement system
for many government departments and institutional entities. This procurement method is driven
by five principles as constituted by the South African government, which are:
i) Value for money;
ii) Competitiveness;
iii) Fairness;
iv) Accountability; and
v) Equity principles.
What has been evident over the past few years, however, is the lack of transparency and
competitiveness regarding the awarding of public procurement tenders. This entire system has in
the process created huge inefficiencies of service delivery in less-urbanized areas and has to
some extent led to uncertainties regarding the legitimacies and fairness of conventional
procurement (Malao, 2011:8).
Conventional procurement has always been utilized as an important tool for achieving economic,
social and other objectives. However, the improper administration of contracts is beginning to
reflect an erosion and neglect of socio-economic objectives as some contracts are awarded to
firms with no particular track record and credible reputation within the infrastructure and
construction sectors and has as a result contributed to the current demise of basic infrastructure
needs that every communal environment is entitled to. The fundamental flaws in conventional
procurement have been due to many reasons, some of which include (Arrowsmith, 1998:23):
The improper overseeing and management of the bidding process;
9
inability to evaluate bids objectively and transparently and
The shortage of key skills.
Conventional procurement has also traditionally been known to be more input specification
driven, which has therefore limited the scope for innovation and creativity pertaining to the
design of the related infrastructure facility (Regan, 2009:29). PPPs in contrast are more output
specification driven often requiring better innovation from the private sector. The contractor and
operators assume significant risk which they would price for and agree on at financial close.
(Regan, 2009:23) cites that this innovative approach creates an incentive for the private sector to
deliver quality facilities and to maintain the infrastructure over the concession period. The PPP
project cycle uses three key measures of approval which are governed by (Treasury Regulation
16, 2004), namely: affordability; value for money; and risk transfer.
This cycle follows a rigorous procedure that is monitored by the PPP Unit right through from
when the project is registered, to the feasibility analysis and then to procurement. Sound
governance mechanisms are also followed through the appointment of independent consultants
who assist in providing independent advice to the respective government departments (Regan,
2009:29). The consultants who are often referred to as transaction advisors are appointment by
the government department concerned, to advise government on how to structure a PPP
transaction and also to ensure that the appropriate mechanisms have been followed to deal with
the risks involved with infrastructure projects (Fourie, 2000:23).
10
PPP as a procurement method (National Treasury, 2004)
Table 1.1 above shows some of the key differences in procurement methodology, and with that
tabulated one can say that the key motivation for governments considering public private
partnerships is the possibility of bringing in new sources of financing for funding public
infrastructure and service needs. It is important to understand the main mechanisms for
infrastructure projects, the principal investors in developing countries, sources of finance
(limited recourse, debt, equity, etc.) (Barlow, 2010:52). In any of the PPP structures mentioned
above, the following payment methodologies could apply, including the institution making a
payment (which would normally be known as a unitary payment); or the private party collecting
revenue or fees from the users of the infrastructure facility; or a combination of the two (National
Treasury, 2004).
11
2.5 DIFFERENT TYPES OF PPP’S
The PPP models can be classified into five broad categories in order of generally increased
involvement and assumption of risks by the private sector. The five broad categories are:
2.5.1 Supply and management contracts
The management contract moves beyond the delegation of discrete service functions to the
delegation of a range of delivery, operation and maintenance functions. The municipality retains
ownership of assets and like the service contract it is responsible for capital expenditures,
working capital and the commercial risk associated with collecting service fees from users
(Plummer, 2002:189). A private sector organization assumes overall responsibility for the
operation and maintenance of a service delivery system, with the freedom to make day-to-day
management decisions. The typical duration of a management contract is five years (Republic of
South Africa, 2001) or 3-8 years (Plummer, 2002). Johannesburg Water and Sanitation is an
example of a management contract. The management contract can address efficiency objectives,
although not the structural problems associated with under-investment (Plummer, 2002:191).
2.5.2 Turnkey contracts Build, Operate, Transfer (BOT) and Design, Build, Operate
(DBO)
In this PPP model, a private sector organization finances, builds, and operates a facility
providing a public service. The relevant public entity pays a fee, usually on a per-unit-of-service
basis .The duration of BOT and DBO PPPs is normally around 15+ years. Examples include
Durban Wastewater Treatment (Republic of South Africa, 2001). BOT and DBO projects are
generally designed to bring private capital into the construction of new infrastructure. The
operations period is long enough to allow the private company to pay off the construction costs
and realize a profit – typically 10 to 20 years. The government retains ownership of the
infrastructure facilities and becomes both the customer and the regulator of the service.
The private sector provides the capital to build the new facilities and in return the government
agrees to purchase a minimum level of output over time, regardless of the demand from the
ultimate consumers. Having the government bear the commercial risk is what distinguishes
BOTs from concessions (Plummer, 2002:201).
12
2.5.3 Affermage/Lease
In this category of arrangement, the operator (the leaseholder) is responsible for operating and
maintaining the infrastructure facility (that already exists) and services, but generally the
operator is not required to make any large investment. However, often this model is applied in
combination with other models such as build-rehabilitate-operate-transfer. In such a case, the
contract period is generally much longer and the private sector is required to make significant
investment The typical duration of a lease contract is 10 years or 8-15 years (Plummer,
2002:195).
2.5.4 Concessions
In this form of PPP, the government defines and grants specific rights to an entity (usually a
private company) to build and operate a facility for a fixed period of time. The government may
retain the ultimate ownership of the facility and/or right to supply the services. In concessions,
payments can take place both ways: concessionaire pays to government for the concession rights
and the government may pay the concessionaire, which it provides under the agreement to meet
certain specific conditions. Usually, such payments by the government may be necessary to
make projects commercially viable and/or reduce the level of commercial risk taken by the
private sector, particularly in a developing or untested PPP market. Typical concession periods
range between 5 to 50 years (Plummer, 2002:197).
2.5.5 Private Finance Initiative (PFI) and Private ownership
In the private finance initiative model, the private sector remains responsible for the design,
construction and operation of an infrastructure facility. In some cases, the public sector may
relinquish the right of ownership of assets to the private sector. In this model, the public sector
purchases infrastructure services from the private sector through a long-term agreement. PFI
projects, therefore, bear direct financial obligations to the government in any event. In addition,
explicit and implicit contingent liabilities may also arise due to loan guarantees provided to the
lenders and default of a public or private entity on non-guaranteed loans (Plummer, 2002:199).
13
The basic features of these five categories of PPP models are shown in Figure 2.1 (Quium,
2011:5)
2.6 PPP PROCESS – HOW IT WORKS
A typical PPP structure can be quite complex involving contractual arrangements between a
number of parties, including the government, project sponsor, project operator, financiers,
suppliers, contractors, engineers, third parties and customers. The creation of a separate
commercial venture called a Special Purpose/Project Vehicle (SPV) is a key feature of most
PPPs. The SPV is a legal entity that undertakes a project and negotiates contract agreements with
other parties including the government (Quium, 2011:9).
An SPV is also the preferred mode of PPP project implementation in limited or non-recourse
situations, where the lenders rely on the project’s cash flow and security over its assets as the
only means to repay debts (Quium, 2011:10).
At all phases of a project’s development, the inputs of both the procuring institution and the
private party need to be assessed in terms of their compliance with the legislation, the regulations
14
and the process and its components, including with the bidding process, the BEE component, and
the formation of the special purpose vehicle (SPV) (Quium, 2011:9). National Treasury’s PPP
Unit is the main source of support and regulation for ensuring this compliance, supported by the
provincial treasuries (Quium, 2011:11). Sometimes, governments want to ensure a continued
interest (with or without controlling authority) in the management and operations of
infrastructure assets such as a port or an airport particularly those which have strategic
importance, or in assets that require significant financial contribution from the government.
To ensure that these complexities are dealt with appropriately, detailed documentation needs to
be prepared at all phases of a PPP project. It is important to note that PPPs can take a long time
to procure if these processes are not carefully followed (Flinders 2005:232).
2.7 ADVANTAGES AND DISADVANTAGES OF PPP’S
For government departments and agencies contracting the delivery of infrastructure to the private
sector, it creates opportunities to deliver improved public services. PPPs can potentially deliver
significant benefits in design and the quality of services. PPPs can draw upon the best available
skills, knowledge and resources, whether they are in the public or the private sector. Departments
and agencies can focus their own efforts on the delivery of core services within a given area, and
use the savings generated to improve or expand other services. PPPs also provide the
construction, service and finance industries with opportunities to generate efficiencies and cost-
effectiveness in the delivery of infrastructure .The PPP approach has a demonstrated ability to
deliver value for money results for the community (Quium, 2011:2).
Governments worldwide have increasingly turned to the private sector to provide infrastructure
services in energy and power, communication, transport and water sectors that were once
delivered by the public sector. There are several reasons for the growing collaboration with the
private sector in developing and providing infrastructure services, which include (Quium,
2011:3):
Increased efficiency in project delivery;
Operation and management; and
Availability of additional resources to meet the growing needs of investment in
the sector.
15
Although there are a number of parties involved with long-term nature of their relationships this
often results in complicated contracts and complex negotiations, and therefore high on
transaction and legal costs emerge. PPP projects can take years to complete, and there is a risk
that the private sector party will become insolvent or make large profits during the course of the
project and that can cause political problems for the public entity (Harris, 2004; 23).The PPP
approach offers a number of advantages for the public sector as well as the private sector and the
general public.
2.8 SOUTH AFRICAN REGULATIONS FOR PPPS
A set of regulatory frameworks and guidelines for the use of PPPs by national and provincial
government institutions in South Africa has been instituted. This legislation which governs PPPs
for national and provincial government is known as Treasury Regulation 16 and is included in
the Public Finance Management Act, 1999 (PFMA). Municipalities are governed by a different
piece of legislation known as the Municipal Systems Act, 2000 and the Municipal Finance
Management Act, 2003 and are not subject to the PFMA or Treasury Regulation 16.
2.8.1 The Public Financial Management Act
The PFMA’s core focus is to improve financial management in the public sector. This is due to
the accountability that government has to taxpayers’ money, hence the constant evaluation of
value for money choices. A PPP is therefore supportive of the objectives that the PFMA tries to
achieve: this is based on the three pillars or tests which are central to the adoption of the PPP,
being that it (National Treasury, 2004):
Targets public spending, particularly on outputs specification;
Leverages private sector finance; and
Allocates risks to the party best able to manage them.
2.8.2 Treasury Regulation 16
Treasury Regulation 16 (2004), defines a PPP and sets out the phases and tests it will go through.
