A Framework for Value Co-Creation in China's PPP Projects Antecedents, Interactions, and Results

A FRAMEWORK FOR VALUE CO-CREATION IN CHINA'S PPP PROJECTS:

ANTECEDENTS, INTERACTIONS, AND RESULTS

Chapter 1

Introduction

This chapter introduces the research study. It presents the background information

relevant to the research, then articulates the problem statement, and establishes its

connection to pertinent literature from diverse fields, such as project management,

marketing and general management. The research objectives and questions are outlined

after the study’s research aims. Last, the chapter provides an overview of the research

strategy adopted to address the research questions. The primary objective of this

chapter is to establish a robust theoretical and empirical foundation for the study.

1.1 Research Background

1.1.1 The PPP Project Context

Public–Private Partnerships (PPPs) have gained significant attention and have been

implemented in various countries worldwide. PPPs are often considered to be more

advantageous than traditional procurement methods, as they provide better risk sharing,

higher efficiency, and quality outcomes (Jefferies & McGeorge, 2009). As the

European Commission (2003) has suggested, PPP projects offer several benefits to

governments, including accelerated infrastructure provision, timely project

implementation, reduced entire-life cost, reduced government risk exposure, improved

service quality and innovation, and enhanced management of public expenditure (Liu

et al., 2017).

As an alternative to traditional infrastructure procurement methods, PPPs have gained

widespread popularity in the past two decades as long-term arrangements between

public and private sectors aimed at sharing risks and responsibilities while taking

advantage of each sector’s respective skills (Akintoye et al., 2003). This is especially

true in developing countries (Liu, Love, Davis, et al., 2015; World Bank, 2017), where

PPPs have been used to address the contradiction between the increasing demand for

new infrastructure and the government’s limited financial capacity (Chan et al., 2011;

Jefferies & McGeorge, 2009). PPP projects are characterised as inter-organisational

collaborative projects that combine public and private institutional logics.

One of the main advantages of PPPs is their ability to accelerate infrastructure

provision (Hodge & Greve, 2019). By allowing the public sector to translate capital

expenditure into ongoing service payments, PPPs enable infrastructure projects to be

implemented more quickly than traditional procurement methods. In addition,

allocating design and construction responsibility to the private sector ensures timely

project implementation. Furthermore, PPPs can reduce full lifecycle costs and motivate

performance by providing strong incentives for the private sector to minimise costs and

improve management throughout a project’s lifecycle (Koppenjan, 2005). This reduces

the financial burden on governments and ensures that infrastructure projects are

completed within budget and on schedule. Another advantage of PPPs is the risk

sharing between the public and private sectors (Delmon, 2017). By engaging the

private sector in sharing construction and operational risks, governments can mitigate

risk exposure compared to conventional procurement methods, thereby enhancing the

likelihood of successful project outcomes. Moreover, private sector expertise and

performance incentives can improve service quality and innovation (Zhang, 2005).

Private sector involvement can also enhance public expenditure management by

increasing accountability and transparency, thereby reducing the likelihood of

corruption.

While PPP projects have been touted as a solution to address infrastructure

development challenges, they are not without criticisms. Concerns have been raised

about the potentially high costs, lack of transparency and accountability, inappropriate

risk allocation, social and environmental impacts, and limited flexibility associated

with PPP projects. Scholars have questioned the value for money of PPP projects and

suggested that they may be more expensive than traditional procurement methods

(Hodge & Greve, 2007) due to higher financing costs, transaction fees, and profit

margins for private sector partners. The procurement process for PPP projects may also

lack transparency and accountability (Zhang & Tariq, 2020), leading to doubts about

fairness and effectiveness. Risk allocation is a crucial issue in PPP projects, and failure

to allocate risks reasonably can result in project failure (Ke, Wang, Chan, et al., 2010).

For instance, during the construction phase of the Sydney Airport Rail Link in the

1990s, several challenges such as delays, cost overruns and technical difficulties were

encountered, leading to significant financial challenges for the private sector partner.

