«Over the last couple of decades, Public Private Partnerships (PPPs) have been identified as a viable alternative for procuring public infrastructure. ...»
STAKEHOLDER MANAGEMENT IN PUBLIC PRIVATE
PARTNERSHIP PROJECTS IN NIGERIA: TOWARDS A
Chika Amadi1, Patricia Carrillo and Martin Tuuli
School of Civil and Building Engineering, Loughborough University, Loughborough, Leicestershire,
LE11 3TU, UK.
Over the last couple of decades, Public Private Partnerships (PPPs) have been
identified as a viable alternative for procuring public infrastructure. PPPs bring together the best of both worlds; private sector managerial expertise and public sector regulatory and supervisory capacity to procure public infrastructure. While several PPP projects have been delivered successfully, others have experienced challenges such as stakeholders' opposition. PPP projects are by their nature complex involving multiple stakeholders and thus far, there is a lack of adequate and well- structured means of managing these stakeholders and their varied interests which has resulted in neglect of stakeholders. Neglect of interest of stakeholders has been identified as a major factor that undermines the success of PPP projects in Nigeria.
To this end, managing stakeholders in PPP projects in Nigeria has become necessary owing to the fact that support for PPP projects by the general public and transparency in the PPP process are enhanced when end users, local communities and other stakeholders are involved in all phases of the PPP scheme. This paper reviews literature on stakeholder management and concludes that existing frameworks do not provide adequate guidance on how stakeholders in PPP projects should be managed from project conception to operation and maintenance. Some of the main flaws identified with existing frameworks are their lack of attention to multiple parties involved in PPP projects and the inadequacy of stakeholder identification process.
This paper thus identifies the gaps in existing stakeholder management frameworks and makes a case for developing a framework for managing stakeholders in PPP projects which would be all inclusive, transparent and that gives end users, local communities and other stakeholders their rightful place as co-owners of the project.
This will enhance public support for PPPs and attract private sector investment in infrastructure in Nigeria.
Keywords: frameworks, public private partnership, stakeholder management.
INTRODUCTIONThe procurement of public infrastructure such as roads, rails, hospitals and schools through the PPP scheme has gained global acceptance (Ng et al. 2013). Several PPP projects have been delivered successfully to the required quality, on schedule and within budget. However, many PPP projects have experienced some challenges that led to undesirable outcomes and outright cancellation in some instances.
Stakeholders’ opposition has been identified as the main cause of PPP project failures (El – Gohary et al. 2006). End users and other stakeholders resistance to PPP projects 1 C.J.Amadi@lboro.ac.uk Amadi, C, Carrillo, P and Tuuli, M (2014) Stakeholder management in public private partnership projects in Nigeria: Towards a research agenda In: Raiden, A B and Aboagye-Nimo, E (Eds) Procs 30th Annual ARCOM Conference, 1-3 September 2014, Portsmouth, UK, Association of Researchers in Construction Management, 423-432.
Amadi, Carrillo, and Tuuli occur more in projects where individuals are expected to be charged directly for services (World Economic Forum 2010) such as highways and water facilities (El – Gohary et al. 2006).
Stakeholders can generally be described as individuals, groups or organisations that can affect or be affected by the performance or completion of a project (Freeman 1984; PMBOK 2008). Stakeholders may include clients, project managers, designers, subcontractors, suppliers, funding bodies, users and the community at large (Newcombe 2003). It is therefore important to manage and involve stakeholders early in the life of a project (El – Gohary el al. 2006) and keep them involved throughout the project life cycle. Stakeholder management as a field of study offers the platform for engaging different project stakeholders. Stakeholder management has the capacity of providing critical strategic information, resources and problem- solving techniques and offers different stakeholders the opportunity to make meaningful input to a project (Foo et al. 2011). Scholars and authors have recognised the importance of managing the interests and needs of projects’ stakeholders and have proposed strategies for managing these stakeholders. While several frameworks and models have been developed to aid in the management of project stakeholders in conventional procurement, the frameworks specifically developed for PPPs are inadequate to address the challenges of stakeholders in PPP projects due to some apparent flaws of their processes.