In terms of the regulation, a PPP is a contract between a public sector institution and a private
party, in which the private party assumes significant technical; financial, legal and operational
risks in the design, building and operation of the project. The regulation also caters for a wide
16
range of PPP arrangements to be structured; it is also not prescriptive about the types of
financing structures of a PPP. Treasury Regulation 16 sets out six distinct phases to the project
cycle. The government institution concerned is required to apply these tests throughout,
following which treasury approvals may be given at phases II and III of the project lifecycle
subject to certain requirements been met. Given the two phases of the PPP project lifecycle,
namely the feasibility study and procurement phase, various tests would need to be met prior to
any approvals being made.
In determining whether the PPP is in the best interests of an institution, the authorised accounting
officer must undertake a feasibility study that: Explains the benefits of the proposed PPP for the
institution in terms of its strategic objectives and government policy; Explains the nature of the
institutional function and the extent to which it can be performed by the private party;
Demonstrates the affordability of the PPP for the institution, maps out the level of risk allocation
of financial; technical and operational risks and mitigation strategies in place; Demonstrates
value for money to be achieved by the PPP; and describes the extent to which the institution will
implement; manage; enforce and report on the PPP (National Treasury, 2004).
Once the institution concerned applies for Treasury Regulation I approval, National Treasury
will evaluate the submission and only upon approval can the institution proceed through to the
procurement phase. During the procurement phase: the institution must obtain approval from the
relevant treasury for all procurement documentation; this would commonly be done in the
Treasury Regulation IIA. The procurement process also needs to be fair; equitable; transparent,
competitive and cost effective (National Treasury, 2004).
17
Where the selection of private bidders is concerned, all bidders must have an equal chance of
competing for the contract and the PPP procurement process must be in accordance with the law.
For obtaining Treasury Regulation III the following aspects need to be complied with:
The PPP agreement must meet the requirements of affordability; value for money and significant
risk transfer to the private party; A management plan needs to be in place that explains the
capacity of the institution and its procedures; and an acceptable due diligence should have been
completed.
Figure 2.2 below maps out the PPP Project cycle (in accordance with Treasury Regulation 16
and in term of the PFMA). Phase I of the project cycle entails registration of the project by the
government institution with National Treasury and the appointment of an internal project officer
responsible for spearheading the project, and then the appointment of transaction advisors needs
to be done. Phase II entails the preparation of a feasibility study comprising of:
Needs analysis;
Options analysis;
Project due diligence;
Value assessment;
Economic valuation; and
Procurement plan.
Once the feasibility study has been completed the institution would then need to apply for
Treasury Approval I. Upon the approval of National Treasury, the institution would be permitted
to proceed through to the procurement phase where a cost-competitive procurement process
would have to be designed including the preparation of bid documents and the drafting of the
PPP agreement. This would be followed by the application of Treasury Approval IIA approval.
From this point on it is the beginning of the pre-qualification process where the private bidders
would have to be pre-qualified, followed by the issue of a request for proposals (RFP) with a
draft PPP agreement. Once the private bids have been received from the bidders, they would
have to be compared with the feasibility study and against each other.
18
The next phase is to select the preferred bidder and prepare a value for money report which will
be followed by the application of Treasury Approval IIB. The last phase is the most intense as
this entails thorough negotiations with the preferred bidder by negotiating the terms and
conditions of the PPP agreement and finalising the PPP agreement management plan. Once
Treasury Approval III has been granted, the PPP agreement is signed and this would thereafter
lead to the implementation of the project (National Treasury, 2004a).
2.7.3 TESTS FOR A PPP IN SOUTH AFRICA
Whatever the PPP type, structure, payment mechanism or sources of funding, all South African
PPPs, governed by Treasury Regulation 16, are subjected to three strict tests:
Technical, operational and financial risk transferred to the private party.
Affording of the cost by the institution.
There should be value-for-money
Before deciding whether to pursue a PPP, the procuring institution needs to carefully reflect on a
number of important issues related to the tests of risk, affordability and value for money
(National Treasury, 2004).
19
Figure 2.2 PPP project life cycle (National Treasury, 2011)
20
2.9 THE ROLE OF PPPS IN INFRASTRUCTURE DEVELOPMENT
The failure of government and municipalities in providing sustainable and well-functioning
services to the public poses a threat to the development of our continent and country in many
respects. PPPs have a critical role to play in ensuring that sustainable funding mechanisms are in
place to drive the design, construction and operations of a project and that very little political
interference in the operation of facilities takes place.
There is a positive association between infrastructure and a country’s level of development
(DBSA, 2006:21). Infrastructure reduces the cost of production and makes it easier for
participants in the economy to enter into transactions (DBSA, 2006:21). Leipziger (2005) found
that there is a direct correlation between infrastructure accumulation and growth as measured by
improvements in GDP per worker (DBSA, 2006:22). Infrastructure has considerable potential in
redressing low income levels, hazardous conditions, social powerlessness and isolation (DBSA,
2006:22). South Africa currently lags behind in its investment in infrastructure (DBSA, 2006;
46). This research is necessary and can assist in policy making regarding infrastructure provision
through PPP process.
PPPs are aimed at delivering services more proficiently than traditional procurement methods by
easing off government budgets through the use of the private sector’s innovation and funding.
This in essence should result in an increase in the level and investment of public infrastructure by
reducing government spending during the construction period of the infrastructure facility
concerned (Chege, 2003:78). The long tenure of the concession period is intended to ensure that
the private party operates and maintains the infrastructure to satisfactory conditions. This is often
a beneficial factor when compared to conventional procurement which can often defer the
maintenance of facilities as a result of government’s budgetary constraints (Malao, 2011:11).
One of the other roles PPPs have in delivering infrastructure is to ensure that significant risk is
transferred to the private sector so as to encourage the private party concerned in taking
ownership of the operations and construction of the facility; to ensure that the management of the
project is efficiently run and to reduce public sector risk.
These risks can range from construction risks, technology risks, environmental risks, operating
risks, legal risks, regulatory risks, political risks, financial risks and black economic
21
empowerment (BEE) related risks, each of which can affect the overall success of the project.
As PPPs involve the selection of experienced bidders to implement the project; the private sector
becomes an integral source of providing technical assistance and knowledge to the public sector
(Malao 2011:11). Although skills transfer from the private to the public sector has been deemed
as an important function of ensuring that the custodians of the project fully understand all
processes involved in the project, not enough participation from the public sector has been seen
in many projects which further exacerbates the lack of skills in many government departments
(Malao, 2011:12).
During the feasibility and procurement phase, the Transaction Advisory team ensures that there
is adequate transfer of skills to the institutional stakeholders; however, this process has not
always been successful due to the lack of participation from the public sector as cited above. The
institution’s team will usually benefit from the technical, financial, legal and BEE advisory
services to be provided by all work streams (Quium, 2011:7). The technical work stream will
entail processes such as spatial review workshops with the architectural team having to
interrogate the public sector’s needs and propose a cost-efficient design solution leading to
optimal space utilisation . The collaboration between the private and public sector thus emerges
to be a cornerstone catalyst in the progress and successful implementation of state infrastructure
projects, while aiming to achieve the best outputs by freeing up the funds, technologies,
managerial skills and operational efficiency (Zhang, 2006:23).
2.10 PPP – SA EXPERIENCE
PPPs have a relatively short history in South Africa. In April 1997 cabinet approved the
appointment of an interdepartmental task team to develop policy, legislation and institutional
reforms to enable the use of PPPs. From 1997 to 2000 government operated six pilot projects.
These are (PPP Unit 2005):
1. SA National Roads Agency: N3 and N4 toll roads;
2. Department of Public Works and Correctional Services: Two maximum security prisons;
3. Two municipalities: Water services; and
4. SA National Parks: Tourism concessions.
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South Africa’s PPP sector still faces major institutional and political challenges which have led
to the slow implementation and progression of PPP projects thus far and although certain
improvements have been made to catalyze and improve the state of infrastructure in South
Africa. Many of these improvements have been centered on the major economic and urbanized
centers of this country thus leaving a gap in the development of basic infrastructure services such
as water and sanitation in some of South Africa’s rural settings, although there is increased
attention towards improving service delivery (Malao, 2011:15).
There have also been limited progressive engagements between business and the public sector
regarding PPPs despite the existence and use of the PPP policy since its inception. These limited
dialogues have unfortunately not fostered the appropriate levels of confidence and willingness in
government for the use of PPPs and although PPP policies have been fully adopted and practiced
in South Africa, the country still lags behind most of the emerging market economies like India;
Russia; Poland and the Czech Republic particularly where implementation is concerned.
According to the PPP Quarterly of 15 January 2009 (National Treasury PPP Unit, 2009), 19 PPP
projects have been Completed since 2004, which range from transport, hospitals and office
accommodation projects. This includes the Gautrain which is one of the flagship projects to
emanate from the Gauteng Provincial Government, in ensuring greater efficiency and delivery in
the project. There was greater collaboration between various stakeholders in the project,
including the National Department of Transport, the PPP Unit, various municipalities within
Gauteng and other relevant stakeholders (Malao, 2011:52).
The creation of PPPs in South Africa on national and provincial level occurs at roughly two per
annum. The main reason for this rather slow roll out is the lack of skilled staff capacity in
individual departments and provinces to develop a PPP and take it through its project life cycle.
Between 8 March 2000 and March 2006 only 12 project agreements were signed, with the
signing of one further project (the Gautrain – a high-speed train service in Gauteng Province)
that is imminent.
23
Many lessons can be drawn from the Gautrain and these can be applied in other projects. It is,
however, the responsibility of stakeholders to take into consideration the elements that have led
to the successful implementation of such a project and to apply them going forward. Although
the legal and regulatory framework for PPPs in South Africa is quite advanced, the country has a
long way to go in the rolling out of PPPs and the view within the PPP unit is that investment
through PPPs in South Africa should not exceed 20% of the total public service investment in
any given year (Dachs 2006).
CHALLENGES FACED BY PUBLIC PRIVATE PARTNERSHIP IN THE
DEVELOPMENT OF SOUTH AFRICAN INFRASTRUCTURE.
The challenges faced by PPPs in South Africa are extensive to particular projects within the
diverse government departments, although some improvements have been made in developing
the country’s infrastructure; these developments have not been enough to reach all jurisdictions
throughout South Africa. Most of the greatest infrastructure needs are controlled by local
government. These challenges have unfortunately affected many municipal PPPs due to the lack
of resources and proper skills (Malao, 2011:35). Public institutions also have a crucial role to
play in ensuring that priority projects are implemented in less-urbanised environments and that
all members of society can equally benefit from state owned facilities. This remains a
challenging aspect as the private sector’s objective in maximising profits may deter it from
prioritizing the socio-economic objectives of government. The challenges reviewed are central to
many PPP projects across the globe and are discussed below.
