Public Private Partnerships: Organisational form or management strategies? The impact of the organisational form and managerial strategies on the outcomes of PPP projects

Erik-Hans Klijn Jurian Edelenbos Bram Steijn

Paper for the 12th conference of The International Research Society for Public Management, 26-28 march 2008, The School of Management, Faculty of Business,

Queensland University of Technology, Brisbane Australia, Panel Public Private Partnerships

Summary In the discussion about public private partnerships, a lot of attention is devoted to the organisational structures of PPPs. This is especially clear in the discussion about the Private Finance Initiative in the UK where much attention is paid to the organisational form and the contract by which the project is organised. But is the organisational form so important or is the intensity and type of managerial strategies more important? In this paper we investigate this question for PPP projects in The Netherlands. The research is based on a survey in 2006 that resulted in 230 respondents involved in environmental projects in The Netherlands. They were asked questions about trust, about project characteristics, about the organisational form and the level of PPP, about network management strategies and outcomes. If we look at the effects of organisational form managerial strategies on the outcomes we see that managerial strategies are far more relevant for the outcomes than the organisational form which is of limited importance. The conclusion may be that practitioners should devote their attention primarly to the management of partnerships in stead to the organisational form. Dr J. Edelenbos (Associate Professor, Department of Public Administration, Erasmus University Rotterdam) Prof. Dr E.H. Klijn ( Professor, Department of Public Administration, Erasmus University Rotterdam and Visiting Professor at the School of Public Policy, University of Birmingham) Professor Dr B. Steijn (Professor, Department of Public Administration, Erasmus University Rotterdam) Department of Public Administration Erasmus University Rotterdam. PO Box 1738, 3000 DR Rotterdam, The Netherlands, e-mail: klijn@fsw.eur.nl; edelenbos@fsw.eur.nl; steijn@fsw.eur.nl

1. Introduction

Public Private Partnerships (PPP) have become a popular policy instrument in many Western European countries. Governments increasingly refer to PPP as an important instrument to modernize public policy with the assumption that involvement of private actors in the provision of services, or in the realization of policy goals, will increase quality and give better value for money.

So the ideas on PPPs generally stress that a more intense co-production between public and private actors can generate better results. However more intense co-production also requires more co-ordination and thus more transaction costs. These transaction costs have to be compensated by additional revenues that would not have been acquired without the public private co-operation.

PPP in the Netherlands

In the late 1990s, the concept of PPP revived in political discussions in The Netherlands after a brief first attention in the eighties. The coalition agreement of the Kabinet Kok II (the second coalition cabinet of Social Democrat party and Liberal-Conservative party), which came into power in 1998, said that: “The aim is a controlled enlargement of the PPP practice in The Netherlands. The required knowledge, expertise and experience will be combined in a knowledge centre according to the report ‘Knowledge through co-operation’. This knowledge centre will draft policy condition in close cooperation with the sector ministries for PPP and provide support with concrete PPP projects and advice for PPP projects”.

A PPP Knowledge Centre was established at the Ministry of Finance, reporting regularly to the ministry council and parliament. A review of these reports (especially the annual overviews) suggests that early optimism – with ‘easy’ ripe-fruit projects for the picking – was not justified. In the reports one can read that although many projects are underway in The Netherlands that can be labelled as public private partnerships, the spreading of the idea did not proceed as fast as was expected (see Klijn et all, 2007). This however is also due to the specific definition of PPP that the Knowledge Centre uses. It looks especially for contractual forms of PPP, very much like the PFI partnerships in the UK, and has less attention for the more loosely coupled partnerships that can be found in many infra structure and environmental projects in The Netherlands (see also this paper).

This paper: what contributes more, organization or management?

One can find a wide variety of organisational forms for PPP – from strongly contractual based relations till consortium forms of partnerships (see Hodge/Greve, 2005; Ghobadian et all, 2004). But one can also find the statement in the literature that PPP projects in general are fairly complex and for all demand much managerial effort (Klijn and Teisman, 2003).

This paper addresses the question whether the organisational form makes any difference to the outcomes of a PPP project. As an alternative hypothesis the assumption is looked at is that the managerial effort is the most important. In the second section of this paper we

look at PPP as a phenomenon and discuss some hypotheses about organisational forms and managerial strategies. In section 3 we explain the research methodology. Section 4 discusses some key features of PPP projects, while section 5 addresses the key question whether organisational form or managerial strategies are the most important with respect to PPP outcomes.

2. PPP: the qualities of managed partnerships

Public private partnership can be described as a “more or less sustainable cooperation between public and private actors in which joint products and/or services are developed and in which risks, costs and profits are shared” (Klijn/Teisman, 2000). So the main characteristics of public private partnerships are mutual coordination of activities and daily routines, some level of shared risk and some form of organisational arrangement to enhance the cooperation process (see Savas, 2000; Hodge and Greve, 2005).

