Emerging metagovernance as an institutional framework for public private partnership networks in...

INTERNATIONAL JOURNAL OF

www.elsevier.com/locate/ijproman

International Journal of Project Management 24 (2006) 548–556

PROJECTMANAGEMENT

Emerging metagovernance as an institutional framework forpublic private partnership networks in Denmark

Christian Koch *, Martine Buser

Department of Civil Engineering, The Section for Planning and Management of Building Processes, Technical University of Denmark, Denmark

Abstract

Implementation of public private partnerships (PPPs) in Denmark has been a long and reluctant process. PPPs have been used inmunicipalities since the late nineties, but were halted because of controversies in 2002. In 2004 the government launched an action plan,and PPPs are emerging again. In this paper, drawing on insights from new public management perspectives, public services are viewed asa network of mixed players with a regulatory framework, a metagovernance. Examples of Danish PPP initiatives are presented. The pres-ent metagovernance consists of a comparator, guidelines, feasibility studies and a central competence unit. New issues like employmentrelations are surfacing. PPPs are thus emerging political programmes in Denmark.� 2006 Elsevier Ltd and IPMA. All rights reserved.

Keywords: Public private partnerships; Metagovernance; Public management; Denmark

1. Introduction

A few years back the United Kingdom was more or lessthe only European country innovating public private part-nerships (PPPs). In the later years, however, an increasingnumber of European countries have engaged in PPP as amean to develop the built environment element of the pub-lic services. These include countries like Germany, Portu-gal, Ireland, Holland, France, Italy and Denmark tomention some [1,2].

The paper discusses the development of PPP in Den-mark. It is analysed how the PPP networks have developedalong with the emergence of the governance arrangementswithin PPPs. We especially focus on the development ofmetagovernance, which is understood as a regulatoryframework and environment, an umbrella, for PPP net-works. In contrast to many other construction researchcontributions (as for example [3]), which tend to analyse

0263-7863/$30.00 � 2006 Elsevier Ltd and IPMA. All rights reserved.

doi:10.1016/j.ijproman.2006.07.001

* Corresponding author. Tel.: +45 45 25 16 49; fax: +45 45 88 32 82.E-mail addresses: [email protected] (C. Koch), [email protected] (M.

Buser).

the single project level and the related governance [4], theaim here is to look into the governmental frame for thePPP projects. The idea is that conditions for realisingPPP and the conditions for the private participants aredependent of, and in continual interplay with, the metagov-ernance. Metagovernance, networks and governance arethus seen as constitutive elements to realise PPPs.

PPPs can be understood as networks, since PPPs areinvolved with usually more than two and often a rangeof public, hybrid and private players. This understandingcontrasts the immanent dualistic notion in ‘‘partnership’’.Partnerships and networking are usually described asmeans to transcend competition and hierarchy and to rec-ognise interdependence and complementarities. Moreover,networks are frequently described and characterised bycoexistence of trust and distrust. They are also less frequentby politics and power. Partnerships have historically devel-oped through various forms [5], including long term infor-mal cooperation, but are now through new publicmanagement (NPM) changed into either contractual orinstitutional relations [6], including models such as Salesand Lease back, Build, Own, Operate, Transfer (BOOT),

mailto:[email protected]

mailto:[email protected]

C. Koch, M. Buser / International Journal of Project Management 24 (2006) 548–556 549

Design, Build, Finance, Operate (DBFO) [1] or Renovate,Operate and Transfer (ROT) [7]. The article focuses onthese NPM types of PPPs.

Where the networking notion underline the need of find-ing complementary partners and stress the interdependencyof all sizes of companies, the PPP networks are probablycharacterised by applications in SMEs and smaller unitsof the public sector, such as municipalities. The positionhere is therefore also that metagovernance is particularlyimportant for smaller PPPs. The article is structured as fol-lows. After a section on method, the conceptual sectionsdiscuss PPP in the knowledge society and the notions ofgovernance and metagovernance. The three central ele-ments, namely networks, governance and metagovernanceare presented, starting with networks and later combininggovernance and metagovernance. The structure is howevernot prioritizing the three elements. The survey sectionlooks into two main periods and types of PPP networksand metagovernance. A final section sums up the resultsand main points.

2. Methodology

The approach in the research behind is multidisciplin-ary, combining several strands of theory including innova-tion economics, management and organisational theory,construction management and public sector research. Onecentral aim of the present research on PPP is to establishan independent research position, which recognises andunderstands the special characteristics of public organisa-tions and services. The research recognises and under-stands the characteristics of private construction firmsand other participating firms at the same time. AlthoughPPP is widely studied it is rare to see studies that activelycombine understandings and theoretical perspectives ofthe public part with due consideration of the private sector.It is characteristic that the two perspectives rarely use eachother’s results, at least judged by the material known to theauthors.