2.11 PPP UNIT CHALLENGES
National Treasury’s PPP Unit has had a few challenges as facilitators of PPPs in South Africa,
including the following:
The PPP unit does not have the powers to develop new projects and this can be a
disadvantage as these decisions are normally mandated by government departments,
who are then required to register the project with the PPP Unit (SPAID, 2007:33).
Political intrusion at local and provincial government has created huge barriers for the
The PPP Unit has not been very successful in terms of emphasizing the cost
implications of project delays to the government institutions, whilst the latter has
24
failed in terms of making decisions promptly. Risk transfer can pose serious
implications in a project if not properly dealt with (SPAID, 2007:23).
2.12 PRIVATE SECTOR MISTRUST
The inability or lack of interest of the private sector to deliver services at the lower prices that
can be demanded by either government or users, can pose an additional barrier to partnership
(Hodge, 2003:23). The possible inability of the private sector could be related to the fact that a
private company would want to make some kind of profit from delivering a service, while the
prices that can be charged for a specific service may not provide for a sufficient profit margin
above production costs to make it worthwhile for the private company. Private companies could
have a lack of interest in getting involved in partnerships due to the low or non-existent profit
margin (Minnie, 2011:170).
2.13 SKILLS SHORTAGE
Insufficiency of local private sector management skills will pose a further barrier to partnership
(Hodges, 2003:12). The PPP model relies on a private sector that is able to make a meaningful
contribution and deliver services effectively and efficiently – preferably more so than the public
sector can. There is a built-in assumption in the PPP model that management skills in the private
sector are superior to management skills in the public sector (Minnie, 2011:173).
2.14 UNCERTAINTY IN THE SERVICE AGREEMENTS
Government institutions are not always clear about the services the private sector is to perform
and this often causes huge delays in the project life cycle phases as the specifications of bid
documents need to be agreed upon before they go out into market (Ngamlana, 2009:19). There
are instances, however, where bid documents are submitted to the bidders and certain variations
are made to the output specification. This has had huge ramifications to projects as it not only
delays the entire procurement process, but it creates doubts in the minds of the bidders regarding
the facilitation of the project. Project delays have been some of the core issues in relating to the
affordability of projects as contract prices are never constant due to inflation differentials. This
phenomenon has the potential of impacting on the cost of risk transfer, particularly when there is
great uncertainty in the project (Ngamlana, 2009:20).
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To this extend good organizational structures play a critical role in building adequate PPP
projects. A partnership, depending on its configuration and governance arrangements, could
require varying degrees of interaction between the partnering organizations. Even the least
interactive arrangement will however still require considerable inter-organizational contact and
such contact will suffer if there are fundamental differences between the partnering
organizations. Differing missions will leave little common ground on which to base a partnership
and could mean that there is little or no room for mutually beneficial cooperation (Minnie, 2011;
172)
2.15 INADEQUATE STANDARDISATION OF PROJECT DOCUMENTS
The lack of standardized PPP projects has also added to the complexities within some of the
processes in the procurement phase as some project officers find themselves having to refer back
to previous projects executed to draw on some levels of experience and to apply this to projects
that they are working on. The issue of standardisation may therefore be challenging at this stage
in the South African PPP landscape as not many critical projects (i.e. road infrastructure projects;
hospitals and water and sanitation projects) have been closed to formulate well-structured
standardized frameworks for some of these projects. (Ngamlana, 2011:20). Although the
formulation of standardized project toolkits would be a step in the right direction, it would not be
realistic to expect contract standardisation to be the solution to reduce problems (Morkey &
Wainscott, 2006: 10). More projects need to be rolled out by government institutions in order to
facilitate the process of proper drafting of standardized agreements for key priority projects.
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2.16 POLITICAL INTERFERENCE
Political inference and unwillingness have been some of the core causes of instability in the
South African PPP arena. With the various types of PPP projects being implemented at the three
tiers of government, namely national; provincial and local level, decisions needed to be taken
regarding the approval and implementation of such projects are frequently taken at a political
level making the decision-making processes challenging. Concerns arise when there is change in
the administration of government or where there is a restructuring of political positions,
particularly if the individuals who are responsible for managing the PPP contract with the private
party concerned are no longer the same as those who negotiated the contract in the first place
(Flinders,2004: 12).
2.17 RISK TRANSFER
Risk transfer can pose serious implications in a project if not properly dealt with. This
phenomenon is an important element in the implementation of any PPP. The common approach
in South African PPPs is to transfer a significant amount of risk to the private sector; however,
this can have serious repercussions leading to a project that is difficult to finance which
ultimately compromises on the quality of bidders willing to partake in the project (Deloitte &
Touche, 2009:22).
Although one of the key tests for a PPP is the transfer of substantial technical, operational and
financial risk to the private sector, government must be careful not to drive out competition in
the procurement phase by passing on too many risks to the private sector.
Too much risk can also increase transaction costs making the project unaffordable in the process;
thus it is important that the private sector is fairly compensated for taking on risks. The
challenges in many PPP projects, however, is identifying which party is best capable of
managing a particular risk and being able to quantify the risks accordingly (Deloitte & Touche,
2009:22).
Optimal risk allocation is vital in the success of any PPP; but in many instances government is
unwilling to take on risks, barely making it practical and attractive for the private sector to
participate and this ultimately does not create a win-win situation for both parties. Negotiations
27
regarding risk transfer also remain a pivotal component of the negotiations phase when one
considers the level of risks inherent in these infrastructure projects.
The private sector therefore needs to ensure that they are comfortable and satisfied with the
quantum of risk that they are taking. Both the public and private sectors face different risks
during the procurement phase of the PPP cycle. It is therefore critical that both parties work
together closely in managing these risks accordingly (Plummer, 2002: 72)
The barriers to partnership mentioned in this section should be kept in mind when deciding on a
service delivery mechanism where partnership is an option, which is why critical success factors
for PPPs could be derived from some of the barriers. A public sector entity‘s capacity to
participate in partnerships is determined by individual, municipal, partnership and external
constraints which include (Plummer, 2002: 73)
- Overly bureaucratic procedures, inappropriate to partnerships;
- Inadequate skills and managerial capacity;
- Inappropriate political interference;
- Resistance to change;
- Inter-departmental competition;
- Inappropriate incentive structures; and
- Mistrust and skepticism over private sector incentives and NGO approaches.
The challenges eminent in the PPP procurement are common challenges facing many PPP
projects in a developing country. Given the relatively young PPP sector of South Africa, there
have been few project closures and this unfortunately has not created an enabling environment
for the drafting of more standardized PPP projects (Malao, 2011:.27).
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SUCCESS FACTORS WITHIN IMPLEMENTING PPP’S TOWARDS
INFRASTRUCTURE DEVELOPMENT.
This dissertation is intended on assessing the public-private partnerships towards infrastructure
development and providing supportive information for public policy-makers and managers on
when to consider using partnerships as delivery mechanisms and how to best ensure the success
of such partnerships. The most important factor in ensuring the success of a PPP, or an
advantageous PPP environment is that the government and the private sector share a strategic
long-term vision that sees PPPs as valuable contributors to economic growth, employment and
nation-building (PPP Unit). Now that a good initial understanding of partnerships has been
developed and we know that generally, it is becoming more and more accepted that the PPP
procurement method has definite benefits to both the public and private sector. It is possible in
this section to consult literature to locate any critical success factors that are mentioned or
implied by various authors and researchers regarding partnerships.
2.18 OVERVIEW OF PRINCIPLES FOR PPP SUCCESS
A decidedly recipe for success comes from the NCPPP (National Council for Public-Private
Partnerships, United States), who states that there are six critical components of any successful
PPP. The NCPPP notes that, while there is not a set formula or an absolute fool proof technique
in crafting a successful PPP, each of their identified keys is involved in varying degrees. Yet
another checklist or recommendations come from Nelson and Zadek who set out 10 key
pathways for successful partnerships, broken down into issues of context, purpose, participants,
organization and outcomes.
According to McQuaid, the factors he believes success will depend upon include leadership,
legitimacy, resources, governance and evaluation (McQuaid, 2000:30). The key principles of
partnership suggested by Plummer also inform the formation of a set recommendation to
promote partnership success. These suggested principles include: transparency and
accountability; competition and contestability; legitimacy and legality; specificity; stakeholder
participation; equity; clarity and predictability; risk management; and economic, financial and
environmental sustainability.
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2.19 CAREFUL SELECTION OF PARTNER
The selection of a partner is certainly one of the most important steps in creating a PPP. Some
commentators believe that the process of selecting a private sector partner is best handled by a
special body such as a Source Selection Board, made up of senior administration people and
independent third party advisors. The decision process should be open and transparent, aiding in
building the credibility of the project and of the partners with the full range of stakeholders
(Frisch, 2002: 22; UNDP, Stellenbosch 2008).
2.20 FOCUSED PURPOSE
Achieving a focused purpose will entail clarity and openness about individual expectations and
agendas, with mutual agreement on a common purpose and agenda for the partnership – i.e.
synergy between desired benefits to participants and benefits to society. It is necessary to keep a
partnership focused on outcome instead of inputs. There should be mutual agreement on the
scope and complexity of the partnership’s intended locations and levels of action, variety of
functions, range of desired outcomes and time-scales (Plummer, 2002:309–313).
Part of having a focused purpose would be to ensure the identifying and meeting of objectives
with due regard for the organizational and governance objectives, functions and obligations
inside which the partnership operates. A focused purpose not only entails knowing the purpose
of the partnership, but also the target audience, beneficiaries or clients of the partnership – the
public to whom the public service will be delivered. Plummer (2002:309–313) focuses
specifically on additional poverty reduction–specific activities, but such a focus can be translated
into focusing on the intended beneficiaries of the partnership and investing extra effort in
identifying their needs and objectives, incorporating previous knowledge of interaction with the
problem at hand and the target audience, identifying and responding to the key concerns of the
target audience and identifying existing actors, assets and mechanisms involved in service
delivery to the target audience.
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2.21 COMMITMENT, SUPPORT AND INVOLVEMENT BY ALL PARTIES
INVOLVED
What is clear and straightforward, according to ( Plummer 2002:309), is the need for greater
support and commitment in the implementation of partnerships, at least at the municipal level, to
focus PPPs and to integrate them into urban governance strategies as you pay attention to
governance issues in partnerships.