Forms of PPP

This however leaves still open in which way the partnership takes form. Authors have identified a variety of forms of PPP in practice, both in governmental papers, as well as in the theoretical literature (see Hodge and Greve, 2005, Klijn et all, 2007). An important form is of course the Private Finance Initiative that originates in the UK, but has spread ever since within Europe. In this form private firms or consortia are engaged in government policy (outputs services or products) by innovative contracts - the so-called design, built finance and maintenance contracts. For example, the Private Finance Initiative (PFI) tendering system used in the UK for the road construction bundles design, build, finance, and operation, which are contracted out to private consortia for a period of 30 years. The consortium can use more sustainable (expensive) building materials to save on future maintenance costs (Haynes/Roden, 1999). The payment system rewards the ‘availability’ of roads (NAO, 2002) rather than second-guessing the costs of constructing them. The opportunity for a long-term involvement in a project provides both the potential for devising new solutions to problems and protects a risk aversion to untested.

Beside these strongly contractual forms of PPP one can also encounter more loosely coupled organisational partnership forms. Loosely coupled partnerships are usually found in urban reconstruction and regeneration projects where measures to strengthen transport are combined with measures aimed at improving the living environment and/or housing and measures aimed at strengthening the economic structure. In this method of cooperation, added value is generated by combining substantive activities and projects which then reinforce each other. This also makes it possible to achieve a financial trade-off between profitable and less profitable but socially interesting components.

Whatever form is discussed, policy makers and researchers assume that a more intensive cooperation between pubic and private parties will produce better and more efficient policy outcomes and policy products (Ghobadian et all, 2004; Hodge/Greve, 2005; Savas, 2000). The key to a successful ‘partnership’ mechanism is that private parties are

involved earlier and more intensively in the decision making process, than is the case with more traditional client-supplier or principal-agent relationships.

Two different types of assumptions on PPP

So far everyone agrees. But in the assumptions about added value we can recognize different assumptions based on different theoretical bodies of knowledge. On the one hand one can recognize ideas from New Public Management that have become dominant in Public Administration since the eighties. In these ideas governments should focus on the formulation of public policy and leave the implementation to other bodies (private organisations or non profit organisations) (Osborne and Gaebler, 1992). For that a separation of policy implementation and policy formation should be encouraged by privatization, outsourcing, agentification and a stronger emphasis on market mechanism (Hood, 1991; Kickert, 1997). Public actors should control the implementation by performance indicators or market mechanisms. These ideas can be traced in the public private partnerships debate where it stresses efficiency and tendering and outsourcing as possible forms of organizing PPP’s (Nao, 2002; Greve, 2007). But it can also be found in the suggestion that PPP should be given clear performance indicators.

One can however also encounter quite different assumptions in the PPP literature. An example is the assumption that co-production between public and private actors results in exchanging more information and the usage of each other’s knowledge and so generate more innovative and better products and policy outputs for complex societal problems. In these assumptions that can be traced to governance theories, one can find the idea that horizontal coordination leads to a combination of knowledge, information and skills but should also be managed (Kickert et all, 1997; Sorensen and Torfing, 2007). Although the literature does mention organisational structure and form (Mandell, 2001) it tend to stress institutional and even more so managerial characteristics as decisive for achieving good outcomes. Mostly these managerial effort are labelled network management (Gage/Mandell, 1992; Agranoff/McGuire, 2001; Meir/O’ Toole, 2001, 2007; Koppenjan/Klijn, 2004). Without these managerial strategies the story goes that reaching desirable outcomes is very hard.

The number of network management strategies that has been dealt with in the literature to guide interaction processes is impressive and this is not the place to pretend to be exhaustive (see Gage/Mandell, 1990; O’Toole, 1988, Agranoff/McGuire, 2001; 2003). It is clear, however, that if the network manager is to achieve interesting outcomes he has to implement a range of different strategies (see Kickert/Klijn/Koppenjan, 1997; Agranoff/McGuire, 2001). He has to activate actors and resources (see Scharpf, 1978, Mandell 1990), he has to co-ordinate goal achieving mechanisms which includes influencing the perceptions and goals of other actors, he has to foster or create organisational arrangements to facilitate and enable interactions between actors (Agranoff/McGuire, 2003) and last but not least he has to co-ordinate the stream of actions and interactions between different actors (Kickert et all, 1997). But various authors indicate that it also is sensible to design temporarily rules for interaction between actors before the process start or during the process to solve difficulties in interaction (see Bruijn et all, 1998; Koppenjan and Klijn, 2004). One can

think various rules that facilitate interaction like conflict resolution, exit or entrée rules etc (see table 1) Table 1 below summarizes these types of strategies and specifies them by giving examples of each of the categories. As said we do not pretend to be exhaustive. Moreover, not all the strategies mentioned in any one cell are mutually exclusive. One can, for instance, influence the perceptions of actors by activating new actors that bring in those new perceptionsi. Table 1 Overview of process management strategies Type of strategies Setting interaction

rules (process design) Goal achieving strategies (exploring content)

Organisational arrangements (arranging)

Activating actors and interaction guiding (connecting)

Main strategies mentioned in the literature

Rules for entrance or exit in the process, conflict regulating rules, rules that specify interests of actors or veto possibilities, rules that inform actors about availability of information about moments of decisions etc.