The risks were then transferred back to the NSW government, which had to rescue the

project, resulting in additional costs, delays and an increased financial burden on the

government. PPP projects have also been criticised for prioritising private profit over

public interest, leading to negative social and environmental impacts (Jayasuriya et al.,

2020). Furthermore, PPP contracts may be inflexible, making it challenging to adapt to

changing circumstances or to terminate the contract in the case of problems (Klijn &

Koppenjan, 2016).

It is important to note that various countries define these partnerships differently.

Usually, these partnerships are defined as a collaborative effort between the public and

private sectors to deliver public services and infrastructure projects through a long-

term contractual agreement (Grimsey & Lewis, 2007). Nevertheless, it's crucial to

highlight that PPP definitions vary across different countries (see Table 1-1, adapted

and expanded from Kwak et al. (2009), potentially influencing their implementation

and success.

Table 1-1 Definitions of PPPs

Sources Definitions

HM Treasury An arrangement between two or more entities that enables

them to work cooperatively towards shared or compatible

objectives and in which there is some degree of shared

authority and responsibility, joint investment of resources,

shared risk-taking, and mutual benefit.

World Bank The term “Public–Private Partnerships” has taken on a

very broad meaning. The key elements, however, are the

existence of a “partnership” style approach to the provision

of infrastructure as opposed to an arm’s-length “supplier”

relationship… Either each party takes responsibility for an

element of the total enterprise, and they work together, or

both parties take joint responsibility for each element…

A PPP involves a sharing of risk, responsibility, and

reward, and it is undertaken in those circumstances when

there is a value-for-money benefit to the taxpayers.

European

Commission

A partnership is an arrangement between two or more

parties who have agreed to work cooperatively toward

shared and/or compatible objectives. There is shared

authority and responsibility; joint investment of resources;

shared liability or risk-taking; and ideally, mutual benefits.

Canadian Council

for Public–

Private

Partnerships

A PPP is a cooperative venture between the public and

private sectors, built on the expertise of each partner that

best meets clearly defined public needs through the

appropriate allocation of resources, risks and rewards.

Australian National

Audit Office

A contractual arrangement between a private party and a

public agency for the provision of public assets or services.

Grimsey and Lewis

(2007)

PPPs can be defined as arrangements whereby private

parties participate in or provide support for the provision

of infrastructure, and a PPP project results in a contract for

a private entity to deliver public infrastructure-based

services.

Kivleniece and Quelin

(2012)

Long-term collaborative relationships between one or more

firms and public bodies that combine public sector

management or oversight with private partners’ resources

and competencies for the direct provision of a public good

or service.

The differences in PPP definitions and frameworks across countries arise from several

factors, such as legal and regulatory environments, political and cultural contexts, and

institutional structures. These variations in PPP definitions can impact the

implementation and outcomes of PPP projects. For instance, in countries where PPPs

are mainly seen as a way to transfer risks to the private sector, the private sector may

end up assuming too much risk, leading to financial instability and project failure

(Song et al., 2019). In contrast, in countries where PPPs are viewed as a collaborative

effort between the public and private sectors, there may be better risk sharing and more

successful outcomes. Therefore, it is essential to understand the different PPP

definitions and frameworks across countries and their potential impact on project

implementation and outcomes. This understanding can help policymakers, practitioners

and scholars to identify best practices and improve PPP project outcomes across

different contexts.

1.1.2 PPP Projects in China

This research aims to research PPPs in China and provide valuable knowledge and

insights for other countries for several reasons. First, China has one of the world’s

largest and most active PPP markets, with a wide range of projects in various sectors.

As a result, the Chinese experience can provide valuable lessons for other countries

looking to develop their PPP frameworks (Chan et al., 2010). Second, China’s PPP

market has evolved rapidly in recent years, with significant changes to the legal and

regulatory framework governing these partnerships (Li & Wu, 2017). This has resulted

in a range of innovative PPP models and financing structures that have not been widely

adopted in other countries. By studying the Chinese experience, other countries can

gain insights into the potential benefits and risks of these new models. Third, China’s

PPP market has also faced significant challenges, such as project delays, funding

constraints and inadequate risk allocation. By examining these challenges and the

solutions developed to address them, other countries can gain insights into how to

effectively manage the risks and challenges associated with PPP projects. In addition,

China’s experience with PPPs reflects its unique political, economic and social context.