It has been indicated that any partnership initiative will flounder if stakeholder involvement is
hastily consultative, with the stakeholders feeling that they have no real impact on outcomes. All
stakeholders should be consulted with due sensitivity to their particular interests (Plummer,
2002:223). More people will be affected by a partnership than just the public officials and the
private-sector partner. Affected employees, the portions of the public receiving the service, the
press, appropriate labour unions and relevant interest groups will all have opinions and,
frequently significant misconceptions about a partnership and its value to the public. It would be
in the interest of the prospective partnership to communicate openly and candidly with these
stakeholders to minimize potential resistance to establishing a partnership (NCPPP, 2006).
Most importantly once a partnership has been established, the public-sector must remain actively
involved in the project or programme. On-going monitoring of the performance of the
partnership is important in assuring its success.
2.22 CREATING SKILLS In handing over certain responsibilities for a project, the public sector uses a range of skills
offered by the private party. These include all the skills required in the development or upgrading
of infrastructure, project management skills, contract management skills, and, if a service is
being procured, particular service skills. Because of the acute skills shortage in South Africa, this
is a particularly important criterion for choosing a PPP. Where the institution does not yet have
the skills, the PPP can contribute to skills transfer and capacity building. Part of the PPP contract
should also involve the private party transferring appropriate skills to the procuring institution.
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2.23 TRANSPARENT PROCUREMENT PROCESSES
It is argued that partnership success will depend upon building legitimacy, accountability and
public confidence through transparency in procurement processes (McQuaid, 2000:30; Plummer,
2002:220). To improve accountability, cost reporting must be made transparent. One concern
regarding process transparency is that a transaction which seems transparent and fair to a highly
trained chartered accountant might not be seen in the same light by a member of the community
with little or no financial training. The lesson is that stakeholders should be empowered to
understand that which is supposed to be transparent. A fully transparent procurement system
must allow for open competition in the selection of the partners for each project (UNDP, 2008).
2.24 ENABLING POLITICAL AND STATUTORY ENVIRONMENT
Before the first step is taken to form a PPP, the political and statutory environment must be in
place. Critical parts of this include visible leadership and a fully transparent procurement system
that allows for open competition in the selection of the partners for each project. There must be
statutory and regulatory authorization for the specific use of PPPs (NCPPP, 2006; UNDP, 2008).
Provisions in a contract must be adhered to by all parties, unless it is mutually agreed that a
revision is appropriate and needed. Failure to comply with the terms of a contract must also
invoke clearly prescribed penalties for both the public and the private sector partners.
2.25 PPP LEADERSHIP
According to the NCPPP (2006), a successful partnership can result only if there is commitment
from "the top". The most senior public officials must be willing to be actively involved in
supporting the concept of PPPs and taking a leadership role in the development of each given
partnership. A well-informed political leader can play a critical role in diminishing
misperceptions about the value to the public of an effectively developed partnership (NCPPP,
2006). Visible and effective political leadership is required in support of the PPP. Senior
officials, both elected and administrative, must take a public posture in support of the partnership
approach, through a strong policy statement to all stakeholders and a clear will to ensure that the
necessary parts of their procurement system can support a PPP (Frisch, 2002; UNDP, 2008).
Equally important, public officials must take the leadership role in removing any impediments,
legislative, regulatory or administrative, to the implementation of PPPs.
32
2.26 THE CONTRACT: THOUGHT OUT PLAN
The prospective partners must know what to expect from the partnership ahead of time. A
carefully developed plan (which could be compiled with the assistance of an outside expert in
this field) will substantially increase the probability of success of the partnership. This plan most
often will take the form of an extensive, detailed contract, clearly describing the responsibilities
of both the public and private partners. In addition to attempting to foresee areas of respective
responsibilities, a good plan or contract will include a clearly defined method of dispute
resolution because not all contingencies can be foreseen (McQuaid, 2000:30).
2.27 CAPACITY
Capacity is perhaps the single most important element contributing to partnership success.
Success will depend upon leadership capacity, resource capacity, governance capacity and
evaluation capacity (McQuaid, 2000:30). The term partnership has become overused, misused
and abused. Too often, analysis is concerned with the financial and technical contributions and
very little is said about the capacity needed to achieve partnerships.
Enhancing capacity to implement partnerships, according to Plummer‘s analysis, consists of
understanding the operating context and supporting organizational development. An
understanding of the context can be gained by investigating the operating environment of the
applicable agency and the impact of this environment on PPPs and on the regulatory
environment for PPPs (Plummer, 2011:20).
2.28 RISK TRANSFER
The SA Treasury dictates that all risk management in a partnership should be performed by the
private partner. It is however argued that the public sector may be better equipped to manage
certain specific types of risk than the private sector is (UNDP, 2008:23). It therefore seems that
the success of a partnership can be enhanced by ensuring that the different types of risk to which
the partnership is exposed are assigned to the partner most able to manage it.
33
2.29 MARKETING OF PPP’s
The general marketing of PPPs has not been aggressively done within the infrastructure circles in
South Africa, which partially explains some of the slow progression of public sector delivery.
Marketing key aspects of PPPs is critical in gaining success. South Africa still has long way to
go in so far as the adoption and use of PPPs is concerned. This, however, is a joint effort between
all stakeholders within the public and private sector. The Gautrain project is certainly a
champion project that integrated marketing, good public relations and co-operation amongst
political power and business, where many lessons can be learned (Ngamlana, 2009:45).
2.30 CASE STUDY ANALYSIS: LESSONS LEARNED FROM THE GAUTRAIN
2.30.1 INTRODUCTION
The objective behind reviewing case studies is to establish the key lessons learned from the
implementation of the Gautrain; in order to find ways and solutions by which PPP policy makers,
relevant agencies and government institutions can improve on implementing and facilitating the
PPP procurement better in South Africa in order to fast-track the delivery of key infrastructure.
The following section evaluates the Gautrain project as a case study analysis.
2.30.2 GAUTRAIN: OVERVIEW
The Gautrain Railway Link is a PPP initiative pioneered by the Gauteng Provincial Government
and managed as part of the Gauteng Department of Finance and Economic Affairs Public Private
Partnership Unit. This project which is estimated to have cost R26 billion is a joint venture
between the state and the Bombela Concessionaire, a consortium consisting of the following
members: Bombardier; French civil contractor Bouygues Travaux Publics; RATP Development,
a major French rail and bus operating company; South African civil contractor Murray &
Roberts; and Loliwe Rail Contractors and Loliwe Rail Express, the consortium's black economic
empowerment component (Johannesburg News Agency, 2008).
The organogram structure for the consortium is summarized in Figure 2.3 below (Van der
Merwe, 2010).
34
Figure 2.3
In terms of the agreement, the Bombela Concessionaire took all the concession risks and was
involved in all the operational and maintenance of the train throughout the concession period. At
the end of the concession period Bombela obliged to hand over the infrastructure to the Gauteng
Government in accordance with the conditions specified in the agreement. These conditions
include and relate to the refurbishment or replacement of equipment or machinery of the train
and the manner in which these would need to be rehabilitated or transferred back to the
Government (Malao, 2011:51).
The development of this project was concomitantly conceived as a result of the traffic
congestions experienced by road users who commute between Gauteng’s major routes and also
to create more economic development in and around Gauteng. Alternative transportation
therefore had to be created to help ease the traffic congestions and to market the concept of using
the train to car users. The inception of this project was also primarily driven by the urgent need
to upgrade Gauteng’s roads in time for the 2010 FIFA World Cup (Railwaytechnology.com,
2011). The Gautrain has been exhibited on some of the best international practices applied in
developed countries like Europe and is certainly one of its kind in Africa.
35
2.30.3 CHALLENGES EXPERIENCED
This was one of the largest and complex projects to be launched in South Africa, thus expertise
had to be sourced abroad. Environmental issues were initially encountered. There were dolomitic
conditions that required stabilizing techniques that had never been used in South Africa. This,
however, required a thorough understanding of the properties of the soils and rock. There were
several cost increases that occurred and these had not been well communicated. These cost
increases occurred as a result of the route alignment that needed to be done additional tunnel
lining, increases in land costs and the shifting of the completion date (Malao, 2011:53).
2.29.4 KEY SUCCESS FACTORS
As the Gautrain is one of the flagship projects to emanate from the Gauteng Provincial
Government, in ensuring greater efficiency and delivery in the project, a few success factors
were identified as having contributed to the overall success of this project and these have been
highlighted below:
There was greater collaboration between various stakeholders in the project, including the
National Department of Transport, the PPP Unit, various municipalities within Gauteng and
other relevant stakeholders.
- There was immense political support and will from government provided to the project
team.
- The presence of an experienced project officer who was able to drive and take control of
the project and meet deadlines according to the approved schedule. The quality control
aspects of the project were well managed.
2.24 CONCLUSION ON CASE STUDY REPORT
The Gautrain will certainly improve the standard of transport in South Africa. This project has
transformed the manner in which public transport is perceived in this country: it is about
providing citizens of South Africa with alternatives that are efficient and promoting an
environmentally friendly South Africa. Many lessons can be drawn from the Gautrain and these
can be applied in other projects. It is, however, the responsibility of stakeholders to take into
consideration the elements that have led to the successful implementation of such a project and
to apply them going forward (Van der Merwe 2010:24).
36
2.31 CONCLUSION In this chapter, different views on the relevance of PPP’s by different authors were discussed,
challenges facing the PPP fraternity in South Africa was also discussed and success factors were
elaborated and points regarding fast tracking infrastructure through PPP was reviewed.
In the next chapter the research methodology will be discussed in detail.
37
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Introduction
This chapter explains the research methodology used in carrying out this study. The geographical
area where the study was conducted, the study design and population sample are described.
Furthermore, the instrument used in collecting the data, including methods implemented to
exploration of PPP towards infrastructure development.
3.2 Research design
3.2.1 Types of research methods
The quantitative approach was adopted in the study. Quantitative research is defined as a formal,
objective, systematic process to describe and test relationships and examine causes and effects
interactions among variables (Burns and Grove 1993:777).However, (Mouton 2001;22)
advocated that surveys may be used for descriptive, explanatory and exploratory research. In this
case a descriptive survey design was used. A survey obtains information from a sample of people
by means of self-report, that is, the people respond to a sequence of questions posed to them by
the researcher (Polit and Hungler 1993:148). Therefore, in this study the information was
collected through a well-structured questionnaires distributed to the respondents by the
researcher. A descriptive survey was selected because it gives an accurate account of the
characteristics, for example behaviour, opinions, abilities, beliefs and knowledge of a particular
individual, situation or group.