Searching for goal congruency, creating variation in solutions, influencing (and explicating) perceptions, managing and collecting information and research, creating variation by creative competition

Creating new ad hoc organisational arrangements (boards, project organisations, etc.).

Selective (de)activation of actors, resource mobilizing, initiating new series of interaction, coalition building, mediation, , appointing of process manager, removing obstacles to co-operation, creating incentives for co-operation

Adapted from Klijn, 2005 Some assumptions about Public Private Partnerships

So we can find various assumptions in the literature about PPP. There is no doubt that almost all of the literature (Osborne, 2000; Ghobadian 2004; Hodge/Greve, 2005), and also government documents (see NAO, 2002; Kenniscentrum 2001; 2004) suppose that more intense co-production between public and private actors enhances the results. This especially holds when it concerns more complex policy problems or projects where innovative solutions are needed. If the problem is simple we already have proven technology and solutions and a simple classical tendering scheme will do (Kenniscentrum, 2001). This is also stressed in neo-institutional economics (Williamson,. 1996).

So if we envisage PPP as a level of co-production between public and private actors than the level of PPP should increase with the complexity of the project (simple projects don’t need PPP) and on its turn a high level of PPP should be related to better outcomes. This leads us to the first two hypotheses:

- Hypothesis 1: When projects are more complex they are likely to show a higher degree of PPP.

- Hypothesis 2: A higher degree of public private partnership leads to better (perceived) outcomes in projects outcomes.

Another interesting aspect in the discussion is what in PPP really makes the difference? Is it the organisational form that a PPP takes or is it the managerial effort and type of strategies that are employed within the public private partnerships. As we have seen above, the importance of the organizational form is stressed more in the NPM literature, while the importance of network management strategies (or meta governance) is stressed more in the governance literature (Meier/O Toole, 2001; 2007; Agranoff/Mc Guire, 2001, 2003; Koppenjan//Klijn, 2004; Sorenson/Torfing, 2007). We tried to capture these expectations with a few closely related hypotheses.

- Hypothesis 3: A higher degree of PPP is strongly correlated to a) more formalized organisational form of coordination and b) to more intensity of management and a larger number of network management strategies.

- Hypothesis 4. A more formalized form of PPP is less important than the network management strategies for explaining the outcomes of PPP projects.

In the next section we will deal with some of the methodological issues of this research.

3. Methodology of the research: assessing outcomes and level of PPP

The analysis in this article is based upon a web-based survey held in December 2006 among respondents involved in environmental or spatial projects in the Netherlands. The problem with surveys like this is that there obviously does not exist lists of all environmental projects in the Netherlands – let alone of all respondents involved in these types of projects and networks surrounding it. To acquire addresses of people involved in environmental projects, we therefore used the data base of a large knowledge organisation in The Netherlands (Habiforum). This is a knowledge network in which professionals from the spatial domain participate. It was established in 1999 and incorporates practitioners (from government, NGO’s, water boards, project developers and builders etc), scientists and consultants (most of which are actually involved in environmental projects).ii Population and survey The next table describes the population we have used for our survey, and the number of respondents that have returned a usable questionnaire. Table 2. Population and Survey

Number of people on Habiforum List (after deleting researchers)

1592

Returned questionnaires 547 Analyzed questionnaires 337

The original list contained 1592 names (after we deleted the researchers from universities since we were only interested in practitioners). An e-mail was send in November 2006 to these addresses, with a (secured) link to a webpage containing the questionnaire, although we knew beforehand this included many people with only a broad interest in spatial

