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A study of the operationalization of management controls in United Kingdom Private Finance Initiative contracts
Author(s) -
Ahmad Salman,
Connolly Ciaran,
Demirag Istemi
Publication year - 2020
Publication title -
public administration
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.313
H-Index - 93
eISSN - 1467-9299
pISSN - 0033-3298
DOI - 10.1111/padm.12401
Subject(s) - operationalization , incentive , negotiation , government (linguistics) , control (management) , business , management control system , finance , private sector , public administration , accounting , public relations , public economics , economics , political science , management , economic growth , philosophy , linguistics , epistemology , law , microeconomics
Utilizing evidence from a United Kingdom (UK) road case study Private Finance Initiative (PFI) project, this article considers how the UK central government's infrastructure strategy is operationalized through accounting‐based performance measures and incentive systems, and articulates how the adoption of such systems is moderated by trust practices. The findings indicate that initial government policy objectives, translated as performance indicators in the case study, failed to offer adequate incentives for contractors and created tensions. However, controls were later developed through inter‐party trust practices for managing performance and relational risk. These findings have important implications for PFI policy and practice, including that negotiation can: (i) lead to pragmatic controls being introduced to foster cooperation and trust‐building; and (ii) provide opportunities for adapting the monitoring and incentive mechanisms. This study also contributes to the previous literature where PFI control systems were largely regarded as inadequate for dealing with unforeseen conflicts between parties.