3.2.2 Target population
A research population is generally a large collection of individuals which is the focus of the
study. Castillo (2009) defines target population as it referring to the entire group of individuals or
objects to which researchers are interested in generalizing the conclusions. The target population
usually has varying characteristics and it is also known as the theoretical population. For this
research, the target population is the construction professionals (Private/Public) who are
currently working or have worked on completed or on-going construction projects in Gauteng
38
South Africa, who have an experience on PPP’s. This will also include government and private
officials who are involved with PPP projects procurement.
3.2.3 Sampling
They are two major groups of sampling strategy in the social science: probability sampling and
Purposive sampling. Probability sampling techniques are generally used in quantitative research
(Teddlie and Yu ,2007:77) and according to Tashakkori and Teddlie (2003: 713) cited in
Teddlie and Yu (2007) this include “selecting a relatively large number of units from a
population, or from specific subgroups (strata) of a population, in a random manner where the
probability of inclusion of every member of the population is determinable’’ Probability samples
aim to achieve representativeness, which is the degree to which the sample accurately represents
the entire population.
The random sampling was preferred in this study than the stratified sampling, cluster sampling
and Sampling using multiple probability techniques. Random sampling was used because all the
participants had the same chance to be selected. This method is made use of when the members
of the entire population present same performance, or the sampling size is very large to represent
the entire population efficiently and each member of the entire population have the same chance
to be selected as a sampling member .
39
3.2.4 Sample size
According to Mouton (2001) a questionnaire return rate of 50% is adequate for data analysis and
reporting. A return rate of 60% is good and 70% is regarded as very good. Babbie and Mouton
(2001) further explain that the overall response rate is a guide to the representativeness of the
sample respondents. Of the 50 questionnaires distributed, a total of 34 (68%) was returned. This
was a fair response rate and more than sufficient for data analysis and reporting.
3.2.5 Research instrument
A research instrument is what one uses to collect the information. It helps one keep track of what
can be observed and how it can be reported. It must be both valid and precise. The types of
instruments that are available for researchers to use are: Study available information,
observation, interviews (structured, semi-structured, unstructured – closed and open-ended),
surveys and questionnaires, focus group discussions, diary methods, psychometrics (self-report
questionnaires, tests).
Although semi-structured interviews offer versatile way of collecting data, the main instrument
used in this research for collecting data was questionnaires. Because they ensure a high response
rate as questionnaires were distributed to the respondent to complete and were collected
personally by the researcher
3.2.5.1 Questionnaire design
A questionnaire was chosen as a means of the data collection instrument. A questionnaire is a
printed self- report form designed to elicit information’s that can be obtained through the written
responses of the subject. The information obtained through a questionnaire is similar to that
obtained by an interview, but the questions tend to have less depth (Burns and Grove 1993:368).
Data was collected with the aid of a questionnaire to explore Public Private Partnership towards
Infrastructure Development. Questionnaires were decided upon for this study for the following
reasons:
- They require less time and energy to administer.
40
- They offered the possibility of anonymity because the respondent’s names were not
required on the completed questionnaires.
- There was less opportunity for bias as they were presented in a consistent manner.
- Most of the items in the questionnaires were closed, which made it easier to compare the
responses to each item.
Although the above is the advantages of a questionnaire, it also has its
disadvantage’s/weaknesses; for example, there is the question of validity and accuracy (Burns
and Grove 1993:368). The respondents might not reflect their true opinion but might answer
what will please the researcher, and valuable information’s may be lost as answers are usually
brief.
The questionnaires were designed in English language as all the respondents are educated and
could read and answer the questions. They were given assurance that the answers would not be
able to link their responses to them at the stage of data analysis, therefore ensuring anonymity.
The questionnaire of this study consist of four sections A, B,C and D. Section A aimed at gaining
demographic data such as sex, age, level of education etc. these information’s would assist the
researcher when interpreting the results; Section B seeks to evaluate the relevance and
importance of PPP towards infrastructure development; Section C aim to assess the challenges
facing the PPP fraternity in South Africa; while Section D of the questionnaire explores success
factors in implementing PPP’s. Instructions and guidelines were attached to the questionnaires to
guide the respondents as to whether to circle or tick the chosen response.
3.3 THE RESEARCH PROCESS
3.3.1 The Administration of questionnaires
For the purpose of this study, the researcher chooses to use personal hand delivery to ensure that
the target sample definitely received and returned the questionnaire. The questionnaires were
distributed Gauteng to professionals and some people where emailed. The questionnaires and
covering letters were photocopied and stapled. The author personally distributed some of the
questionnaires to the professionals.
41
3.3.2 Collection of questionnaires
Data was collected from different professionals manually and electronically. Some Respondents
completed questionnaires upon my delivery, some emailed back the completed questionnaire and
some didn’t respond at all due to the workload they had. Many indicated that they will email it
back but only a low number did keep their word.
3.3.3 Data analysis
The data collected from the questionnaires was analyzed using MS excel. This data was
interpreted in form of tables and graphs.
3.3.4 Reliability and validity
According to Miller (2011), reliability is the extent to which a questionnaire, test, observation or
any measurement procedure produces the same results on repeated trials. He further elaborates as
it being the stability or consistency of scores over time. An important point to understand is that
a measure can be perfectly reliable and yet not be valid.
Another explanation of reliability is that it refers to the extent to which the scores obtained may
be generalized to different occasions of measurement
Reliability according to Collins and Hussey (2003) cited in Mabaso (2008), is concerned with the
findings of the research and if the research can be can be replicated then it is reliable.
Validity is the extent to which research findings accurately represent what is really happening in
the situation (Collins and Hussey, 2003 cited in Mboyane, 2006).
Validity is also defined as the extent to which the instrument measures what it purports to
measure.
For the purpose of the reliability and validity of the data, the following measures were taken:
Cover letter was given to the respondents explaining the nature of the study.
Purposive sampling was used. According to the SAGE dictionary of Social Research Methods,
purposive sampling is a form of non-probability sampling in which decisions concerning the
individuals to be included in the sample are taken by the researcher, based upon a variety of
criteria which may include specialist knowledge of the research issue, or capacity and
willingness to participate in the research.
42
3.4 ConclusionIn this chapter the methodology and design used in this study was discussed. The reason for
choosing these were given and importance of exploration was outlined. The means and method
of data collection were discussed thoroughly.
The problems encountered in gathering data included the limitations like time constraint and
resistive behaviour of different respondents, which lead to the study to be done on a small scale.
In the next chapter the data analysis and presentation of findings will be discussed in detail.
43
CHAPTER FOUR
DATA ANALYSIS AND DISCUSSIONS OF THE DATA
4.1 IntroductionThe aim of this study is to find the importance and relevance of Public Private Partnerships in
building infrastructure in South Africa and success conditions relevant towards infrastructure
development. This chapter reveals the results of data obtained from the well-structured
questionnaires, which were circulated amongst the government officials, financials officials, and
quantity surveyors, project managers and other professionals that have knowledge about the PPP
or have been involved in a PPP project. The analysis of the data and interpretation of the results
are as obtained from the questionnaires study and it served as the basis of this quantitative data
collection. The questionnaire comprised of 19 questions. The analysis is based on 34 well
completed questionnaires out of 50 that were sent out, which reflects 68% response rate. The
first section of the questionnaire explores the background information of the respondents. The
second section looks at the relevance of PPP towards infrastructure development. The third
section explores the challenges faced by PPP in South Africa, Gauteng, while the last section
explores conditions that can be used to fast-track infrastructure in the country.
4.2 Data AnalysisTo assess the level of relevance and challenges within Public Private Partnerships, a 5-point
Likert scale was employed. The respondents were asked to rate their level of agreement about the
stated statements on a scale from 1 – 5 (strongly disagree, disagree, neutral, agree and strongly
agree). The five-point scale was transformed to a Mean Item Score (MIS) for each of statements.
A weight was assigned to each response. The indices were then used to determine the rank of
each item. These rankings made it possible to cross compare the relative importance of the
statements as perceived by the respondents. The Mean Item Score (MIS) is ranked in descending
order (from the highest to the lowest).The Mean Item Score (MIS) was derived from the
following formula (Lim and Alum, 1995).
MIS = 1n1 + 2n2 +3n3+ 4n4+ 5n5 …………………………………..Equation1.0
∑N
44
Where;
n1 = number of respondents for strongly disagree
n2 = number of respondents for disagree
n3 = number of respondents for neutral
n4 = number of respondents for agree
n5 = number of respondents for strongly agree
N = Total number of respondents
4.2.1 Section A: Background Information Of Respondents.This section discusses the results of the background information relating to the respondents. The demographic information was essential for correlation of the response sets between the different categories.
Figure 4.1below reflects that out of the 34 respondents 65% were male, while 35% were female.
65%
35%
Figure 4.1 Respondents on Gender.
45
The respondents’ ethnicity showed that 74% of the respondents were Africans, 15% were White,
9% were Coloured and 3% were Indian as shown in Figure 4.2
African
White
Coloured
Indian
Asian
0% 10% 20% 30% 40% 50% 60% 70% 80%
74%
15%
9%
3%
0%
Figure 4.2 Respondents ethnicity.
Figure 4.3 below represents the professional qualification of the sampled respondents and it
reveals that 35% were Post graduate degree, 32 % were Bachelor’s degree and Post matric
degree.
Grade 11 or Lower
Grade 12 (Matric)
Post Matric Diploma
Baccalaureate degree
Post Graduate degree (s)
0% 5% 10% 15% 20% 25% 30% 35% 40%
0%
0%
32%
32%
35%
Figure 4.3 Respondents Highest qualifications.
46
The figure below shows the sectors the respondents are working in, it revealed that 44% work in
the private sector, 35% work in the government, and 21% have self-owned companies
35%
44%
21%
Public ( Government)Private Self Owned Company
Figure 4.4 Respondents sectors of working
Also, Figure 4.5 below which represents the divisions in which the respondents are working;
revealed that 24% of the respondents are working in road and transport, finance and procurement
and Property Development, while 18% are working in Housing divisions amongst others.
Road and Transport
Housing
Property Development
Water
Health
Finance and Procument
Others
0% 5% 10% 15% 20% 25%
24%
18%
24%
0%
6%
24%
6%
Figure 4.5 Divisions deployed in
47
The figure 4.6 below shows respondents current positions, were quantity surveyors are 29%,
finance officials is 24% project managers and government officials is 21%, construction manager
is 3% and others 3%
Finacial officialQuantity- SurveyorGovernment offical
Project ManagerConstruction Manager
Other
0% 5% 10% 15% 20% 25% 30%
24%29%
21%21%
3%3%
Figure 4.6 Respondents current position in the selected sector and division
Figure 4.7 below shows that of all the respondents 76% have worked in the construction industry
and 24% have not worked
76%
24%
Figure 4.7 Respondents who worked in the construction industry
.
