Institute of Construction Management European Real Estate Conference 2011 University of Stuttgart To the term efficiency by Public Private Partnerships Dipl.-Ing. Hans Christian Jünger

To the term efficiency by Public Private Partnership 2 University of Stuttgart Institute of Construction Management 15th June 2011ERES Conference 2011, Eindhoven Institute of Construction Management, University of Stuttgart Faculty 2: Civil- and Environmental Engineering Foundation: 1964 Principle: research and teaching with practical relevance 7 Assistants: everyone at least 1 year of experience in the industry Courses of studies: Civil Engineering and Real Estate Engineering and Management

To the term efficiency by Public Private Partnership 3 University of Stuttgart Institute of Construction Management 15th June 2011ERES Conference 2011, Eindhoven Public procurement Need of procurement through difference between objectives and reality. Result or effect (Outcome) compared with objectives Input, e. g. information, capital, knowledge Product, service provided e.g. school building (Output) Definition of objectives

To the term efficiency by Public Private Partnership 4 University of Stuttgart Institute of Construction Management 15th June 2011ERES Conference 2011, Eindhoven Relationship of terms objectives InputOutput ? Outcome= efficiency effectiveness = doing right things = doing things right effectiveness of measure effectiveness of execution

To the term efficiency by Public Private Partnership 5 University of Stuttgart Institute of Construction Management 15th June 2011ERES Conference 2011, Eindhoven Placing of Public Private Partnership Placing according to act against restraints of competition (§97 GWB): … in a transparent procedure to the most efficient offer… Efficiency is a diffuse term in public procurement! No standardised and structured identification of efficiency!

To the term efficiency by Public Private Partnership 6 University of Stuttgart Institute of Construction Management 15th June 2011ERES Conference 2011, Eindhoven Public Private Partnership (PPP) Lifecycle approach : - Building realisation (planning and construction) - Building services (Facility Management) - Organisation (owner duties, contact person for client) - Financing (bridge, long term) Ressources (e. g. employees, equipment, capital) in common organisation context Project risks distributed according to competence in risk management Procurement model for public real estate and related services Long-term cooperation regulated by contract (>20 years)

To the term efficiency by Public Private Partnership 7 University of Stuttgart Institute of Construction Management 15th June 2011ERES Conference 2011, Eindhoven Complexity of PPP Duration, long running project Efficiency of PPP bids not obviously! Different interests Multiplicity of persons involved by client and private partner … because PPP contracts are complex due to: Mutual influences and dependencies of services Diversity of services

To the term efficiency by Public Private Partnership 8 University of Stuttgart Institute of Construction Management 15th June 2011ERES Conference 2011, Eindhoven Definition of efficiency Minimum rule/ maximum rule/ optimum rule of efficiency Efficiency is the most sustainable advantageous ratio between achievement of objectives and consumption of resources efficiency = cost = degree of objective achievement consumption of resources Minimum rule due to necessity of thrift by public authorities problem: benefit measurement and cost calculation! benefit

To the term efficiency by Public Private Partnership 9 University of Stuttgart Institute of Construction Management 15th June 2011ERES Conference 2011, Eindhoven Benefit measurement by quality Degree of quality measurable, e.g. by system of points Benefit as quality of PPP product? quality = realised characteristics to required characteristics. required characteristics (Input) compared to realised characteristics (Output) enables to indirect measurement of benefit! Substitution of term benefit by term quality:

To the term efficiency by Public Private Partnership 10 University of Stuttgart Institute of Construction Management 15th June 2011ERES Conference 2011, Eindhoven Research project: Standardised method for PPP total cost calculation duration: December 2007 to May 2009 research objective: - cost by cause calculation over life cycle - transparency especially by building service costs Cost calculation research partners and advisory board:

To the term efficiency by Public Private Partnership 11 University of Stuttgart Institute of Construction Management 15th June 2011ERES Conference 2011, Eindhoven standard term definitions Research results of standardised PPP total cost calculation see also website: list of all standard-services schematical procedure of calculation continous risk management display of comparable results

To the term efficiency by Public Private Partnership 12 University of Stuttgart Institute of Construction Management 15th June 2011ERES Conference 2011, Eindhoven Conclusion and prospect cost calculation by standardised PPP total cost calculation benefit becomes measureable by the term quality! ratio of benefit to cost is relevant! efficiency transparent measurable for placing of PPP contract! efficiency is diffuse term in public procurement! there is no structured and standardised identification of efficiency!

To the term efficiency by Public Private Partnership 13 University of Stuttgart Institute of Construction Management 15th June 2011ERES Conference 2011, Eindhoven Questions? Thank you for your attention!