Towards a model for goal setting and negotiation in public private partnerships

In Australia, Public Private Partnerships (PPPs) are a relatively new concept to project finance. While there have been many successful infrastructure projects undertaken through PPPs, there are other PPP projects that have been fraught with problems. PPPs such as the Spencer Street Railway Station redevelopment in Melbourne and the Cross City Tunnel in Sydney renewed debate among professionals and academics on both the merits and the future direction of PPPs. PPPs in project finance bring together two disparate organisations with distinctly different goals as project sponsors. Such an arrangement requires the project sponsors to constantly strive to achieve common goals. Therefore, the success of PPPs depends upon, inter alia, the process of goal setting and negotiation by the project sponsors to meet their respective goals and to achieve the best possible performance outcome. Works describing the structuring of project finance and the use of the PPPs are increasingly common (Esty and Christov, 2002, Esty, 2003, Finnerty, 1996, Nevitt and Fabozzi, 2000, Yescombe, 2002). Nonetheless, the authors have not located any works focusing on the goal setting and negotiation issues in PPPs. This paper takes a first step towards addressing this deficiency by presenting a model for goal setting and negotiation in PPPs. This is followed by a review of the literature in each of the key areas of the model that influences goal setting and negotiation in PPPs: strategic factors in project finance, public sector goals and private sector goals. It concludes with the identification of the key research questions emanating from the model.