Finally, as a student from China, the researcher has convenient access to empirical data.

By studying how PPPs have been developed and implemented in this context, other

countries can gain insights into how to adapt and tailor PPP frameworks to their own

specific contexts and challenges.

Since the definitions and implementation of PPPs vary across different countries, it is

important to provide a clear understanding of what PPPs entail in the context of China.

This research is being conducted in China, as it is currently experiencing a significant

surge in infrastructure investment (Ansar et al., 2016). As a result, PPPs have gained

significant popularity in the country. In China, PPPs refer to collaborative

arrangements between the public and private parties aimed at bolstering the provision

of public goods and services, as well as enhancing supply efficiency (National

Development and Reform Commission, 2021). Through mechanisms such as

franchising and equity cooperation, this mode of long-term cooperation enables the

sharing of benefits and risks and serves as a common international investment and

financing approach in the infrastructure sector.

One notable characteristic of PPP projects in China is that the private party involved is

often a state-owned enterprise (SOE) instead of a purely private investor. This is

because many of the largest and most influential companies in China are state-owned,

and the government has a strong presence in many sectors of the economy. As a result,

the participation of SOEs in PPP projects is seen as a way to leverage their expertise

and resources to support the development of public services and infrastructure. This

also allows the government to maintain a certain level of control and oversight over the

implementation of PPP projects. However, the involvement of SOEs in PPP projects

has also raised concerns about fairness and competition. Some critics argue that SOEs

have an unfair advantage in the PPP procurement process, as they may have access to

government subsidies and other forms of support that are not available to private

companies. This could lead to a lack of competition and potentially higher costs for

taxpayers.

Another notable characteristic of PPP projects in China is the PPP legal system, which

lacks a national-level law and has confusing and conflicting lower-level regulations.

While there are regulations and guidelines in place, they are not always clear or

consistent, and there are gaps in the legal framework that leave room for interpretation

and uncertainty. This imperfect regulatory environment can create challenges for both

public and private partners in PPP projects. For public partners, it may be difficult to

navigate the legal and regulatory landscape and to ensure that the terms of the

partnership are fair and transparent. For private partners, the lack of clear guidelines

and regulations can make it difficult to assess the risks and potential returns of a PPP

project.

Since the widespread implementation of PPP projects in China in 2014, one of the key

challenges has been the lack of adequate risk assessment and management in many of

these projects. Risks come from the way in which private investment is often

structured as “equity” when it actually functions as “debt”. This means that the private

party invests in the project and is entitled to a share of the profits but is also guaranteed

a fixed return on their investment regardless of the project’s success or failure. This

arrangement is sometimes referred to as “hidden debt”, as it can result in a significant

financial burden to government. In practice, this means that local governments may use

PPP projects as a way to finance public infrastructure and services without directly

borrowing money. However, because private investment is structured as equity, it is

not included in the government’s official debt statistics, which can create a misleading

picture of the government’s financial situation. This approach to financing PPP

projects has led to concerns about the financial risks associated with these

partnerships,

particularly for local governments. If a project fails to generate the expected returns,

the government may be left with significant debt and few options for recouping its loss.

The Chinese government has taken a number of steps to promote and support the

implementation of PPP projects. First, it has established a legal and policy framework

that provides guidance and support for PPP initiatives and creates a more stable and

predictable environment for PPP projects. This includes developing more effective

performance governance frameworks, allocating risks more equitably between public

and private partners, and creating mechanisms for withdrawing or renegotiating PPP

contracts when necessary. The most remarkable move to improve PPP performance is

that the Chinese government has established a PPP centre that serves as a central

coordinating body for PPP projects across the country. This demonstrates the

government’s commitment to the PPP model as a way of delivering infrastructure and

public services in a more efficient and cost-effective manner.