There is a tendency that construction research getstrapped in the classical problems on whether to research‘‘for’’ or ‘‘on’’ the sector [8,9]. The studies of PPPs fromthe construction research perspective thus tend to inheritthe understanding of industrial actors viewing PPPs asmerely a potential new market for building projects andthe implicit simplification of the public sector as merely acustomer organisation. This is for example revealed whenscholars talk about ‘‘uncontrollable external factors’’,referring to the wider interests of the citizens related toPPPs. It is moreover visible when PPP is portrayed asbound to stir up a lot of emotions amongst citizens [8,9].Construction management approaches are however usefulin understanding the project level.

Public sector research, typically built on political sci-ence, on the other hand has developed a profound under-standing of private sector management, which is thecentral element of new public management [10–13]. Despite

this profound turn in political science, it still carries impli-cit favoring for the social democratic welfare state, and toapproach of the private sector as an alien. Scholars thustend either to portray the private sector efficiency as flawed(Linder in [13]) or the right out opposite, without tran-scending the stereo types. Moreover, public sector researchtends, even though it encompasses foci on state, regionaland local levels, to shy away from the organisational leveland seem to prefer to deal with relatively generalized con-cepts such as democracy and community [14,15]. Publicsector research is nevertheless helpful in understanding ofthe shift from governmental regulation to metagovernanceof networks. Management and organization theory [16–18]project management [19,20] as well as economics of trans-action [21] therefore finally become useful in conceptualis-ing PPP on the project level. Thereby, transcending marketand hierarchy and developing the understanding of net-works takes place [22,23]. Not surprising a number of con-tributions has strived at merging these, obtainingframeworks that transcend level of analysis as well as sec-tors [17,24].

In 2002 the research behind this article commenced witha qualitative study, financed by CSTB (Centre Scientifiquedu Travaux Public et du Batiment, Paris) [25]. The develop-ment of PPPs in Denmark has been followed since thenwith several methods of analyses. Interviews, dialoguesand participations in Danish network events on the subjectare discussed. Desk research has followed the public devel-opment of instruments documented in guidelines, marketstudies, and feasibility studies for potential projects, estab-lishment of a database of approved consultants, etc. Thedescriptions moreover build on other types of public docu-ments, media coverage and students reports on the issue. InMay 2005, a RealDania financed project was commencedin cooperation with two consulting engineering companies.

We recognise our orientation and organisation of theo-retical biases in the work [26]. Although PPP has importantcontractual and juridical aspects these are only seen as ele-ments of governance and organisation and are not treatedbeyond that. Another methodological point in the researchbehind is the case options of projects. PPPs are emerging inDenmark. Roughly there are three mature types of pro-jects, large infrastructure projects realised through publiclyowned shareholder companies, dwellings for precariousgroups (youngsters and elderly) under regulation as publicutility and more classical partnerships between municipali-ties, contractors and financial institutions. The maturecases moreover relate to the first period of PPPs discussedhere (ending in 2000), whereas the second period, startingin 2004, has not yet produced any established operationalPPPs.

The present paper draws on and extends arguments inprevious papers [27–29]. Some of the primary materialshave been left out as references since it only exists in Dan-ish. It should also be noted that it has been avoided to usetoo many national specific notions and abbreviations. Themain public body active in PPP is the National Agency for

550 C. Koch, M. Buser / International Journal of Project Management 24 (2006) 548–556

Enterprise and Construction under Ministry of Economicand Business Affairs, which in Danish is abbreviatedEBST.

3. Theoretical framework of public and private sectors in the

networked knowledge society

Both public and private products and services areincreasingly complex [30]. Client’s demands consist of bothabstract and concrete components for solutions; the socialactors related to developing the products and services suchas suppliers, consultants, customers, etc., are crucial as par-ticipants in the development [16]. Their competencies areemerging, and so is the demand for knowledge. Under suchcircumstances (innovation) networks and partnerships areincreasingly viewed as a solution for bundling and juxta-posing the necessary material and immaterial elements ofproducts and services [17,22,23,31].

These innovation (actor) networks are cross-sectoraland cross-organisational by necessity. The firms operatewithin networks to assure complementary competenciesand components [22]. In the creation of new services thecontributing companies and institutions participate in aproject specification of not only the renewed or new servicebut also their internal organisation referring to projects asmore and more frequent organisational forms [32]. Notonly external relationships and partnerships are initiatedas temporary, but also internal organisation when develop-ing knowledge intensive complex service products. Thisdevelopment creates new challenges to corporate manage-ment and initiates the development of governance and con-tract structures in an attempt to align projects and the restof the organisation.

The response discussed here, is the building of a collab-orative network in an emergent process. The network candraw on existing networks. The process is characterizedby politics of negotiating, alliance building and obtainingpartial consensus [17,29]. Network participants will seekto influence the decision-making process, advancing theirspecific interests and enhancing their position within thenetwork [18].

These trends towards networking, brings organisationand competition beyond market and hierarchies [21]. Mar-kets are losing their textbook characteristics. This is mir-rored in the rapid growth of strategic alliances as well asmergers and acquisitions [33]. We witness a simultaneouscapital concentration and organisational dissolution [23].This means that new forms of corporate governance inmultinationals in principle should mirror/match govern-ment governance in the public sector.