These PPP stakeholder management frameworks provide project practitioners with some tools to identify project stakeholders and engage with them. However, a review of these frameworks shows significant limitations and the inapplicability of some of the proposed processes. This paper proposes the development of an all-inclusive and participatory framework for stakeholder management in PPP project in Nigeria.
Firstly, the PPP concept and stakeholder opposition as a major challenge that inhibits its success is discussed. Secondly, stakeholder management as a field which recognises the importance of managing stakeholders is discussed. Frameworks for managing stakeholders in traditional procurement and PPP projects in particular are then examined and their limitations highlighted. Finally, a research agenda aimed at developing a framework for managing stakeholders in PPP projects in Nigeria is proposed.
PUBLIC PRIVATE PARTNERSHIPS: CHARACTERISTICS AND
EXPERIENCESPublic Private Partnerships are models that have been adopted for procuring hitherto traditionally owned public infrastructure. The concept of PPPs has been identified as a veritable tool in the procurement of public infrastructure. PPP is a generic term for the different forms of relationships or partnerships that could possibly exist between the public sector (government) and the private sector to form a synergy with the sole aim of financing, developing, building/constructing and for the effective management of public infrastructures (Robinson et al. 2010; UNECE 2008). The relationship between the public sector (government) and the private sector for the provision of public infrastructure comes in different forms: Build –Own- Operate- Transfer (BOOT);
Build Operate Transfer (BOT); Design Build Operate Transfer (DBOT); etc. These relationships are usually long term and in a concession arrangement, could last up to 40 years (Smyth and Edkins 2007). The essence of the long term contract is to enable the private sector to repay loans sourced from banks and other financial institutions (NAO 2011) and make some profit in the process. The relationships are designed to be
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of mutual benefit as well as risk sharing to the parties (Grimsey and Lewis 2005).
Under the relationship, the strength and expertise of both the public and private sectors are combined to improve the efficiency of resource allocation and the quality of public service (Robinson et al. 2010). PPP programmes have developed rapidly and replicated in different forms across the world.
Several countries in both developed economies such as Australia, Canada, USA, and the UK and developing economies and middle- income countries from Africa, Asia, Eastern Europe have procured many infrastructures through the PPP scheme (Robinson et al 2010). According to Public Works Financing (PWF); International Major Project database (2013), a total of $876 billion (or £524 billion as at current rate) has been invested in PPPs across the world. With an estimated £54.7 billion invested in 717 projects (HM Treasury 2012), the United Kingdom is one of the leading countries with huge private sector investment in infrastructure. Canada is another example of a country that has made progress in PPPs. About £38.3 billion have been invested in 198 infrastructure projects in Canada through the PPP scheme (Media Planet 2013). In Sub- Sahara Africa, through private sector investment, an estimated £39.1 billion has been invested in 249 infrastructure projects (World Bank PPI Database 2012). Nigeria is a Sub – Saharan Africa Country that has embraced the PPP concept and has initiated policies and frameworks geared towards improving private sector participation in the financing and development of infrastructure.
The history of private sector participation in financing, developing and managing public infrastructure in Nigeria is recent but has grown considerably with some PPP projects completed and operational and several transactions reaching financial close.