Second, the government is committed to promoting open and fair competition between

SOEs and private companies in the PPP market. This is intended to create a level

playing field for all participants and to ensure that the best partners are selected for

each project. To achieve this, the government has introduced measures to increase

transparency and accountability in the PPP procurement process, as well as to prevent

anti-competitive practices. This encourages private companies to participate in PPP

projects, which can bring fresh ideas, innovation and expertise.

Third, the Chinese government is committed to strengthening scrutiny and fighting

“fake” PPP projects. This includes removing “fake” projects, where the private

investment is structured as “equity” when it actually functions as “debt”, from the PPP

centre’s database and implementing more rigorous screening and due diligence

procedures to ensure that only genuine PPP projects are supported. These efforts are

intended to reduce the government’s fiscal risks in the PPP model and to prevent

abuses and fraudulent practices from undermining the success of PPPs in China.

Overall, PPP projects in China are characterised by their complexity, requiring a high

level of expertise, skill and experience in managing risks and aligning the interests of

all parties involved.

1.2 Problem Statement

In PPPs, ensuring value for money, particularly in the public interest, is of paramount

importance. In fact, pursuing value outcomes instead of prescribed project deliverables

is a vigorously advocated tenet in project research (Morris, 2013). One distinguishing

feature of value is subjectivity. Thus, value can only be determined by the beneficiary

(Vargo & Lusch, 2007a). In PPP projects, various stakeholders with differing and

sometimes conflicting value expectations must be taken into account, creating a

significant barrier to value creation. Another key feature of value is dynamics. Value is

not static but dynamic, meaning that it may not be immediately apparent in the short

term but can be constructed or destructed over time (Fuentes et al., 2019). For example,

the Sydney Opera House was initially estimated to cost around AUD 7 million and be

completed in four years. However, it ended up costing approximately AUD 102 million

and took over 14 years to finish. However, the project has been considered a success in

the long term due to its significant symbolic and economic value (Murray, 2003). In

contrast, projects that prioritise cost and time savings over environmental, quality and

objective considerations may result in value destruction in the long term.

In order to achieve value creation in PPP projects, it is crucial to recognise the two key

features of value: subjectivity and dynamics. PPPs pose significant challenges to value

creation due to the involvement of multiple stakeholders with varying and often

conflicting value expectations, as well as their long-term nature that requires a focus on

long-term value creation. Thus, in the PPP context, achieving value creation requires

collaboration among all relevant stakeholders, including primary stakeholders (i.e., the

public and private parties) and external stakeholders such as end-users, consultants,

finance institutions and society. Consequently, the value creation objective in PPP

projects is often accomplished through a process of value co-creation.

This research defines value co-creation (VCC) as a process of reciprocal value creation

(Vargo & Lusch, 2015) through collaborative interaction (Escandon-Barbosa et al.,

2021; Payne et al., 2007; Prahalad & Ramaswamy, 2003) in the form of resource

integration (Chih et al., 2019; Vargo & Lusch, 2018) and relationship management

among actors (Grönroos & Voima, 2012; Vargo & Lusch, 2011). This is the key to

realising value creation in PPP projects.

VCC holds great potential for enhancing the outcomes and effectiveness of PPP

projects (Payne et al., 2007; Vargo & Lusch, 2015). It emphasises the collaborative

involvement of various stakeholders, including public authorities, private entities and

end-users, in jointly creating value throughout the project lifecycle (Fuentes et al.,

2019; Vargo & Clavier, 2015).

However, the practical implementation of VCC principles within PPP projects often

faces significant challenges, resulting in missed opportunities and suboptimal project

performance. Despite the increasing recognition of the importance of collaborative and

inclusive approaches in PPPs, there is a lack of comprehensive understanding and

guidance on how to effectively incorporate VCC principles into the planning,

execution and management of PPP projects (Bovaird, 2004; Delmon, 2017).