Figure 4.8 below shows the number of respondents who have construction related degree, were
yes is 68% and No is 32%.
Yes 68%
No32%
Figure 4.8 Construction related degree
48
The figure 4.9 below shows the number of year experience the respondents have in the industry
were 38% is 5 years and above, 18% is 4 years, 15% is 3 years, 9% is 2 years and 20% for those
with no experience or a year of experience.
38%
9%15%
18%
21%
0 - 1 Year 2 years 3 years 4 years 5 years and above
Figure 4.9 Industry Experience by Respondents
Figure 4.10 below shows that 68% of the respondents have had experience in a PPP project, 29%
haven’t been involved but they have an understanding and 3% were unsure.
68%
29%
3%Yes No Unsure
Figure 4.10 PPP experience
Figure 4.11 represents the PPP sphere’s which the respondents were part of, 22 % were part of
the national government, 39% for Local Government and 39% in the municipal government.
22%
39%
39%
Figure 4.11 PPP sphere
49
The figure 4.12 below shows the PPP role or positions which the respondents were carrying
during their PPP experience, were 35% is the financial official, 17% quantity surveyor and the
government official are 17%, 13% project manager and others (architects and a systems
engineer) and 4% was the construction managers
Finaci
al officia
l
Quantity-
Surve
yor
Governmen
t offical
Projec
t Man
ager
Constructi
on Man
ager
Other 0%
20%
40%35%
17% 17% 13%4%
13%
Figure 4.12 your role in the selected PPP sector.
.
50
4.2.2 Section B: Relevance of PPP towards Infrastructure Development.This section explores the relevance of PPP towards infrastructure development in Gauteng
Province. It consisted of 16 statements regarding the relevance, furthermore the respondents were
asked to rate the essential PPP test. The respondents rated the statements on a scale (1 = strongly
disagree; 2 = disagree; 3 =; Neutral 4 = agree and 5 = strongly agree) by indicating the number
that best described the importance of such relevant statement.
Table 4.1 Relevance of PPP towards infrastructure development.
51
RELEVANCE OF PPP TOWARDS INFRASTRUCTRE DEVELOPMENT MIS RANK
PPP is important in accelerating and enhancing infrastructure Development. 4.62 1
PPP are more advantageous than traditional procurement methods 4.44 2
PPP delivers better value for money than traditional procurement. 4.38 3
PPP’s creates Jobs 4.35 4
PPP Improves the quality of services 4.26 5
PPP can be good for project management development planning 4.24 6
PPPs encourage the injection of private sector capital 4.24 6
PPP Advances expertise and experience 4.18 7
Both parties play a key role at each stage of the of the PPP project. 4.15 8
PPP’s provide better chances of completion on time and within the budget 4.15 8
PPP’s allows the spreading of funds in a long term period 4.12 9
PPP agreements should comply with the legal requirements of affordability 4.06 10
PPPs force the public sector to focus on outputs and benefits from the start 4.03 11
PPP free up public funds for immediate use 4.00 12
PPP help capacitate employees 3.91 13
Adequate Risk allocation within the PPP 3.88 14
PPP is structured to advance BEE options in South Africa 3.79 15
PPP is not a solution option to an infrastructure service problem but it is a viable
project implementation mechanism for a preferred solution option
3.65 16
Table 4.1 above represents the survey results obtained on the relevance of PPP’s towards
improving infrastructure in Gauteng and South Africa. The table reveals through the Mean Item
Score (MIS) ranking, that PPP is important in accelerating and enhancing infrastructure
Development (MIS=4.63; R =1), PPP are more advantageous than traditional procurement
methods was ranked second with a score of 4.44.
The study further shows that more respondents see the relevance of PPP towards delivering
better value for money than traditional procurement and that it creates Jobs, which were ranked
third and fourth with score of 4.38 and 4.35 respectively. PPP helps capacitate employees was
ranked fourteenth with the score of 3.88 and PPP being structured to advance BEE was ranked
fifteenth with the score of 3.79.
Table 4.2: PPP tests
Table 4.2 shows how the respondents responded with regard to the PPP test’s and its importance,
were avenue for job creation was the first ranked with a score of 4.59, skills transfer (R =2; MIS
4.41), affordability and value for money(R=3; MIS4.38) and (R=4;4.29) respectively. The least
ranked test was community development with a score of 4.00.
15 of the respondents said that it’s of high priority and 11 respondents said that it’s of medium
priority for PPP partners to Share responsibilities related to implementation and management of
an infrastructure in a PPP projects.
52
IMPORTANT TESTS WITHIN IMPLEMENTING PPP MIS RANK
Avenue for job creation 4.59 1
Assists in skills transfer 4.41 2
Affordability 4.38 3
Value for money 4.29 4
Appropriate risks transfer 4.18 5
SME development 4.09 6
Community development 4.00 7
4.2.3 Section C: Challenges facing PPP towards Infrastructure Development in South Africa (Gauteng).This section explored the challenges facing PPPs towards infrastructure development in Gauteng Province
Table 4.3 below shows the results for challenges facing PPP in infrastructure development. The
table reveals through the Mean Item Score (MIS) ranking that there is sufficient capital to deploy
a PPP model in infrastructure (R=1; MIS=4.07), suspicion of the private sector involvement in
implementing PPP in infrastructure (R=2; MIS=3.97), Government policies being bias towards
traditional procurement and the lack of PPP awareness were both ranked third with a score of
3.85, Followed by other challenges as shown in the table according to the MIS ranking. PPP
being costly to government was the least challenge selected by the respondents towards
implementing PPP in South Africa (R=10; MIS=3.15).
Table 4.3 Challenges facing Public Private Partnerships
CHALLENGES IN THE ADOPTION OF PUBLIC PRIVATE PARTNERSHIP IN SOUTH AFRICA MIS RA
NKThere is sufficient capital to deploy PPP model in South Africa. 4.07 1Suspicion or mistrust of private sector involvement in infrastructure. 3.97 2Policy Bias toward Traditional Public Procurement 3.85 3PPP awareness 3.85 3The operational definition of PPPs remains unclear. 3.74 4Insufficient research in PPP 3.74 4Public sector lacks understanding of PPP’s 3.65 5Skills shortages affects the implementation of PPP models 3.47 6The Government has an ability to deal with external risks associated with PPPs 3.47 6Reshuffling result in changes in departmental priorities and commitment 3.47 6Government structures are a problem in implementing PPP Models. 3.44 7Capacity constraints in both the public and private sectors in the delivery of PPPs in South Africa 3.44 7The South African regulatory environment provides a conducive environment for PPP transactions 3.41 8Lack of Resources Dedicated to Fostering Public Private Partnerships Government 3.38 9PPPs are undesirable since they are costly to government 3.15 10
53
4.2.4 Section D: Possible success factors within implementation of PPPs.This sections looks into the successful implementation of PPP’s and solutions relevant.
The figure 4.13 below represents the number of respondents, on how they think PPP can be
successful towards Infrastructure Development were 56% of the respondents think that PPP can
be successful, 21% think it will be somewhat successful and of the respondents 15% are neutral
about the success.
Not Successful
Somewhat Successful
Neutral
Successful
Very Successful
0% 10% 20% 30% 40% 50% 60%
0%
21%
15%
56%
9%
How Successful can PPP be?
Figure 4.13 Success of a PPP
54
Table 4.4 Success conditions of a Public Private Partnership
Table 4.4 above shows the PPP success conditions and the number of respondents who selected
any of the statements, were 22 of the respondents selected transparent procurement process as a
major success factor (R=1), 19 respondents believe that parties having strong management skills
is important in fast-Tracking a PPP project (R=2). Government support and commitment by both
parties playing a critical role in implementing PPP were selected by 18 and 14 of the respondents
respectively (R=3: R=4), Furthermore Clear PPP law and processes was selected by 12
respondents (R=6), 5 of the respondent’s selected paying attention to governance issues as the
least important factor in bringing success in a PPP.
55
PPP SUCCESS CONDITIONS Freq Rank
Transparent PPP procurement processes 22 1Institutions should have a strong management skills 19 2Government support 18 3Commitment to the partnership process by all partners 14 4Clarity and openness about individual and collective agendas and purpose. 13
5
Clear PPP law, process, standard terms 12 6Buy-in from all parts of the organizations is needed, from the leadership to the grassroots. 12
6
Proper training and communication 12 6Good project estimating 12 7The on-going PPP education of all involved is needed 12 7Previous experience of partners in partnerships 10 8Both institutions knowing more about the outcomes of PPPs 8 9On-going performance management 8 9Focus on appropriate product development and service delivery 8 9Strong financial markets, competitive private sector 7 10Establish sound partnership principles. 7 10Open competition in the selection of partners. 6 11Clear description of the responsibilities of each partner. 5 12Continued active involvement of public partner. 5 12Pay attention to governance issues in partnerships. 5 12
4.3 ConclusionIn this chapter the findings from the data collected were shown in terms of charts and tables. It
illustrated how important and relevant PPP is according to the professionals in South Africa
(Gauteng). It further shows the success conditions PPP has in fast-tracking infrastructure
development. In the next chapter it will compromise the discussion to the findings based on the
findings of this study linked to the literature review that has been reviewed in chapter 2.
56
CHAPTER FIVE
DISCUSISION OF FINDINGS
5.1 IntroductionThis chapter discusses the findings of the research questionnaire and will provide answers for the
research questions which are listed in Chapter 1. The findings are linked and compared with the
findings from literature reviewed. The purpose of this study was to explore Public Private
Partnership towards infrastructure development in South Africa Gauteng Province, as we see its
relevance, challenges and possible success conditions in fast- tracking infrastructure in the
country. The objectives of the study were:
To investigate the relevance of PPP to infrastructure development in the Gauteng
Province.
To assess the challenges that Public Private Partnership in infrastructure development are
facing in South Africa.
Possible success factors within implementation of PPP’s, and to suggest solutions for the
challenges faced by South African Public Private Partnership.
As the problem statement brought it to light that as a developing country, infrastructure
development needs special attention from the public and private sectors, the analysis will thus
provide evidence that Public Private Partnership will have a great impact on developing
infrastructure in the country. The delivery of Infrastructure remains paramount in our society and
possible methods of fast racking has to be explored significantly.
The purpose of this chapter is to find out if the research questions have been answered from the
analysis in chapter four.