4. Public sector developments

New public management prescriptions and political sci-ence governance perspectives have argued that the future ofthe welfare state is in the form of networked public ser-vices. According to this discourse public organisation will

move away from hierarchy and bureaucracy and developinto networks on many levels and with multiple actorsinvolved within a (common) metagovernance frame[9,10,13]. One reason for this is the need of tackling com-plexity and need of flexibility by combining complementaryresources and competences. This discourse also predicts atransformation of the concept of democracy from represen-tative democracy to participative democracy. This movesaway from rationalistic planning and focuses on emergentplanning with inclusion of representations from citizen tocustomer [14]. The networks delivering services will encom-pass a mixed set of players (private, voluntary and public)[9,10]. The networks are assumed to be strong in combiningforces from these various sectors in producing a set of pub-lic services. Partnerships are central elements.

Despite the extensive lip service to networking, gover-nance and metagovernance by political science, publicinstitutions seen as a whole still maintain hierarchy, and,what can be described as, having principal-agent relation-ships. There is inbuilt tension between trends towards net-working of public services, and prevailing governancestructures encompassing principal-agent instruments andpractices. We contend that the metagovernance and/orprincipal-agent elements both are overarching the networkelements; meaning that the state is less fragmented and‘‘flat’’ than some observers would argue. Public servicesare developed in a hybrid organisation with network char-acteristics, but also with a hierarchical element.

5. Construction sector developments

Roughly, the production of construction products andservices is realised through ‘‘one off’’ type projects, ratherthan routine production or mass customisation as seen inparts of the service and manufacturing industries. More-over, the end-production site for each product is centralin the process and is moved for every project. These char-acteristics underline the difficulties in seeing construction asa perfect market. The organisation of the supply chain inconstruction exhibits a specific division of labour and insti-tutionalised roles such as the manufacturers of basic parts,the engineering companies and contractors. Although thereare examples of transcending the institutionalised roles,they are roughly maintained in the majority of buildingprojects. Therefore, every project needs some form ofcross-organisation, thus making the production processan inter-organisational task. Understanding of the charac-teristics of construction implies two pitfalls it seems. One isto too rigorously employ methods and concepts for manu-facturing/economy of scale. The unique and cross-organi-sational characteristics of the construction productionprocesses imply that other governance structures areneeded. Network management amongst participants arethus widespread as routine in the sector. The other pitfallis to celebrate the ‘‘one off’’ type features too far. It is anoften-celebrated sectorial myth that the inter-organisa-tional cooperation is temporary and its partnerships


constantly reconfigured. At a closer look the temporarycharacteristic is relaxed. It is thus rather a network ofrecurring partners in different constellations and withrather well defined and well exercised roles that are in play.These characteristics are of major importance when dis-cussing partnerships and governance between constructionprojects.

In the later years the Danish, Scandinavian, and Euro-pean part of the construction sector has witnessed rapidgrowth in mergers, acquisitions and strategic alliances.Contractors, consulting engineering companies and com-ponents manufacturers have radically restructured the sec-tor in forming fewer and larger players. In parallel to thisan increasing recognition grows that the fragmentation ofthe construction industry is a problem rather than strength[28,34,35]. It has become commonplace to argue thatalthough temporary partnerships might enhance theexploitation of complementary competencies, it also pro-motes short terminus and constrains in innovation, sincea tyranny of the single project is the result. As a conse-quence of this there has been a growing interest in partner-ing and alliances amongst the (private) participants of theindustry. Emerging networks find difficulties in establishinglong-term goals due to the worst drawbacks of short termi-nus. For example, UK experiences show how it takes timeto develop the competencies for partnering [36]. Although,partnering is a formalised cooperation between private par-ticipants, it is a constitute element in PPPs.

The concentration in the sector can be expected to befollowed by a professionalisation of management, includ-ing increased focus on improved corporate governance inmultinationals [37,38], which match government gover-nance. However, corporate governance approaches showthat risk is having a little impact on construction projectsand construction partnerships with public parties. The pro-ject economy and the tyrannies of these organisationalforms are at least barriers to be overcome.

6. Governance and metagovernance

Most scholars ascribe to Williamson’s groundbreakingwork on transaction economics as seminal for the under-standing of governance [39,40]. But, it is equally well estab-lished that governance has become a messy term today [41].Here, we define governance as broadly coordination, steer-ing and control mechanisms encompassing both structuraland procedural elements [4,30,37–39].

Our interest here is to understand governance in relationto PPP, which can be defined as a network. Network is oneout of three classical generic governance forms apart fromhierarchy and market [39]. Peters and Pierre coming fromthe public governance discussion add ‘‘communities’’ asthe fourth form of governance [41]. The development ofgovernance approaches and understandings have been par-allel and are overlapping within the public and private sec-tors. In public sector approaches governance is viewed as anewer form of governances which are used to underline indi-

rect forms of control, self-organisation and other soft andnetwork elements of governance instruments. The privatesector discussion has focused also on corporate governance,focusing on issues of transparency and accountability [37].