Key challenges around value co-creation (VCC) in PPP projects

The first challenge identified in the extant literature is the fragmented knowledge on

the value of PPP arrangements. Despite criticisms that PPPs may not be value-for-

money (Hodge & Greve, 2007), there is no consensus on what constitutes value in a

PPP project, nor a detailed presentation of value outcomes (Hueskes et al., 2017). In

project management research, the value-driven approach is increasingly being taken

seriously, but evaluating the value remains the greatest difficulty. The importance of

value, including its definition, creation and capture, has gained considerable attention

in business research, especially in the area of project management (Martinsuo, Klakegg,

et al., 2019).

The current conceptualisation of value in project management literature faces

limitations when applied to PPP projects, requiring a re-conceptualisation of value. It is

essential to adopt a holistic and multidimensional perspective on value that

encompasses economic, social, environmental and public value in the PPP context. For

instance, economic value assessment should consider the long-term revenue streams

and potential cost savings of PPP projects (Hueskes et al., 2017). Assessing social

value requires the identification and quantification of social benefits, such as job

creation and improved quality of life (Akbari Ahmadabadi & Heravi, 2019).

Environmental value should be integrated into VCC by employing robust

environmental assessment tools and frameworks (Zhang & Tariq, 2020). Additionally,

public value, including improved service quality and citizen satisfaction, needs to be

considered in PPP projects (Xiong et al., 2020). Although scholars advocate for re-

conceptualising value to encompass the dynamic interactions among stakeholders,

long-term project goals, and the broader societal impacts of PPP projects, we still lack

a comprehensive perspective on value that can fully capture the complexity and

nuances of VCC.

Furthermore, another challenge in achieving holistic value knowledge lies in the

tendency to conflate the value creation process with its content, thereby impeding

analytical discussions. Many existing studies do not make a clear distinction between

the two, leading to a general discussion of value creation. Differentiating the value

creation process from the value creation content allows for a more focused and precise

analysis of how value is actually co-created in a specific context. The value creation

process refers to the activities, interactions and collaborations undertaken by

stakeholders to jointly create (Vargo & Lusch, 2011). It encompasses the dynamic and

iterative nature of VCC, involving various stages such as idea generation, resource

integration, knowledge sharing and problem solving. Understanding the process helps

identify the specific mechanisms, strategies and practices that enable effective VCC.

On the other hand, the value creation content refers to the actual outcomes, benefits or

value propositions that result from the co-creation process (Grönroos, 2017). It focuses

on the tangible and intangible value that is co-created and delivered to stakeholders.

This could include improved service quality, enhanced customer experiences,

increased efficiency, environmental sustainability or social impact. By analysing the

value creation content, researchers can identify areas for improvement, value leakage,

or misalignment between the co-creation process and desired outcomes. This

understanding informs decision-making, resource allocation, and strategic planning to

enhance the effectiveness and efficiency of VCC initiatives, ultimately fostering a

deeper understanding of the value generated.

By making a clear distinction between the value creation process and the value

creation content, researchers can delve into the mechanisms, dynamics and

determinants that influence the co-creation process. This enables a more

comprehensive understanding of the factors that enable or hinder effective VCC. It

helps identify the roles, contributions and responsibilities of different stakeholders, as

well as the interactions, knowledge flows and coordination mechanisms that drive

VCC success. This analytical distinction enhances theoretical development,

methodological approaches, and practical interventions related to VCC. Moreover,

understanding the value creation content allows researchers and practitioners to

evaluate the outcomes and impacts of VCC efforts. It helps assess whether the co-

created value aligns with the intended objectives, expectations and needs of

stakeholders. By analysing the value creation content, researchers can identify areas

for improvement, areas of value leakage, or misalignment between the co-creation

process and the desired value outcomes. This understanding informs decision making,

resource allocation, and strategic planning to enhance the effectiveness and efficiency

of VCC initiatives.