57
5.2 Background information results of respondentsThis section discusses the profile of the respondents with regard to their demographic attributes,
namely, gender, age, race group, qualification, experience and professional capacity within the
different sectors. Furthermore it discusses the respondent’s attributes with regard to PPPs.
5.2.1 Biographical data results Of the respondents that answered the questionnaire, (35%) were female and (65%) were male.
The race group that comprised the majority of the respondents were Africans (74%). This was
followed by (15%) White, (9%) Coloured and (3%) Indian.
The respondents were asked about their qualifications, were (35%) had a post graduate degree,
(32%) of the respondents had a Baccalaureate degree and a post matric diploma respectively.
The respondents were further asked about the sectors they are currently working in, were (35%)
are in the Public sector, (21%) in the Private and 44% owned the companies. Within these
sectors (24%) of the respondents worked in the finance and procurement division, (24%)
property development and (24%) transport division. 18% are in the housing division. Health
sector had 6% of the respondents. (29%) of the respondents are working as quantity surveyors
within this sectors, financial officials were 24% of the respondents. Project manager and
government officials were 21% each. (3%) of the respondents were the construction Managers
The respondents were also asked if they have worked in the construction industry before, were
(24%) of the respondents haven’t worked and (74%) have worked in the industry. This resulted
in 68% of the respondents having a construction related degree and 32% having not any degree
related to construction. However (38%) of the respondents had construction experience of 4
years, (20%) had above 5 years’ experience, (18%) of the respondents had 0 -1year experience,
(15%) had 3 years’ experience, and (9%) had 2 years’ experience.
Furthermore the respondents were asked if they had any PPP experience were 68% of the
respondents had the experience, 29% had no experience and 3% were unsure. Of the respondents
58
having the PPP experience, (39%) were part of the National government, (39%) were part of the
Local government and (22%) of the respondents were part of the municipal government.
Lastly in this section respondents were asked about the positions the occupied in the PPP sphere
they were involved in, were (35%) were financial officers, both the quantity surveyors and the
government officials were (17%), (13%) were the project managers. Other respondents were
involved in the PPPs, but with different occupations such as (Systems Engineer, Architect and
aviation facilitator) this was (13%) of the respondents.
5.3 RESEARCH QUESTION 1What is the relevance of Public Private Partnership towards infrastructure development in South Africa?
5.3.1 FindingsRespondents were asked to rate their level of agreement based on the relevance and importance
of PPPs. It is quite evident through the median item score (MIS) that majority of the respondents
indicated that PPPs is important and relevant towards enhancing and accelerating infrastructure
development (MIS = 4.62; R=1). Further the table indicates that the respondents feel that PPP are
more advantageous than the traditional public procurement method (MIS = 4.44; R = 2), delivers
better value for money towards a project (MIS=4.38; R=3), create more jobs (MIS=4.35; R=4)
Other factors explored which the level of agreement was low include; PPP free up public funds
immediately (MIS =4; R=12), Adequate risk allocation in PPPs (MIS=3.88; R=14) and
Structured to advance BEE options in South Africa (MIS=3.79; R=15).
Respondents were further asked about their level of agreement with regard to the PPP tests
which include; assisting in skills transfer (MIS =4.41; R=2), affordability (MIS=4.38; R=3). Low
ranked tests were SME development (MIS=4.09; R=6) and Community Development
(MIS=4.00; R=7). Literature reviewed that it is important to involve the private sector in service
delivery in this country because the partnership between the public and the private sector benefits
the public at large
Respondents were further asked about the level of priority for partners to share responsibilities
with regard to implementation and management of an infrastructure project, were 4 said its of
59
medium priority,12 said its of high priority and 18 of the respondents believe that its essential to
share the responsibilities within a project.
Findings from the survey support the work done by (Malao 2011:12) that PPPs are relevant
towards building and accelerating infrastructure. (PPU, 2007:22) outlines the progress done in
implementing PPP and the good progress done shows how vital PPP is towards building South
African infrastructure. Findings relating to PPP being more advantageous over the traditional
method is in agreement with work by (Regan, 2009; 29), were it is found that PPP increases the
scope for innovation and creativity. Literature reviewed shows us the PPP tests and how
important they are in building a PPP project, the importance was in agreement with the findings,
were respondents agreed with PPP creating value for money, creating jobs and assisting in skills
transfer. However, the findings don’t support work done by (Malao, 2011; 11) were it was
discovered that PPPs don’t transfer risk adequately.
5.4 RESEARCH QUESTION 2What are the challenges faced by Public Private Partnership in the development of South
African infrastructure?
5.4.1 FindingsProfessionals were asked about their level of agreement with the challenges facing PPPs in South
Africa. The findings (see table 4.12) indicate that there is enough funds within the country to
implement PPP’s (MIS = 4.07; R= 1), this finding discards the notion that SA has no funds to
implement PPP. Furthermore the challenges identified include; Suspicion or mistrust of the
private sector towards being involved in the partnership (MIS=3.97; R=2), Lack of PPP
awareness (MIS=3.85; R=3), operational definitions of PPPs remains unclear (MIS=3.74; R=4)
and insufficient PPP research is one of the main challenging factors towards institutions
implementing PPP for infrastructure (MIS =3.74; R=5) and Government constant reshuffling
resulting in changes of PPP plans and priorities (MIS=3.47; R=6).
Further challenges that had a low level of agreement include; the South African regulatory system
supports the PPP systems (MIS=3.41; R= 8) and lack of resources to foster PPPs (MIS=3.38;
60
R=9).This is in agreement with the literature that the PPP framework within the treasury is
properly done to support the PPP projects and transactions (Malao 2011:71).
Findings from the survey support the work done by (Hurst and Reeves 2004; 23), that many
challenges remain in enhancing the use of PPP’s as a means of delivering infrastructure and that a
number of these challenges are not so much in the set-up of the process but in the support and
articulation of approach that is applied, government departments lack the skills required to drive
PPP’s with the private sector. One is persuaded to say that the capacity and the lack of skills is the
influencing challenge towards the lack of implementing PPP’s. In the absence of such capability,
certain inherent inefficiencies associated with the public sector act as an inhibitor the PPP
process.
5.5 RESEARCH QUESTION 3Which conditions are necessary for the successful implementation of Public Private Partnership
and to what extent can this implementation fast track the delivery?
5.5.1 Findings Figure 4.13 in chapter 4 indicates the percentage of the respondents on how they feel the PPP can
be successful, were 56% of the responses indicated that implementing PPP in South Africa can
be successful in fast – tracking infrastructure in South Africa. 15% of the responses indicated
that it would be somewhat successful.
Table 4.4 indicates the conditions relevant in fast-tracking infrastructure through PPP. Findings
revealed success factors that include; transparency in all processes (ranked at 1st), strong
management skills (ranked at 2nd). Government support and commitment by both parties ranked
at 3rd and 4th respectively. Other findings revealed that buy in by all parties involved is of
paramount importance and adequate PPP training and communication (both ranked at 6th).
The findings further revealed factors which are of low importance in bringing success within a
PPP project. These factors were strong financial markets and establishing sound principles (both
and ranked 10th). Findings are in agreement with work by (Minnie, 2011:497), were it is evident
that transparency and accountability is essential for partnerships, and especially partnerships
involving public funds. Findings are further in correlation with research done by (UNDP 2008)
61
and (McQuaid, 2000; 30) that government support and strong leadership backing is vital in
bringing success in a PPP project. McQuaid further sets out principles as discussed in the
literature which are important in developing PPPs, his principles are in agreement with all the
findings. There are many additional success factors which can further define success and degrees
of success, all of which are descriptions of desired conditions. A large collection of such success
factors was developed in this study and this collection forms a reference point for the
construction of a new hypothesis which can serve as the basis for future research.
5.6 Conclusion This chapter analysed and discussed the findings of the questionnaire. The respondents’
demographic information, PPP relevance in infrastructure, and Challenges facing PPPs were
discussed. The chapter also discussed the success factors in implementing PPPs .The findings
were linked and compared to the literature reviewed relating to the same study.
In the next chapter the conclusion and recommendation for this study will be discussed.
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CHAPTER SIX
CONCLUSION AND RECOMMENDATIONS
6.1 IntroductionThe previous chapter reported on and discussed the results of the study. The main objective of
the study is to explore PPPs in South Africa and how they can help in building infrastructure.
The intention of this chapter is to summarise and draw conclusions regarding the main findings
of the study. Recommendations of future studies are also highlighted in this chapter.
6.2 RESEARCH OBJECTIVE 1 The first research objective was to investigate the relevance of PPP to infrastructure development
in the Gauteng Province.
6.2.1 ConclusionAs indicated in chapter 5 there are so many important reasons why one would select a PPP as a
method toward implementing infrastructure. Different authors concluded on different points but
are seen to be similar in some degree. Therefore, according to literature reviewed and the
findings, the importance of a PPP is to;
1. Accelerate and enhance infrastructure
2. Avenue for creating more jobs and value for money
3. Improve the quality of a service and skills within an entity.
4. Create adequate risk transfers within a project
The analysis of the PPP concept in this dissertation has shown that PPPs exist and are successful
in a wide variety of settings and sectors. It seems as if a PPP could potentially be used in almost
any circumstance. However, based on the success factors identified in this dissertation, it seems
that a PPP is most useful where the public sector is failing to provide a public need for which a
market exists. There are more externalities to consider, such as whether a supportive
environment exists, and whether appropriate private sector partners are available and would be
interested in the project.
63
6.3 RESEARCH OBJECTIVE 2To assess challenges that Public Private Partnership in infrastructure development are facing in
South Africa
6.3.1 Conclusion
The findings revealed there was no lack of funds within the South African government to
implement PPPs. There was also lack of trust from the private sector towards the government.
Findings also revealed that the lack of PPP awareness and insufficient research as a challenge
affecting the PPP growth, skills shortage and capacity constraints within the partners.
The intended creation of provincial PPP units might alleviate some of these challenges.
Unfortunately, the ability of provincial governments to operate provincial PPP units might be
constrained even more than the ability of national government by the shortage of skills and
capacity. This means that government will need to pay special attention to the creation of skills
within government to deal with PPPs, not only within PPP units, but also within government
departments.
6.4 RESEARCH OBJECTIVE 3Possible success factors within implementation of PPP’s, to suggest solutions for the challenges
faced by South African Public Private Partnership.