projects and without ‘real’ involvement in such a spatial project. Therefore, one of the first questions of the questionnaire was about a specific project the respondents were involved in. It was also meant to select only those respondents who are really involved in these projects. In total we got 547 filled in questionnaires back. Many of these, however, were only (very) incompletely filled in.iii In fact, 188 people did not give any information about a spatial project they were involved in, and quit the survey after the questions about these project started (e.g. question 6, the first five were about personnel characteristics). Many of these respondents indicated in an open question that they were in fact not involved in such a project. We therefore deleted these respondents from the database. We also had to delete 22 other respondents from the dataset, because they were missing on most of the variables. This leaves us with 337 respondents who answered most of the questions in the questionnaire and indicated that they themselves were involved in spatial projects. Related to the number of e-mailed questionnaires the response can be estimated at 21%, although related to the people that are involved in spatial projects this response can be estimated substantially largeriv. Nevertheless, the above implies we have to be careful in interpreting our data as: a) the actual population of people involved in spatial projects is unknown and b) therefore it is impossible to find out whether our response is representative for this population. We however have reasons to believe that this sample gives a reasonable overview of all spatial projects in the Netherlands (see note 3) Project and respondent characteristics The respondents were asked questions about trust, project characteristics, management strategies, (perceived) outcomes and on involvement of stakeholders and political parties in decision-making. As note above, each of the respondents was asked to answer the questions with a specific spatial project in mind. It is important to give some information about the respondents and the projects they were involved in. With respect to the respondents, they were predominantly male (83.4%), middle aged (48 years) and highly educated (80.7% had a university degree). They had on average 12,24 years experience with environmental/spatial projects, and with respect to their involvement in the project, four different categories can be discerned:

- 1. 12.0% followed the project ‘from a distance’ - 2. 23.4% was ‘thinking along with the project’ - 3. 35.7% ‘actively participated within the project’ - 4. 28.8% was managing the project.

We can see that the large majority of respondents (almost 65%) is heavily engaged in the project they answer the questions for (e.g. a combination of categories three and four). Finally, also the background of the respondents (e.g. the parental organization) is important. Four different backgrounds can be discerned: 1) national civil servants (10.7%); 2) local civil servants (included also civil servants from counties) (28.5%); 3) private sector respondents (48.3%); ‘others’ (12.4%). The last group mostly involved respondent from stakeholder organizations like environmental groups, etcetera. With respect to the projects these respondents were involved in, the following table provides some important characteristics.

Table 3. Description of several project characteristics (N=337) Project includes

Building of houses 60.8% Building of business terrain 30.3%

Mean number of different activities (maximum 6) 2.98 Includes: houses, business terrain, water development, environmental development and commercial development

Median pass through time period of the project 10 years Average number of involved organisations in the project

11,78 All other organisations with whom – according to the respondents – his/her organisation has contact with for this project.

If we look at these characteristics we can conclude that these certainly are projects that match the characteristics of fairly complex projects: they include many actors (see number of contacts), they deal with difficult problems (more than one activity/problem area is dealt with) and take a long period of time. The important variables are listed in table 4. For an extensive elaboration of the conceptualization and measurement we refer to the appendix at the end of this paper. Table 4. Short description of measurement of main variables Variable nature Conceptualization and measurement Outcomes (divided in content and process outcomes

Dependent variable Measured by 6 items that were added and divided by 6 to construct two scales.

Project complexity Independent variable Number of different activities (housing, road development etc). ranging from 0-6

Network management strategies Independent variable 16 items measuring managerial activities divided in four subcategories (arranging, process agreements, connecting, exploring content). We used the 16 items summed as a measure of the number of strategies (see table 1)

Management intensity (nature of the effort

Independent variable Measured by four items related to how active the process is managed

Phase of project Control variable Measured by several types of activities that are performed in the project

Parent organization of respondent Control variable Organizational background of respondent

Organizational form Independent variable Formal organizational category (no organizational form, project group, project bureau and autonomous judicial identity)

Position in project Control variable Position respondent holds in the project (manager=1 other=0)

Years of experience Control variable Years respondent has experience in environmental projects

4. Public Private Partnership: form and strategies We want to explore first whether Public Private Partnerships are used for complex projects more often (hypothesis 1) and how complexity relates to the organizational form and the managerial strategies that are used in the project.

PPP: complexity and organizational form We first look at the relation between complexity and degree of PPP. Table 5 presents a regression analysis with the degree of PPP as dependent variable and complexity as independent variable. We also control for the control variables indicated above. Table 5. Regression analysis with degree of PPP as dependent variable (N=267)

Unstandardized Coefficients

Standardized Coefficients

Model B Std. Error Beta t Sig. (Constant) 2,607 ,299 8,727 ,000background

Local -,205 ,254 -,088 -,808 ,420Private -,180 ,243 -,086 -,744 ,458

different ,179 ,284 ,057 ,630 ,530Phase project

developmental ,489 ,167 ,230 2,935 ,004Building ,336 ,205 ,121 1,644 ,101

maintenance ,684 ,197 ,261 3,468 ,001Manager (1=yes) ,144 ,130 ,065 1,102 ,272experience ,013 ,007 ,111 1,841 ,067