Metagovernance is used here to denote the regulatoryenvironments of mechanisms and processes that enable orconstrain the PPPs in networks. Metagovernance instru-ments include various types of soft law, incentives, guide-lines, brokering activities and legal mechanisms such aslaw and contracting. Metagovernance originates in politi-cal science, where it overlaps with governance of networks[13,39–41]. We admit that the overlap still pertain in ourconceptualization, but use metagovernance to underlinethe difference between governance ‘‘in’’ PPP arrangementsand the metagovernance frame ‘‘around’’ the PPP. Meta-governance do intervene however directly in the ways gov-ernance can be exercised in processes of PPP, for examplethrough brokering actors (representatives from statedepartments or the like directly participate in PPP pro-cesses) and therefore metagovernance is not just an exter-nal factor to the PPP network.

7. Processes of metagovernance of public private

partnerships in Denmark

Denmark is as a welfare society, characterized by a largepublic sector. Denmark is, at least in contrast to UK, asmall and well integrated society, characterized by corpora-tive arrangements between the state and a range of partici-pants. The political climate is (still) consensus seeking andwe have elsewhere argued that elements of corporatismremain. It is even revitalised within industrial relations inconstruction [42]. Rothstein [43] on the other hand arguethat corporativism looses terrain in a Scandinavian context,because society becomes complex and cannot be ‘‘ruled’’ asconvening of a few blocks of interest, such as it could inearly modernity. In the context of PPP, it is however impor-tant to remember that metagovernance and other govern-mental initiatives and activities cannot be easilyunderstood as some form of independent ‘‘hand’’. Theshaping of metagovernance is a multi actor societal process.

Until January 2006, the Danish state was organised in athree layer configurations: state, countries and municipali-ties. In a long period the interest for PPP has been limitedand driven more by the interest in additional means ofdeveloping public services than lack of public capabilityfor financing investments (which is still the case). The back-ground of PPPs in Denmark is mainly reflected in fourtrends:

� Marketification of public service,� New public management,� Financial innovation,� Construction innovation.

As late as the 1980s large infrastructure projects wererealised through full state financing (Farø-bridges). Privat-


isation did commence at that time. But, the marketificationof public services is particularly driven by EU legislationsdemanding that public services are tendered on marketconditions. In Denmark a series of activities has been priv-atized on all public levels. New public managementemerges as a belief in managing public tasks with methods,tools and roles as in the private sector. New public manage-ment has been influential in Denmark over the last 15years. Innovation in financing of public building projectsprobably commenced with the large infrastructural pro-jects, like the Great Belt fixed link, but continues withthe financing in the sale and lease back model. The con-struction innovations have focused on the role of the clientas the key change driver since 2000. Parts of the public cli-ent ‘‘body’’ are indeed very active in developing new con-struction management forms such as partnering.

The reforms in the legal framework have occurred intwo periods with a transitions phase in between, describedbelow. The first period include the implementation of thefirst EU directive for public procurement, in an order ofJuly 1998. According to this a municipality can withdraw5% of revenue of a sale every year. In contrast the subse-quent state intervention in the sales and lease back modelby June of 2000 implied that the ministry for internalaffairs have to approve the municipalities’ arrangements.The sales sum is to be deposited, only 5% can be withdrawnafter 10 years, and it is prohibited to exploit the differencesbetween short and long term interest rates. The second per-iod of reform was embedded in the Ministry of Economicand Business Affairs with the National Agency of Enter-prise and Housing (EBST) as prime mover from 2004.An order issued in early 2004 thus obliges public units toinvestigate whether PPP would be feasible in all planningof future building projects. The reform is accompaniedwith soft regulations such as subsidies, template-contractsand guidelines.

8. The first period of PPP in development of local policynetwork

The municipality Farum with 18,000 inhabitantsobtained revenue of 300 million Euros through the sellingof a number of public institutions in 1998. The salesencompassed a wastewater plant and the pipe-net, fourschools, a culture centre and a swimming pool. By sellingpublic property, and leasing them back, the municipalityobtained capital and could speculate in the differencebetween short and long terms interest rates on loans. Theapproval of the Farum model by the ministry for internalaffairs occurred in 1999. Farum developed its modelbetween 1998 and 2000 and 15–20 other municipalitiesdid the same. Typical partners were financial institutions,contractors and municipalities. In 2000, a governmentintervention meant that the municipalities were onlyallowed to speculate differences in interest rates and wereobliged to deposit the sales-sum. In spring 2002, controver-sies began in Farum. The economic and political transac-

tions of the mayor involved clientelism, fraud and‘‘circular financial transactions’’. Expensive dinners andexcessive consumption of redwine annoyed the public.The contractors Hoffmann (Veidekke) and Skanska wereaccused for paying sponsorates for Farum football club,which was headed by the mayor. Hoffmann and Skanskadid obtain several larger contracts in Farum. Skanskawas later convicted for their part. The mayor is nowinvolved in a litigation procedure. Farum experiencedmajor deficits on its accounts and raised taxes. In manyother municipalities however, the PPP arrangements of thisnature were rather successful [25,27].

