END-USER ORIENTED PUBLIC-PRIVATE PARTNERSHIPS IN REAL ESTATE INDUSTRY

International Journal of Strategic Property Management, Mar 2008 by Majamaa, Wisa, Junnila, Seppo, Doloi, Hemanta, Niemist�, Emma

8. NEW SUGGESTED FRAMEWORK FOR 4P PROJECTS EVALUATION

Findings from the case studies point out that customer-orientated service provision should be considered in the early stages of project development. Then the perspective of the end-user could entirely be incorporated into the purchasing process. The project development stage is crucial because the main decisions related to investment and service provision occur during this stage, and over the concession period, changes are extremely limited (Dixon and Pottinger, 2006; Kaya, 2004). The property, which is usually the most expensive single element in the contract, gives physical limits to the service production to be conducted in it (Nisar, 2007). During the concession time, major changes are normally unacceptable because the investors like to secure steady cash flow, based on a tight contract (Dixon and Pottinger, 2006).

In some of the cases, like in Vantaan Point, Frami and Dynamicum, the scheme did not give much space to customer-oriented thinking and innovative service developments. One solution to get innovative proposals could be to keep the project, and the service provision flexible. However, in the studied cases, the construction processes and the buildings themselves were the main focus of the purchasing processes. As noted before, the evaluation criteria used for decision-making in all cases included only Life Cycle approach features, and in some cases, like in Vantaan Point, Frami and Dynamicum, almost only technical ones. This is conceivable, but led the focus from service production to property and maintenance issues. From the perspective of the end-users, the property issue is not linked only to the Life Cycle approach criteria. The Diversity of service provision and Customer selection also includes many features related to the property. Diversity and Customer selection both need the development of flexible spaces, in the beginning and during the concession period which has demands on the property.

The lack of application of the evaluation criteria, and the missed potential of service development from end-users' perspective, particularly in the decision making stage, raises a need to develop a customer-orientated framework for evaluation processes. This new evaluation framework should include all the three criteria categories as evaluation stages, and it is developed for use at pre-qualification and for evaluation of proposals in the tendering process. In pre-qualification the features should be related to the company's capability, and in the tendering stage, to the service outcome of proposals (Pohjonen, 2006; Laine and Junnonen, 2006). If the purchasing process itself has more than one round, the features can be more open in early stages to get innovative solutions, and tighten up during the decision-making stage.

The new framework can also be used to compare the Public Sector Comparator (PSC) and PPP solutions. In comparison, PSC is important to point out the benefits of PPP and to verify the costs of it. Traditionally, the PSC has only been used on to the best PPP alternative (Treasury Taskforce 1997b), and only with "Value-for-Money" (VFM) criteria. From the end-users' point of view, it is fundamental that the PSC is on the same track with PPP solutions in the evaluation process (Majamaa, 2004 and 2005). This new framework makes it possible to compare all the elements, not only the VFM features. In the studied cases only in Kaivomestari were the PPP solutions were compared using PSC during the tendering process. In Finland, in many cases like Kaivomestari, the public sector had difficulties calculating the real costs of traditional service provision for the PSC. Knowledge of the ecomonics of existing service production is the first step to developing more desirable and cost effective public services in future (Nisar, 2007; Zhang, 2006; Piekkola, 2003). As in Espoo, where the city had difficulties in calculating the costs of service delivery, Kaivomestari as a PPP project with detailed cost estimation of all the services for next 25 years was seen as an example way to calculate the cost and be one way to help this evolution towards more desirable and cost effective services.