1

Complexity ,160 ,046 ,205 3,504 ,001

Model R R Square Adjusted R Square

Std. Error of the Estimate

1 ,355 ,126 ,095 1,00090 The results are a clear support for hypothesis 1: the higher the complexity of a project, the higher the degree of PPP. Not surprisingly, respondent characteristics do not play a role (which implies their perception of the degree of PPP in a project is not different!). but the phase of a project is important. Compared to the preparation phase, the degree of PPP is significantly higher in the later phases (especially in the developmental and maintenance phase). However, this is not very surprising, since mostly the idea of public private co-operation has to be taken explicitly in these phases of the project.. PPP: organizational form and managerial strategies. We now turn to the essence of this paper, the effects of PPP (hypothesis 2), and organizational form and managerial strategies (hypotheses 3 and 4). We first turn to the relation between PPP and organisational form and managerial strategies. According to hypothesis 3 a higher degree of PPP is related to both a more tight organizational form as well as a more intensive and higher number of managerial strategies. The next table shows the relation between PPP and organizational form.

Table 6. PPP and organizational form (N=231)

Mean N No formal organizational form

2,2857 14

Project group with regular meetings between parties 3,4989 147

Joint project office 3,6522 46Autonomous legal entity 4,3889 24Total 3,5483 231

eta2 = 0.14 There is a weak association between PPP and organizational form. A higher level of PPP is associated with an autonomous legal entity as organizational form, a finding which is confirmed by a Scheffe test which shows that the mean score for this category differs from all three other categories. In the same way, the absence of a formal organizational form is significantly associated with a lower degree of PPP. This confirms hypothesis 3a. The next table holds the correlations between PPP, management intensity and the number of managerial strategies. Table 7. Correlations between PPP, management intensity and the number of strategies

PPP Number of Strategies

Management intensity

Pearson Correlation 1 ,366 ,333 Sig. (2-tailed) ,000 ,000

PPP

N 292 213 255 Pearson Correlation ,366 1 ,580 Sig. (2-tailed) ,000 ,000

Number of Strategies

N 213 224 223 Pearson Correlation ,333 ,580 1 Sig. (2-tailed) ,000 ,000

Management intesity

N 255 223 274 We can clearly see that the degree of PPP is highly correlated to the number of strategies and the management intensity, which confirms hypothesis 3b. An extensive co-operation needs a large number of management strategies as well as intensive managerial activities. Although the coefficients are difficult to compare, it appears at first sight that the relation between PPP and managerial strategies is higher than the relation with organisational forms. Before we turn to our analysis of the effects of these variables on outcomes, we first look into the relation between organisational form and strategies. Are these variables related? The next table gives an answer.

Table 8. Organizational form and managerial strategies

Strategy

(a) Intensity

(b) Mean 5,4444 3,1071No formal organizational

form N 9 14Mean 8,8496 4,0128Project group with regular

meetings between parties N 113 137Mean 9,3667 4,0833Joint project office N 30 39Mean 8,8571 4,3021Autonomous legal entity N 21 24Mean 8,7630 3,9988Total N 173 214

Eta2 (a) = 0,04 (ns); eta2 (b) = 0,11 (p < 0,01) It appears that organisational form and number of strategies is not statistically related, but form and intensity are. Thus if actors have chosen for a more formalized organisational form we see no correlation with the number of employed strategies but we do see correlations with the way the project is managed. This is not surprisingly if we look at the way management intensity is measured. Two of the items are likely to be connected to the organisational form that is the fact that much staff is used and that there is a good relation with the top level of the involved organizations. One may expect that these two are more easily fulfilled when there is a more formalized organisational form. The same holds true for the item that a process manager is appointed for the project. Actually one can even say that correlation is relatively weak if one considers that the items that measure intensity can be expected to relate to the organizational form. 5. Perceived outcomes: What is more important organizational structure or managerial strategies? Now that we know how the degree of PPP relates to the organizational form and to the managferial straetgies we can take a closer look at hypotheses 2 till 4. For that we use a step wise regression analysis, in which either process outcomes or content outcomes are the dependent variable. We look at various independent variables. In the first step we look at the complexity of the project. In the second step we add the degree of PPP. Then we add organizational structure (step 3) and network management strategies and management intensity (step 4) to the model. The next table presents the explained variance of each separate step for process and content outcomes respectively.