As described above the metagovernance was character-ised by absence, ambivalence and restrictions. It was alocally grounded policy network of municipalities, lawyers,consultants and financial institutions that developed andpromoted the model (see also [44]). Central governance ele-ments were sale and lease back and partnering. Few of theprojects were full blown with DBFO method throughwhich a number of renovate, operate transfer projectsemerged.

9. The transition period of public private partnerships

In December 2000 the government announced an effortto develop PPP as part of the so called ‘‘client package’’in the Taskforce report. The effort consisted of threeelements. They are namely, tools to evaluate PPP before ini-tiation, standard/generic contracts for PPP and consider-ation of commencing and funding experimental projects.For various reasons these efforts were delayed. Legal com-petition issues meant that representatives for the authoritiesdeveloped a small report on these. In autumn 2002 a ‘‘publicsector comparator’’ was developed as a realisation of localpolicy framework. By COWI (consulting engineer) with aDutch partner (Dutch and UK experiences were centralfor the shaping of the comparator). The comparator aidscalculating expenses related to building, operation andmaintenance so PPP can be compared to a traditionaloffers. In 2003 more seminars were held and public reportswere published to further support the development (such asPPP for public schools [45]). In parallel to this, anotheroffice of EBST developed competences for public purchas-ing of buildings with project partnering.

10. The second period of public private partnerships topromote metagovernance

In the beginning of 2004 the government launched amajor action programme providing a new metagovernanceframework for PPP and embedded in the National Agencyfor Enterprise and Housing. The elements include a centralcounseling unit, a new set of contracts, obligations for stateunits to consider PPPs, a comparator to calculate, aselected set of pilot projects, subsidies for feasibility studiesand further investigations of various elements in the strat-egy such a investigating urban development as potential


area of PPP [46], and forecasting market developments [47](see Table 1). Around 20 reports, standard contracts,guidelines, case studies were published by the end of2004. The process from the December 2000 announcementof public interest in OPP, commencement and elaborationof elements in PPP (2000–2003), over the announcement ofthe action programme in 2004 allowed a set of privateactors to develop competencies and to align with the publicunits engaged in the development (primarily EBST and theMinistry of Traffic). This emerging alliance/constellationencompasses international consultancy companies, interna-tional lawyers, engineering consulting companies andfinancial actors. The present international consultanciesare KPMG, Ernst & Young and Grant Thornton. The par-ticipating consulting engineers are COWI, Rambøll, Birch& Krogboe and Moe & Brødsgard. There are few of large‘‘Danish’’ contractors, although contractors appear to bereluctant in engaging in institutional PPPs. Some contrac-tors seem to prefer the contractual form, which means thatthey would participate in PPP as traditional contractors.The consulting engineers on the other hand seem more pre-pared for more long-term committed institutional PPPs.EBST also established a series of seminars for interestedactors, which therefore became a ‘‘platform’’ for the net-work. It should be noted that SME companies are onlyto a very restricted to active in the networking process.In parallel to this the other office of EBST developed guide-

Table 12004 Government action plan and its current status

The 10 initiatives in the DanishGovernment Action plan forPublic Private Partnerships,announced by the governmentin January 2004

Status January 2006

1. State Pilot Projects 1. One major projectunderway

2. PPP feasibility checkobligatory in the State area

2. In place since December2004

3. Regional Pilot projectswithin traffic

3. Three feasibility studies(motorway a.o.)

4. Pilot projects withinbuildings and dwelling

4. Subsidies for feasibilitystudies, a municipalityschool under way

5. Clear guidelines for relaxingmunicipalities obligatorydeposit, when taking loans

5. Guidelines in place,subsidies provided

6. Frame contract withcompetent PPP consultants

6. In operation, 3300consultants onboard

7. PPP guidelines andstandard contracts

7. A set of PPP tools inplace

8. PPP ‘‘window’’ in theinternet portal for publictendering

8. In place

9. Analysis of feasibility ofPPP in various sectors

9. Market investigationfinalised by June 2005

10. Competence unit for PPPwithin building anddwelling

10. Established in late 2003

lines for partnering as a tool within public purchasing ofbuildings.

By January 2006 three projects started to act as primemovers for PPPs, a state building, a motorway and amunicipality public school. The state agency for propertiespre-selected five consortia of consultants (the above-men-tioned consulting engineers and international consultantsparticipated) to develop a project for a new national archive

(Rigsarkiv) and chose one of them, the consortium ofGrant Thornton, Birch & Krogboe, the architect firmC.F. Møller and DLA Nordic A/S over the summer2005. The design is in progress. This project is estimatedat 76 million Euros. The international business lawyersGrant Thornton also have carried out a feasibility studyof a motorway in southern Denmark. This project is esti-mated to be at 121 million Euros and with a potential costreduction of 3.7 million Euros. The study was financed bythe ministry of traffic, who have 3.4 million Euros allocatedfor such studies. A municipality wanting to build a public

school went through a competitive dialog in an EU tender,which is still a new procedure in Denmark, and the con-tractor, MTH, commenced works in October 2005. Thisproject is estimated to be at 13 million Euros and the com-parator calculus show a benefit of 10% in favour of PPPs.This project’s feasibility study was financed by the nationalsubsidy. The feasibility subsidy is at 800,000 Euros for cov-ering three years.