Notably, in 2003 the Federal Airports Authority of Nigeria (FAAN) and Bi- Courtney Limited (BCL) entered into a concession agreement for the financing, development and operation of the Murtala Mohammed International Airport (MMA2). The project has since been delivered and is operational. Following the successful delivery of the MMA2 project, the Federal Government took a decisive step in revamping major seaports in the country. The government in 2004 engaged competent private ports operators to rehabilitate, operate and manage 26 seaports through a concession arrangement (Ekanem 2010). Also, the first phase of the 49.5km Epe – Lekki toll road in Lagos state which was started in 2006 has been completed and operational. The project with an estimated cost of £222 million is a Design – Build- Operate – Transfer (DBOT) road concession arrangement between the Lagos state government and the Lekki Concession Company (LCC) (World Economic Forum 2010). However, the tolled road since its opening has come under public scrutiny with stiff opposition from human right activists, local residents and road users which have led to protests and litigation (Falayi and Ajaja 2014). Such opposition by the public and other stakeholders is now a source of worry for PPP projects around the world (El- Gohary et al. 2006).
Several cases of public opposition against PPP projects have been reported across different countries of the world. For example, the 2.1km Cross City Tunnel (CCT) in Sydney, Australia went into receivership less than two years after its opening in August 2005 (Phibbs 2008) which was as a result of low traffic volume caused by public resistance and boycott of the tunnel. As noted by Chung et al. (2010), had the public sector authority taken on board the views of the community at the early stage of the project, public resistance would have been minimised. The Jin long toll road (JLTR) project, a 17Km road in the Zhejiang province of China is another example of a failed PPP tolled road project due to public opposition. Drivers used all available
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alternative routes to register their frustration and protest at the exorbitant fees charged.
Chen et al. (2012) note that the fundamental factor that led to the collapse of the concessioned JLTR project was the non-engagement of stakeholders and neglect of public interest in the concession project, particularly at the planning phase. Public opposition is mainly caused by lack of effective public participation in project planning (Ng et al. 2013). To this end, adequate consultation and involvement of end users, local communities and other relevant stakeholders from project initialisation to completion has been recommended as one of the core good governance principles for PPP projects (UNECE 2008). Generally, consultation and involvement of stakeholders is considered in the field of the stakeholder management concept.
STAKEHOLDER MANAGEMENTModern stakeholder management can be attributed to the scholarly work of Freeman (1984) with his now classic book, “Strategic Management: a Stakeholder Approach” (Andriof and Waddock 2002; Chinyio and Olomolaiye 2010). Managing stakeholders is “trust-based collaborations between individuals and/or social institutions with
different objectives that can only be achieved together” (Andriof and Waddock 2002:
Stakeholder management is a concept that describes an organisation’s resolve to manage relationships with its stakeholder groups (Chinyio and Olomolaiye 2010) in a proactive manner (Freeman 1984: 53).The aim of managing relationships is to motivate stakeholders to act in manners that will promote the objectives of a firm (Harris 2010). Although, the origin of stakeholder management can be traced to strategic management, its ideas and principles have been researched and applied in various fields of study including construction project management (Atkin and Skitmore 2008).
The importance of effective management of stakeholders in construction projects cannot be over stated due to the impact stakeholders can have on projects. The complexity of modern construction projects has created a web of stakeholders which often make several demands on a project depending on their interest in the project.
These multiple stakeholders more often than not have different interests and concerns which could be conflicting (Harris 2010) and mismanaging these interests and concerns can have devastating consequences on projects (Chinyio and Olomolaiye 2010; Manowong and Ogunlana 2010). Therefore, there is the need to develop a broad project management process that would aid in active interaction with stakeholders from the start of project to completion (Oyegoke 2010). Jawahar and McLaughlin (2001) suggest the deployment of different strategies to effectively manage the interests of different stakeholders’ groups and individuals. Strategies should be formalised so as to help project practitioners manage stakeholders more intelligently and to avoid the unreliable informal or hit- or-miss methods (Cleland and Ireland 2007).
Different stakeholder management process models for construction projects have been proposed by several researchers and scholars (Yang et al. 2011). Stakeholder management frameworks developed by Karlsen 2002; Bourne and Walker 2006;
Olander 2006; Cleland and Ireland 2007; PMBOK 2008 are the most cited. These frameworks identify various processes for engaging and managing project