Table 9. Explained variances in stepwise regression analyses for perceived process and content outcomes

Process outcomes

Content Outcomes

Model R R Square Adjusted R Square R R Square

Adjusted R Square

1 ,158(a) ,025 -,029 ,280(a) ,078 ,028 2 ,295(b) ,087 ,029 ,366(b) ,134 ,080 3 ,306(c) ,094 ,016 ,370(c) ,137 ,063 4 ,615(d) ,378 ,315 ,616(d) ,380 ,317

The results are highly similar with respect to both types of outcomes. The explained variance rises from step 1 to step 2 (when the degree of PPS is introduced). Remains stable in step 3 (when organizational form is introduced), but rises substantially in step 4 when management strategy and intensity are introduced. This suggest that with respect to outcomes especially management actions count, which is in accordance with hypothesis 4. Table 10 presents these results in more detail. The first step (with the control variables) is left out from this table, as it does not contain much additional information: the action is in step 2, 3 and 4. Table 10. Analysis of perceived process outcomes

Step 2

Step 3

Step 4

Beta sign Beta sign Beta sign (Constant) ,000 ,000 ,000 Background Local actor ,151 ,413 ,109 ,568 ,007 ,964 Private actor ,108 ,585 ,059 ,776 -,016 ,925 else -,002 ,992 -,042 ,800 -,125 ,370 Complexity -,136 ,119 -,140 ,135 -,139 ,077 Project phase developmental -,023 ,829 -,033 ,764 -,052 ,579 building ,012 ,909 ,009 ,929 ,010 ,911 maintenance ,061 ,558 ,057 ,593 ,033 ,708 Manager -,002 ,984 -,009 ,912 -,056 ,432 Degree of PPS ,278 ,002 ,258 ,007 ,043 ,608 Organizational form projectgroup ,202 ,315 ,075 ,658 projectbureau ,167 ,332 ,035 ,809 Juridical entity ,145 ,394 ,048 ,736 Management intensity ,346 ,000 Number of strategies ,314 ,001

Looking in more detail at the results of the analysis of project outcomes, we can see that the control variables do not play a significant role in the explanation of perceived process outcomes (please note that this also holds for the project phase). In step 2 – when introducing the degree of PPP – the explained variance rises slightly and we can note that the degree of PPP is significantly related to perceived outcomes, which is in accordance with hypothesis 2. Nothing really change in step 3. The effect on perceived process outcomes of the degree of PPP remains high (beta 0.26). The introduction of organizational forms do not matter and have no effect on this perception. However, in step 4, the effect of the degree of PPP disappears, whereas strong effects of management intensity and number of strategies can be seen. This confirms hypothesis 4: with respect to the perception of process outcomes, management actions matter, and not so much the organisational form of the PPP. In fact, none of the other included variables significantly matters. The analysis of content outcomes is highly similar. Table 11., Analysis of perceived content outcomes

Step 2

Step 3

Step 4

Beta sign Beta sign Beta sign (Constant) ,000 ,000 ,000 Background Local actor ,318 ,101 ,312 ,122 ,174 ,315 Private actor ,289 ,165 ,285 ,193 ,164 ,381 else ,129 ,430 ,118 ,492 ,020 ,895 Complexity ,000 ,998 ,017 ,851 ,028 ,718 Project phase developmental -,040 ,701 -,042 ,688 -,004 ,962 building -,105 ,281 -,105 ,285 -,072 ,390 maintenance ,034 ,739 ,038 ,712 ,041 ,639 Manager ,117 ,147 ,106 ,207 ,060 ,399 Degree of PPS ,261 ,003 ,262 ,004 ,069 ,404 Organizational form projectgroup ,059 ,761 -,028 ,865 projectbureau -,006 ,969 -,097 ,499 Juridical entity ,016 ,920 -,010 ,941 Management intensity ,112 ,225 Number of strategies ,467 ,000

Like in the preceding table, the degree of PPP significantly affects the perception of content outcomes. This effect remains unchanged in step 3, where – again – organizational form does not significantly affect this perception. In step 4, the explained variance rises dramatically and the effect of the degree of PPP withers away. In contrast to the preceding table, only one of the management variables is significantly related to these outcomes: the number of strategies used in the projects is very strongly related to

the perception of the content outcomes (beta = 0.473). Again, this is in accordance with hypothesis 4. 6. Conclusions In general public private partnerships in infrastructure and housing area are characterized by low formalization of the organization. The majority of the partnerships is organized by project groups (53%) or project bureau that organizes the interactions (16%). Autonomous judicial entities only make 16% of the cases (19% different form/unknown and 5% no organizational form). On the other hand there is more variety in the degree of partnerships, which we measured by looking at risk sharing, coordinating activities and the existence of organizational provisions to arrange cooperation. We found that the degree of PPP is positively related to perceived outcomes of the respondent. So the higher the degree of PPP the higher the perceived outcomes are. If we look what has to most impact we see that it is the number of employed network management strategies, and to a lesser extent the management intensity that have the most impact. The organizational form of the partnership has relatively little impact. Of this is not the last word on the effectiveness of PPP. Not only is the discussion on that topic too complex, but we also only looked at partnership projects in the field of infra structure, urban planning and environmental policy. These by nature are mostly complex projects, although we think that most of service delivery issues where PPP is used for are also fairly complex. It is not surprising that we witness a proliferation of PPP forms in the UK as PPP are increasingly used for more complex issues than the building of schools and highways. We now have local educational partnerships, service delivery partnerships and more. They share a common characteristic and that is that their organizational forms are more complex that the by now almost ‘classical’ PFI contract in the UK (see Klijn et all, 2007). But we do think we have showed that there is enough reason to look more closely on the management of partnerships at the expense of the organizational structure. Organizational structure probably does matter for the interactions in PPP but does not contribute very much to the quality of the outcomes. It is the managerial strategies that make the difference to achieving interesting outcomes. References Agranoff, R., M. McGuire, (2001), Big questions in public network management research, Journal of