The action plan is thus represented by the above-men-tioned Rigsarkiv project. It is realised through a publicorder of January 2004. It is also represented by the men-tioned motorway, regional road on Zealand and a bridgeproject also on Zealand. It has been also supported withsubsidies for feasibility studies and the mentioned schoolproject is represented here. In 2004 another 20 municipali-ties and countries showed interest in getting a feasibilitystudy. The action plan was realised through a guidelinefrom the minister of internal affairs and with an annualsubsidy of 13.5 million Euros for 2005. Three thousandand three hundred consultancy firms are entered in a data-base of approved firms. It has been covered by the publica-tion of around 15 guidelines, standard contracts and othertools. The action plan was realised in the spring of 2005showing a potential market for PPP in roads, railroads,sewer systems, institutions for elderly and primary second-ary schools for 3.7 billion Euros in Denmark [47]. Interest-ingly however, the health sector was not covered. Thecompetence unit was established in January 2004. The unithas 2–4 staff members and has been carried out most of itsdevelopmental work through external tenders. A numberof traffic infrastructure projects have surfaced as prospec-tive PPPs during 2004 and 2005. These include tunnels,light rails and motorways.

Although the second period of metagovernance for PPPin Denmark is clearly promotive of PPP, providing a rangeof tools and competences along with a network of potentialactors in PPP projects, there are still barriers to be over-come. The EBST was for at period eager to underline a

Table 2The two periods of metagovernance

Local network PromotingMetagovernance

Period 1998–2000 2004-Metagovernance Classical Government

(Laissez Faire)Central Unit, Law,Funding, Soft support

Network 15–20 municipalities State, regions andmunicipalities

Small consultants Small and multinationalconsultants

Danish Banks Danish andmultinational banks

Danish Lawyers Contractors partlyinvolved

Main form of PPP Sales and lease back Several types includingDBFO


13.5 million Euros lower limit for the feasibility of PPP[47]. This rule of thumb referred to the initial cost of estab-lishing PPP. This argument was relaxed in the spring of2005 by an expert report ordered and published by EBST[47]. But, it is still ‘‘active’’ as an orientation point. Theforms of contracts are perceived as complex and financiallimitations prevail. Finally, the entire public mega structureis under reform. The municipalities are merging into fewerand larger units by January 2007 and the reform’s practicalimplications have halted PPP. It is unclear what the futurepolitics of the larger municipalities will be. The two periodsof metagovernance are summarised in Table 2.

11. Conclusions and further recommendations

The Danish government has successfully developed a setof guidelines, funding, competences, a network of actorsand a central unit for supporting PPP. The metagover-nance and the network are developed beyond a minimumframework. Governance of practical PPP projects is nowunder consideration. However, despite the vivid govern-mental enthusiasm in reforming the metagovernance, it stillconstitutes an ambivalent frame for partnership projectsfor companies and public players. The SMEs are now con-strued into passive spectators. At present the consultingengineers see the ambivalence in the metagovernance as arisk to be taken, whereas contractors are considerablymore reluctant in signalising interest in establishing morethan contractual partnerships. The framework is there.But, the application of framework is almost absent.

In the projects realised in the first period, the localgovernance experiences were contradictory. The buildingmanagers, the engineers and architects experienced thePPP-projects at times look pretty much like traditionalbuilding projects, which can be haunted by adversarialinterests and strategies, even if partnering is part of thetoolbox [28]. The Farum controversies, which led to theclosing of the first period, underlines the constructionfirms’ dependency of their public partners and their vulner-ability in their efforts to develop and maintain strong linksto public players. Although a local network was estab-

lished, it was too weak to counter the political impact ofcontroversies. Nevertheless, the realised projects have sta-bilised long-term contractual partnerships between fewmarket participants during the first period.

In the second period, the competences among centralstate players, consulting companies, consulting engineersand financial institutions in developing partnerships arenow growing rapidly, the framework is emerging. The gov-ernment’s present effort to develop a better metagover-nance frame might solve some of the problems that theprojects from the first period demonstrated. And as feasi-bility studies are available, more actors can engage in fur-ther stabilisation of governance and metagovernance ascompetence and learning develops.