64
6.4.1 ConclusionPPPs should be seen as a catalyst for providing basic services to households with the intention of
improving the quality of lives for ordinary citizens. This, however, has not been well marketed in
political circles. Based on the literature and findings the conditions relevant towards
implementing PPP in South Africa include:
1. Transparent PPP procurement Processes
2. Government support and commitment by all parties
3. Strong management skills
4. Proper training and communication
6.5 CONCLUSIONSThis research is intended to formulate mechanisms of addressing some of the key challenges that
the PPP procurement has been experiencing and finding ways of addressing these. The
challenges have been widespread and have included: Internal capacity constraints within the PPP
Unit; the biggest challenge stemming from this being the PPP Unit’s limited amount of power
when it comes to promoting PPPs in government circles and the political interference that tends
to play effect when it comes to decision making and lack of capacity and skills.
6.6 RECOMMENDATIONS More commitment towards PPPs needs to be made. This should, however, be accompanied by a
thorough dialogue amongst PPP stakeholders and those in government in order to drive an
educational discussion around PPPs and the need for employing them as a form of procurement
mechanism. Implementing and sustaining a successful PPP project requires co-operation, while
complexity of PPP’s cannot be entirely removed, focusing on a number of key elements may
influence the objective of fast-tracking infrastructure. Below are some the recommendations
linked with the findings in the study;
1. Innovation through providing financing structures that translates in meaningful risk
sharing.
2. Retain a team of PPP champions whose expertise will be to government departments
when required.
65
3. The public sector should be treated as an equal partner in the PPP process.
4. Government department’s needs to be educated about the value and affordability
provided through using PPP.
The future of PPPs cannot be analyzed entirely on its own without understanding the need for
them. One may argue that public procurement also makes use of private sector firms and thus the
use of a PPP framework may prove to be an unnecessary and costly route. One of the key
objectives of PPPs is to encourage the private sector to prepare beyond the end of the
construction date and integrate the lifecycle and maintenance of the infrastructure facility within
the partnership arrangement.
The question that ought to be asked is whether government is fit to provide a particular service or
if indeed a hybrid approach to service delivery is taken, which component of the proposed
service is government best able to provide to its citizens. PPPs should be used to serve the best
interests of public citizens and not as a public relations or profit intensification mechanism by the
private sector.
6.7 CONCLUSIONThe research explored elements that blunt the successful delivery of infrastructure using PPP’s.
A number of challenges were identified with emphasis on minimizing them and understanding
conditions relevant in implementing PPP to build South African infrastructure. It is hoped that
the findings of this study will contribute towards the development of a sustainable PPP process
which will contribute to effective infrastructure delivery.
66
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QUESTIONNAIRE DESIGN Liphadzi. MTel: 0785972273 2013
Questionnaire towards a Dissertation (UJ)
Dear Sir/Madam
I, Murendeni Liphadzi, am undertaking a research project to assess Public Private
Partnership (PPP) in infrastructure development in South Africa. To this end i kindly
request that you complete the following short questionnaire regarding your
understanding of PPP’s towards infrastructure development. It should take no longer
than 10 minutes of your time. Although your response is of the utmost importance to
me, your participation in this survey is entirely voluntary. This research is being
conducted under the supervisory of Mr. Clinton Aigbavboa.
Please do not enter your name or contact details on the questionnaire, as it remains
anonymous. Information provided by you remains confidential and will be reported in
summary format only. Would you have any queries or comments regarding this survey,
you are welcome to contact me telephonically at 0785972273 or e-mail me at
Yours sincerelyLiphadzi Murendeni
72
Please answer the following quest ions by crossing (x) the relevant block or writing down your answer in the space provided.
Section A: Background information
This section of the questionnaire refers to the background or biographical information. Although I am aware of the sensitivity of the questions in this section, the information will allow us to compare groups of respondents. Once again, i assure you that your response will remain anonymous. Your Co-operation is appreciated.
1. Gender
Male 1Female 2
2. Ethnicity
African 1White 2Coloured 3Indian 4Asian 5
3. What is your highest qualification?
Grade 11 or lower (std 9 or lower) 1Grade 12 (Matric, std 10) 2Post-Matric Diploma or certificate 3Baccalaureate Degree(s) 4Post- Graduate Degree(s) 5
4. In which of the following sectors are you working?
73
Example How to complete a Questionnaire:
Your Gender?
Male 1 XFemale 2
Public (government) 1Private 2Self-owned company 3
5. FROM THE SELECTED SECTOR ABOVE, IN WHICH OF THE FOLLOWING DIVISIONS ARE YOU
DEPLOYED?
If other, Please specify) __________________________________
6. What is your current position in your assigned division?
If other, Please specify) __________________________________
7. Have you worked in the construction Industry before?
8. Do you have a construction related degree?
9. How many years of Experience do you have in the construction industry?
74
Road and Transport 1Housing 2Property Development 3Water 4Health 5Finance and Procurement Services 6
Finance Official 1Project Manager 2Construction Manager 3Quantity Surveyor 4Government Official 5
Yes 1No 2
Yes 1No 2
10. Have you been involved in a Public Private Partnership (PPP) project?
11. Which sphere of government initialized the PPP project you were involved in?
12. What was your role in the PPP project?
If other, Please Specify______________________________________
75
0-1 year 12 years 23 years 34 years 45 years & Above 5
Yes 1No 2Unsure 3
National Government 1Local government 2Municipal Government 3
Finance Official 1Project Manager 2Construction Manager 3Quantity Surveyor 4Government Official 5
Section B: Relevance of PPP towards Infrastructure Development
This section of the questionnaire explores the relevance of PPP towards infrastructure development in the Gauteng Province
13. How important is each of the following statements with regard to the relevance of PPP in infrastructure development in the Gauteng Province?
Please indicate your answer using the following 5 - point scale where.1 - Strongly disagree2 – Disagree 3 – Neutral 4 – Agree
Strongly disagree
Disagree
Neutral
Agree
Strongly agree
PPP is important in accelerating and enhancing infrastructure development. 1 2 3 4 5
PPP free up public funds for immediate use 1 2 3 4 5
PPP Improves the quality of services 1 2 3 4 5
PPP are more advantageous than traditional procurement methods 1 2 3 4 5
PPP agreements should comply with the legal requirements of affordability, 1 2 3 4 5
PPP help capacitate employees 1 2 3 4 5
PPP’s creates Jobs 1 2 3 4 5
Adequate Risk allocation within the PPP 1 2 3 4 5
PPP delivers better value for money than traditional procurement. 1 2 3 4 5
PPP is structured to advance BEE options in South Africa 1 2 3 4 5
Both parties play a key role at each stage of the of the PPP project 1 2 3 4 5
PPP’s allows the spreading of funds in a long term period 1 2 3 4 5
PPP can be good for project management development planning 1 2 3 4 5
PPPs force the public sector to focus on outputs and benefits from the start 1 2 3 4 5
PPPs encourage the injection of private sector capital 1 2 3 4 5
PPP’s provide better chances of completion on time and within the budget 1 2 3 4 5
PPP Advances expertise and experience 1 2 3 4 5
5– Strongly agree
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14. How important are the listed tests with regard to implementing PPP in infrastructure development?
15. On a scale of priorities how important is it for Public Private Partners to share responsibilities related to implementation and management of an infrastructure project?
Not a priority 1Low Priority 2Medium Priority 3High Priority 4Essential 5
16. PPP is not a solution option to an infrastructure service problem but it is a viable project implementation mechanism for a preferred solution option.
Strongly Disagree 1Disagree 2Neutral 3Agree 4Strongly Agree 5
77
Not at all im
portant
Low Im
portance
Neutral
Moderately Im
portant
Very im
portant
Value for money 1 2 3 4 5Appropriate risks transfer 1 2 3 4 5Affordability 1 2 3 4 5Avenue for job creation 1 2 3 4 5Assists in skills transfer 1 2 3 4 5Community development 1 2 3 4 5SME development 1 2 3 4 5
Section C: Challenges in the adoption of Public Private Partnership in South Africa
This section of the questionnaire explores challenges facing PPP towards infrastructure development in Gauteng Province
17. To what extent do you agree with the following statements about the challenges in adoption of PPP’s in South Africa?
Please indicate your answer using the following 5 point scale where.1 - Strongly disagree2 – Disagree 3 – Neutral 4 – Agree 5 – Strongly Disagree
In a PPP…
Strongly disagree
Disagree
Neutral
Agree
Strongly agree
There is sufficient capital to deploy PPP model in South Africa. 1 2 3 4 5
PPPs are undesirable since they are costly to government. 1 2 3 4 5
The South African regulatory environment provides a conducive environment for PPP
transactions1 2 3 4 5
Government reshuffling result in changes in departmental priorities and commitments. 1 2 3 4 5
Government structures are a problem in implementing PPP Models. 1 2 3 4 5
Skills shortages affects the implementation of PPP models 1 2 3 4 5
The Government has an ability to deal with external risks associated with PPPs 1 2 3 4 5
Public sector lacks understanding of PPP’s 1 2 3 4 5
capacity constraints in both the public and private sectors in the delivery of PPPs in South
Africa1 2 3 4 5
Lack of Resources Dedicated to Fostering Public Private Partnerships 1 2 3 4 5
Policy Bias toward Traditional Public Procurement 1 2 3 4 5
Suspicion or mistrust of private sector involvement in infrastructure. 1 2 3 4 5
The operational definition of PPPs remains unclear. 1 2 3 4 5
Insufficient research in PPP. 1 2 3 4 5
PPP awareness 1 2 3 4 5
78
Section D: Possible success factors within implementation of PPP’s.
This sections looks into the successful implementation of PPP’s and solutions relevant.
18. How successful do you think PPP’s have been in infrastructure development?
Not Successful 1Somewhat Successful 2Neutral 3Successful 4Very Successful 5
19. Through your understanding of PPP, please indicate which factors can lead to a success in PPP projects? You can select more than one answer.
79
Clarity and openness about individual and collective agendas and purpose. 1
Buy-in from all parts of the organizations is needed, from the leadership to the
grassroots.
2
Transparent PPP procurement processes 3
Previous experience of partners in partnerships 4
Clear PPP law, process, standard terms 5
Strong financial markets, competitive private sector 6
Proper training and communication 7
Open competition in the selection of partners 8
Continued active involvement of public partner 9
On-going performance management 10
Clear description of the responsibilities of each partner; 11
Commitment to the partnership process by all partners; 12
Establish sound partnership principles 13
Focus on appropriate product development and service delivery 14
Pay attention to governance issues in partnerships. 15
The on-going PPP education of all involved is needed 16
Good project estimating 17
Both institutions knowing more about the outcomes of PPP’s 18
Government support 19
Institutions should have a strong management skills 20