Project innovation - a function of procurement mode?

Abstract

The use of public-private partnerships (P3s) has increased in popularity with governments worldwide as a way of meeting ever-increasing demands for infrastructure, such as highways, water supply and wastewater treatment facilities, hospitals, and schools. One of several arguments forwarded by P3 advocates in support of one or more P3 variants as a procurement mode (in place of traditional design–bid–build (DBB) procurement for delivering such infrastructure) is the ability of a P3 to harness more of the innovative capability of the private sector. It is asserted that this capability results in lower capital or life-cycle costs, shorter delivery time, and enhanced long-term project performance. In this paper, we examine the notion that the innovation potential of the private sector is a function of delivery mode, and we describe findings from a study to identify evidence to support or contradict such a viewpoint. We have identified 22 factors or conditions that can act as drivers or inhibitors of innovation for infrastructure projects as a function of procurement mode and project context (e.g., project type, project scale, nature of competition, risk assignment). The product, process, organizational–contractual, and financial–revenue innovations achieved on a major transportation project are then reviewed, and innovation drivers that were present are discussed. The factors and conditions influencing the choice of procurement mode for a large-scale student housing facility are also discussed.Key words: infrastructure procurement, public–private partnerships, innovation drivers and inhibitors, case studies.