Within the stabilisation of a promoting frameworkhowever, the political processes of all parties will continueto create new tensions and dynamics. Especially for smal-ler players and smaller projects there is still barriers, andthe framework is still unclear, despite the recent marketreport [47]. Moreover in this analysis the loss of compe-tence and control at the public side, the perceived costlyprocurement process and cultural barriers which are men-tioned as main obstacles [47]. It is likely that it will take alonger time span to develop the local experiences of PPPin Denmark, just as it was the case in the UK and Italy[1,25]. There the framework was present for a numberof years and had to be reshaped a number of times alongwith a gradual development of operational projects(roughly from 1992, 1994 to 2000). Importantly, it isnot sure that the presence of the Danish market of majorinternational players such as KPMG, Grant Thorntonand Skanska, which were instrumental for developmentof the framework, necessarily will make a difference onthe local scenes of municipalities and state institutions.The concern for local employment and business mightbe a continual orientation. There are moreover at leastthree further issues that have not surfaced in the presentdevelopment of the metagovernance.

The first issue is unemployment in institutionalised PPP.Marchingtons et al. [48] research shows that a number ofissues are related to fragmented work, as it would oftenoccur in PPPs. This point has actually been raised by aDanish union association responding to the EU greenpaper [49]. The second issue is how to deal with fraught,bribing and other illegal activities. The present metagover-nance frame prefers to silence the experiences of Farum,but a recent investigation shows that around 8% of Danishcontractors have experienced illegal demands from publicemployees or from social housing associations [50]. PPPis hardly an exception from other types of trade relationsin construction in its potential role as scene of such activi-ties. Nevertheless, it could be important to tackle thisexplicitly as part of the metagovernance. As the third, thereis potential tension between local and national politicalconcerns for cooperation between private and public par-ties and the present Europeanisation of the policy develop-ment. Where a range of multinational players for long have


been present in the Danish development, it is by nowunclear what the EU green book process will lead to [51].Legal options like competitive dialogues are playing animportant role in the present PPP projects; so also herewe witness metagovernance and local project intertwine.The concept of metagovernance has proved instrumentalin sensitising the relation between governance of the PPPproject and the regulatory framework. Rather than under-standing them as separate the analysis has shown how theyinteract and are mutually shaped. The political processes ofdeveloping the metagovernance are inescapable for publicservice networks.

References

[1] RICS. Quantifying quality – A report on PFI and the delivery ofpublic services. Salford: Royal Institute of Chartered Surveyors(RICS); 2005.

[2] PricewaterhouseCoopers. Developing public private partnerships inNew Europe programme, PricewaterhouseCoopers, 2004. Availablefrom: www.pwc.com/neweurope.

[3] Ahadzi M, Bowles G. Public-private partnerships and contractnegotiations: an empirical study. Construct Manage Econ2004;22(9):967–78.

[4] Pietroforte R. Communication and governance in the buildingprocess. Construct Manage Econ 1997(15):71–82.

[5] Winch G. Institutional reform in British construction: Partnering andprivate finance. Build Res Informat 2000;28(2):141–55.

[6] EU. Green Paper on Public Private Partnerships and Community lawon Public Contracts and Concessions. COM (2004) 327. Bruxelles:EU; 2004.

[7] Worldbank. Build-operate-transfer contracts – a solution for bulksupply and treatment problems. Worldbank website, 2002.

[8] Leiringer R. Public private partnerships – conditions for innovationand project success. In: Atkin B, Borgbrandt J, Josephson PE,editors. Construction process improvement. Oxford: Blackwell Pub-lishing; 2003. p. 154–67.

[9] Heywood C, et al. Strategic issues for facility provision: A reexam-ination of the nimby phenomenon. In: ARCOM proceedings, 2002. p.109–18.

[10] Ferlie(red) E, Ashburner L, Fitzgerald L, Pettigrew A. The newpublic management in action. Oxford: Oxford University Press; 1996.

[11] Jones L, Guthrie J, Steane P. Learning from international publicmanagement reform. London: JAI Elsevier Science; 2001.

[12] Klausen KK, Stahlberg K, editors. New Public Management iNorden. Odense: Odense Universitetsforlag; 1998.

[13] Rosenau PV. Public private policy partnerships. Cambridge, MA:MIT Press; 2000.

[14] Van Heffen O, Kickert W, Thomassen J. Governance in modernsociety effects, change and formation of government institutions.Dordrecht: Kluwer; 2000.

[15] Sehested K. Cross-sector partnerships as a new form of localgovernance. In: Kjaer L, Abrahamson P, Raynard P, editors. Localpartnerships in Europe? An action research project. The CopenhagenCentre; 2004.

[16] Løwendahl B. Strategic management of service firms. Copenhagen:CBS Press; 2000.

[17] McLoughlin I, Koch C, Dickson K. What’s this ‘‘Tosh’’? InnovationNetworks and new product development as a political process. Int JInnovat Manage 2001;3(5):275–98.

[18] Elg U, Johansson U. Decision-making in inter-firm networks aspolitical process. Organisat Studies 1997;3(18):361–84.

[19] Kumaraswamy MM, Zhang XQ. Governmental role in BOT-ledinfrastructure development. Int J Project Manage 2001;19(4):195–205.

[20] Li Bing L, Akintoye A, Edwards PJ, Hardcastle C. The allocation ofrisk in PPP/PFI construction projects in the UK. Int J ProjectManage 2005;23(1):25–35.