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Appendix: conceptualization and measurement of the key variables in the research Conceptualizing and measuring outcomes: process and content outcomes

Measuring outcomes for these fairly complex projects is not that easy. One of the reasons for this is that actors have different goals and it is thus difficult to pick a goal by which to measure outcomes for the whole project. But measuring outcomes is also problematic because these projects take a long time and goals of actors will change during that time. Goal displacement is the negative wording for this and learning the positive wording (see Koppenjan and Klijn, 2004)

In our analysis, another problem is that it is not possible to asses in a survey the ‘objective’ outcomes of the wide variety of projects that were mentioned by the respondents (like number of dwellings realized, time it takes to complete the project etc). We choose therefore to use perceived outcomes as proxy for these outcomes. This is also in line with our remarks that goals change and that actors have different views about the outcomes. We made a distinction between content outcomes (the innovative character, cost efficiency, etc) and process outcomes (managerial effort, support of the involved stakeholders). Table 3 gives an indication of these two dimensions of outcomes and the (five category Likert) items that were used to measure them. Table A1. Measurements of outcomes Content outcomes Items 1. innovative character Do you think that innovative ideas are developed during the project

2. integral nature of solution Do you think that different spatial functions have been connected

sufficiently?

3. involvement of actors (content)

Do you think that in general the involved actors have delivered a recognizable contribution to the development of the results?

4. effectiveness solutions Do you think that the solutions that have been developed really deal with the problems at hand?

5. effectiveness in the future Do you think that the developed solutions are durable solutions for the future?

6. Relation costs and benefits

Do you think that - in general - the benefits exceed the costs of the cooperation process?

Process outcomes Items 1. level of management Do you think that the involved actors have contributed substantively to the

management of the project?

2. conflict resolution Do you think that conflicts and differences of opinion have been solved adequately during the project?

3. deadlocks Did you witness any disturbing deadlocks during the project?

4. productive use of differences

Do you think that the involved actors have made use of the existing different perspectives and insights (among the actors) in an adequate way

with regard to solutions and problems in the project?

5. contact frequency Do you think that the involved actors had frequently contact with each other during the project?

6. support Do you think that the results from the project can expect the support of the involved actors?

A factor analysis on all twelve items (not included here) confirmed our assumption that we could indeed discern the two dimensions of outcomes, each represented by the selected six items. The Cronbach’s alpha of the six items measuring process outcomes is 0.80, which implies that they can be considered as forming one scale measuring the perception of process outcomes. The scores on the six items were added up, and divided by six. The items were also recoded, so that a higher score on the scale indicates a more positive perception of the process outcomes. The resulting scale has a mean score of 3.39 and a standard deviation of 0.60. The Cronbach’s alpha of the six items measuring content outcomes was 0.84. Again, the six items were recoded, added up, and divided by six, resulting in a scale with a mean score of 3.90 and a standard deviation of 0.62. In both cases the scores are above the theoretical mean (3), which indicates that the respondents are on average positive about the outcomes. Comparing both means, it also appears the respondents are somewhat more positive about the content outcomes compared to the process outcomes. Project complexity In our first hypothesis, complexity figures as independent variable. We considered a spatial project as more complex when it dealt with more activities. Six different activities were discerned: the building of houses, industry development, commercial development, environmental development, road development and water management (compare table 2). Based on the answers of the respondents, we measured for each project of one or more of these activities is performed. This resulted in an complexity scale ranging from 0 to 6. According to the mean score on average the projects involved 2.98 activities, with however a broad diversity given a standard deviation of 1.59. Conceptualizing the degree of PPP An important variable in our hypotheses is the degree of PPP. We have measured the degree of public private partnership within a project by three items that are in line with what the literature considers as most important characteristics of PPP organisational arrangements, a degree of risk sharing and adjustment of strategies of public and private actors. The items were:

- The existence of organizational provisions to arrange the cooperation between public and private parties are present.

