Proper prevention prevents poor partnerships

Dr Marcus Jefferies is expert in identifying and managing risk in the emerging arena of partnerships between the public and privates sectors for the procurement, construction and operation of infrastructure.

Marcus suggests that changing governmental spending priorities, and more strategic planning, will see public/private partnerships (PPPs) dominate infrastructure creation in the future.

In line with international trends, government in Australia will finance less infrastructure using tax dollars moving into the future, instead looking toward the private sector to fund and build.

"We're not talking privatisation, or a project being totally outsourced," Marcus explains.

"The private sector will fund, design, build, manage, and even operate this infrastructure. They may even own it sometimes, for a set given period. They pay an operating fee to the government and at the end of an agreed period, it becomes a public asset."

These partnerships have begun to filter through from obvious earners such as toll ways and tunnels through to the creation of schools, hospitals, prisons, and other social infrastructure projects.

A senior lecturer in Construction Management and Program Convenor for the Master in Project Management degree, Marcus draws on extensive experience in the industry to inform his research and teaching.

PUBLISHING PROBLEM SOLVES

A prolific writer, Marcus has transformed his research findings into more than 70 published journal articles, book chapters and conference papers.

"I am interested in theory generation, so looking at both historical and recent literature, I like the process of actually documenting current industry based case studies as well," Marcus conveys.

Marcus was a Chief Investigator (CI) on two recently completed Australian Research Council Linkage Projects (ARC-LP). One, led by UON, analysed risk management techniques used during the bidding process for the Public-Private Partnership (PPP) procurement model. The other, in partnership with Queensland University of Technology (QUT) and all of the Australian State Treasury Departments, investigated advancing capacity, competition and investment in the procurement of the construction and financing of Australian infrastructure.

Routledge, Taylor and Francis will publish Marcus' first book in 2016, entitled; New Forms of Procurement: PPP and Relational Contracting in the 21st Century'.

"I have written a couple of chapters for the book, with the remainder edited by me and Professor Steve Rowlinson from the University of Hong Kong, containing contributions from a mix of international academics and practitioners presenting best practice case studies of PPPs," Marcus says.

"The book holds information on identifying and solving global infrastructure challenges through case studies, from the Asia Pacific, Europe, North America and South Africa."

BUILDING UP TO IT

With his grandfather a building contractor, Marcus spent his school holidays laboring on building sites. On completion of his high school studies, he secured a quantity surveyor traineeship.

After three years of full time work and vocational qualifications through the UK equivalent of TAFE, Marcus gained entry into second year of an undergraduate construction management  degree at the University of Northumbria.

Work with various contractors and much travel followed until a downturn in the UK construction industry prompted Marcus to buy a one-way ticket to Hong Kong.

Securing a position with a large joint venture within a week of landing, Marcus worked on the construction of the Chek Lap Kok Airport, built almost entirely on reclaimed land.

Engaged by the University of Hong Kong, Marcus taught part-time into their Masters programs. He transitioned from industry to academia (City University of Hong Kong) and began postgraduate studies after the transfer of sovereignty to China in 1997.

A job in Newcastle beckoned, and Marcus and his family arrived here in the late 90s. Since that time, the first year intake into Construction Management has increased fourfold.

"It has been great to be involved in the school as it changes and grows," Marcus says.

MASTERING THE MASTERS PROGRAM

Marcus has adopted Newcastle's integrated learning model with gusto.

He believes that a problem-based learning approach, using real cases from industry, is more conducive to industry knowledge than the 'chalk and talk' style of teaching he grew accustomed to at other universities.

Estimating that two thirds of his students are working in the industry while they complete their degree, Marcus suggests many of them are studying to earn qualifications to match their existing experience.

"We are an old discipline in terms of industry but not necessarily academia," he says.

"So we are just seeing people with degrees get to middle or upper management and that is changing what is expected in terms of qualifications."

His is looking at revamping and growing the Masters of Project Management program.

"I've seen a lot of interest from guys in industry that already have a first degree but are looking to up skill," Marcus affirms.

"Next challenges for me are to ensure that the program remains relevant by annually reviewing course content, get it accredited by a professional body in order to maintain strategic connections with industry, and grow the student numbers."

VALUE FOR MONEY

Due to his expertise in the arena of PPPs, Marcus is often sought after to consult on large projects, sometimes with multi-partners.

Early in his time in Australia, he was involved in two large Australian benchmark PPP projects. The construction of the Olympic Stadium and The Superdome created facilities necessary for the Sydney 2000 Olympics without the massive initial outlay for government.

His most recent PPP project involved local government partnering with the private sector to construct mixed-use facilities including a shopping centre, roadwork, public open space, a library, and council offices in an outer Sydney area.

To the layperson, plotting the contractual obligations, and possible pitfalls, of mixed-use PPPs over an extended period is beyond daunting, but Marcus savours this work.

"The challenge is to get the best value for the broader community," Marcus says.

"And that includes getting value for the private sector because their investors are often people like you or I who invest in things like superannuation schemes."

Ensuring value for the broader community also means ensuring public sector jobs are protected.

"With PPPs to build infrastructure such as hospitals and schools, a contractual differentiation is made between core and non-core services," Marcus explains.

"The government provides core staff, and the private sector the non-core staff. So the community gets more services but public sector jobs are protected."

ADDRESSING BARRIERS

A lack of flexibility to renegotiate contracts to reflect actual versus estimated profits; expansive and expensive tendering processes; and public resistance related to concerns regarding public sector jobs are all barriers to successful PPPs.

Conversely, strong relationship management, probity, adding value, and greater stakeholder commitment are also vital ingredients in successful PPPs according to Marcus.

"It is about diplomacy now, about managing relationships," Marcus says.

"More broadly, the construction industry is changing from being quite adversarial to being relationship management driven. And that is coming through in the new procurement methodologies such as PPP's."

These changing priorities are now mirrored within PPP procurement processes, with price not always the overriding factor in successful tenders.

"Now, around half of tender requirements are non-price based," Marcus asserts.

"A great health and safety record, community engagement, plus experience and qualifications of the team are as important as price. Then there is cash flow. There are all sorts of considerations."

"Construction and procurement are no longer necessarily just about designing and building, but feasibility, finance, operation, and even ownership."

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