[21] Williamson OE. Comparative economic organization: the analysis ofdiscrete structural alternatives, Mimeo, 1991.

[22] Hakansson H, Johansson J. The network as a governance structure;inter-firm cooperation beyond market and hierarchies. In: GrabherG, editor. The embedded firm: on the socioeconomics of industrialnetworks. London: Routledge; 1993.

[23] Castells M. The rise of the network society. Cambridge, MA:Blackwell; 1999.

[24] Griffith A, Zammuto RF. Institutional governance systems andvariations in national competitive advantage: an integrative frame-work. Acad Manage Rev 2005;30(2):823–42.

[25] Bougrain F, Carassus J, Colombard-Prout M. Partenariat PublicPrive et Batiment en Europe. Quels Enseignements pour la France?Paris: Presses de L’ecoles National des Ponts & Chaussees, 2005.

[26] Loosemore M, Tan CC. Occupational bias in construction manage-ment research. Construct Manage Econ 2000;18:757–66.

[27] Gottlieb S, Buser M, Koch C. Innovation and drift – DanishMunicipalities and construction firms in networked public services.In: Paper presented at EGOS 2003 Sub theme 27 Post New PublicManagement Models in the Organization of Public Services?.

[28] Koch C, Buser M, Thuesen C. Managing projects with the public,– bringing partnering, contracts and financing together in buildingpublic services. In: De Meyer A, et al., editors. Operationmanagement as a change agent. Proceedings of the 11th Interna-tional Conference, EUROMA, INSEAD, Fontainebleau, 2004. p.199–208.

[29] Buser M, Koch C. Developing public private partnerships inDenmark – The role of construction firms in networked publicservices. In: Proceedings CICT, Athens, 2005.

[30] Sundbo J. The organization and strategy of innovation in service. In:Boden M, Miles I, editors. Services and the knowledge-basedeconomy. London: Continuum; 2000.

[31] Latour B. Science in action. London: Sage; 1988.[32] Boltanski L, Chiapello E. Le Nouvel Esprit du Capitalisme. Gallim-

ard, Paris, 1999.[33] OECD. New patterns of industrial globalisation: Cross-border

mergers and acquisitions. Paris: OECD; 2001.[34] Andersson NA. Mesoeconomic analysis of the construction industry.

Division of Construction Management, Lund University, Lund,2003.

[35] Winch G. Managing construction projects. Oxford: BlackwellScience; 2002.

[36] Bresnen M, Marshall N. The engineering or evolution of co-operation? A tale of two partnering projects. Int J Project Manage2002;20:497–505.

[37] OECD. Principles of corporate governance. Paris: OECD; 1999.[38] Turnbull S. Corporate governance. Its scope, concerns and theories.

Corporate Governance – An International Review 1997;5(4).[39] Williamson OE. Market and hierarchies: analysis and antitrust

implications. New York: The Free Press; 1975.[40] Williamson OE, editor. Organization theory. New York: Oxford

University Press; 1990.[41] Peters BG, Pierre J. Governance, politics and the state. Basingstoke:

Macmillan; 2000.[42] Koch C. Collaboration on change in construction – On why

Scandinavian Union approaches are still modern. In: Dainty A,Green S, Bagilhole B, editors. People and culture in construction: Areader. London: Blackwell; 2006.

[43] Rothstein B. The Social Democratic State. The Swedish model andthe Bureaucratic Problems of Social Reforms. Pittsburg: TheUniversity of Pittsburg Press; 1996.

[44] Beck Jørgensen T, Bozeman B. Public values lost? Public ManageRev 2002;1(4):63–81.

[45] EBST. Offentligt-privat samspil om skolebygninger. (EBST is theNational Agency for Enterprise and Construction), 2003.

http://www.pwc.com/neweurope


[46] EBST Indsamling og analyse af udenlanske erfaringer med OPP ibyomdannelse. Socialministeriet, EBST, København, 2005.

[47] EBST. OPP-Markedet i Danmark 2005–2010. København: EBST,June 2005.

[48] Marchington M, Grimshaw D, Rubery J, Willmott H. Fragmentingwork: Blurring organizational boundaries and disordering hierar-chies. Oxford: Oxford University Press; 2005.

[49] DANISKA. Vedrørende EU-kommissionens grønbog om offentligeprivate partnerskaber. Accessed at website, EU, 2005.

[50] OBSERVER. Korruptionsundersøgelse, København, Dansk byggeri,2005. DB (DB is Dansk Byggeri, the contracting employersassociation).

[51] EU. Communication from the Commission to the European Parlia-ment, the Council, the European Economic and Social Committeeand the Committee of the Regions on Public–Private Partnershipsand Community Law on Public Procurement and Concessions.Bruxelles: EU-Commission, 2005.

Emerging metagovernance as an institutional framework for public private partnership networks in...

Documents

Transcript of Emerging metagovernance as an institutional framework for public private partnership networks in...