- (financial) risks are being shared between public and private parties. - Coordination of activities between public and private parties is taken care of

Each item could be answered on a five point scale (totally agree-totally disagree). The three items have a high cronbach alpha of 0.84. We recoded the variables (a high score on each item means a high score on PPP) and divided this score by 3 to get a measure of the

degree of PPP in the project. The scores varied between 1 and 5 and the average is 3.58. 11% of the scores were below 2 and 27% of the scores were above 4. This suggests that the average degree of PPP of these projects is relatively high. Organizational form In the survey we asked the respondents about the formal organizational form chosen for the project. The next table summarizes the answers of the respondents: Table A2. Description of organizational form (N=317)

No formal organizational form 5%

Project group with regular meetings between parties

53%

Joint project office 16%

Autonomous legal entity 8%

Different form 19%

We can see that the ‘project group’ is by far the most popular organizational form. It is followed by the joint project office and the autonomous legal entity. In 5% of the projects there is no formal organizational form, and in 19% of the cases the respondents indicated that the chosen form is different from the categories indicated by us. In the following analysis we will treat the ‘different’ category as missing, whereas three dummy variables will measure the effect of organizational form on outcomes. Network management strategies: number of strategies and intensity This variable is also prominent in our hypotheses. We used to different measurements of the management strategy used in the project: a) the number of strategies and b) the intensity of the management strategy. a) Number of strategies The respondents were given a list of sixteen items, measuring various strategies that can be used in network management (see for this list Appendix A). The respondents could answer on a five category Likert item whether or not the item was relevant for the management strategy in the project. A factor analysis (not included here) showed that the sixteen items were representative for one overarching management network management strategy. This is confirmed by a reliability analysis showing a Cronbach’s alpha of 0.90. To measure the number of employed strategies, we first dichotomized the sixteen items measuring the strategies, and then counted the number of strategies that were actually used in the project. The resulting variable ranges from 0 (3.6% of the respondents) to 16 (6.3%), with a mean of 9.11 strategies used (standard deviation 4.18).

b) Management intensity To measure the management intensity, we used a scale composed of four Likert itemsv . These items formed a scale with a Cronbach’s alpha of 0.84. The items were recoded, added up and divided by four so that a high score indicates a high management intensity. Mean score on this scale was 4.02 (s.d. 0.45), indicating an on average high degree of management intensity. Phase of the project Not all the projects are in the same ‘phase’ of development. In the survey we distinguished four different phases: 1) preparation phase (21%); 2) developmental phase (41%); 3) building phase (17%); 4) maintenance phase (21%). Probably, the perception of outcomes of a project will depend on the phase it is. We will therefore use ‘phase’ as a control variable when analyzing the outcomes of the projects. Project and respondent characteristics as control variables The above variables measure the main concepts included in our hypotheses. To test our hypotheses, however it is necessary to include also several control variables, both with respect to characteristics of the respondent as well as to relevant project characteristics. Following the discussion above, we used the parent organization of the respondent, the position in the project (dichotomized as manager (33.8%) versus non manager) and the project phase as control variables. As the perception of the outcomes can also be related to the experience respondents have with PPPs, a variable measuring this experience was also included. The mean on this variable is 12.24 years, with a standard deviation of 9.05. Endnotes i For the operationalization (see appendix) we used 16 items which represented the four categories mentioned in table 1) ii Habiforum has established itself as a fairly important network organization with a lot of members. If we look at the projects that are mentioned by the respondents than almost all the well known environmental projects in The Netherlands are represented (and of course a number less well known), which gives confidence that this is a fairly reasonable sample of the available projects in The Netherlands iii That is a normal situation with internet surveys since a number of people only ‘glance’ trough the questionnaire as they would have done if it was a paper version, and then decide that the survey is not relevant to them, or decide that they don’t want to answer it. In this case the fact that they had to answer the questionnaire for a specific project probably enhanced the number of people that only filled in a very limited number of questions iv If the number of 188 ‘incomplete’ questionnaires is an indication of the actual population, we can make the following rough estimation of the actual response: Of the 547 returned questionnaires, 188 or 34% is missing. In this same proportion holds for the total sample, the ‘real’ number of people involved in spatial projects is 1056 (.66*1600). If this assumption is true, the actual size of the response is about 33% (347/1056). Possibly it is even higher, as people not involved in spatial projects will probably not have bothered to take part in the survey. v The intensity of the management was measured by the following question (each could be answered in a five point scale from: absolutely certain, certain, neutral, not certain, absolutely not certain: We now have a number of questions about the steering of the project. Can you respond to the following propositions: -The project is/was actively managed (this includes that there is somebody who brings the parties together, tries to set the agenda, coordinates the parties, tries to steer the content of the project etc.) -There is/are (one) project managers/process managers appointed in the project and he or she is also visible to the involved parties.

-There are many people involved in the steering of the project. - the relations with the top of the involved organisations in this project is well taken care of..