The second challenge identified in this study pertains to the under-exploration of the

VCC and value management (VM) approach to value creation in PPP projects. While

VCC and VM approaches have been increasingly applied in various business contexts,

their application in the PPP project context has been limited. The VCC and VM

approaches aim to create value for all stakeholders, including those in the marketing

and engineering areas. However, there is a need for a deeper understanding of how to

effectively apply these approaches in PPP projects where multiple stakeholders with

diverse interests and objectives are involved. For example, in the project context, there

might be no actual customers but only actors who interact with each other, and in most

cases, value propositions refer to service exchanged for service instead of financial

transactions (Laursen, 2018). Additionally, there is a need for a more comprehensive

framework that integrates VCC and VM into the PPP context, taking into consideration

the specific characteristics of PPP projects. Therefore, further research is needed to

explore the application of VCC and VM approaches in PPP projects and to develop a

framework that guides managers in implementing these approaches effectively.

Implementing VCC and VM approaches in PPP projects requires a framework capable

of accommodating the intricate and diverse stakeholder landscape. PPP projects

involve multiple stakeholders with different interests and objectives, including public

and private partners, regulatory bodies, community groups and end-users. The existing

frameworks for VCC and VM approaches are mainly focused on the traditional

business context, and their applicability in the PPP project context is limited (Green &

Sergeeva, 2019). On the other hand, traditional PPP frameworks primarily focus on

contractual arrangements and financial aspects, often neglecting the collaborative and

participatory aspects necessary for successful VCC (Grönroos & Voima, 2012). The

absence of specific methodologies, frameworks and best practices tailored to VCC in

the context of PPP projects further exacerbates the obstacles. As a result, stakeholders

may rely on ad-hoc approaches or outdated models that do not adequately account for

the collaborative and participatory nature of VCC, hampering the achievement of

project goals and stakeholder satisfaction. Therefore, there is a need for a more tailored

and context-specific framework that guides managers in implementing VCC and VM

approaches in PPP projects.

The implementation of VCC and VM approaches in PPP projects faces additional

challenges due to the inherent nature of PPP settings, which predominantly function

within a Business-to-Business (B2B) context. VCC, as conceptualised within the

service-dominant logic framework by Vargo and Lusch (2004), has predominantly

been developed and studied in the Business-to-Customer (B2C) context, which

presents notable differences in terms of stakeholder dynamics, motivations and

operational considerations.

In the B2C context, VCC focuses on the collaborative engagement between businesses

and end-users to create value through interactive and personalised experiences (Vargo

& Lusch, 2004). This dynamic entails a direct relationship between service providers

and individual customers, enabling a high degree of customisation and immediate

feedback. However, the B2B context of PPP projects introduces distinct obstacles due

to the multifaceted stakeholder landscape, involvement of public authorities, private

entities, contractors, subcontractors and intermediaries. These diverse stakeholders

have varying interests, goals and decision-making processes, hindering the direct

interaction and personalised experiences typical of B2C settings. The differences in

stakeholder dynamics between B2B and B2C contexts pose obstacles in aligning

expectations, coordinating efforts, and fostering effective collaboration among diverse

stakeholders within PPP projects. The multiplicity of stakeholders, each with their own

motivations, priorities and power dynamics, can result in conflicting interests and

difficulties in reaching consensus on VCC objectives. Moreover, the contractual nature

of PPP arrangements often emphasises performance metrics, risk allocation and

financial considerations, which may overshadow the collaborative and relationship-

building aspects essential for successful VCC.

It is noteworthy to acknowledge that, within the B2B context of PPP projects, a unique

dynamic emerges where end-users could assume roles beyond mere customers. They

might actively participate in the project’s lifecycle or contribute inputs that impact

project outcomes. For instance, in a transport infrastructure PPP, commuters could be

considered both end-users and contributors by providing valuable insights into route

preferences, station locations and user experience enhancements.

However, despite such end-user engagement, the B2B context of PPP projects presents

distinct variations compared to the B2C context that originally inspired the concept of

VCC. Specifically, in the B2B realm, the complexities introduced by multiple

stakeholders are paramount. These complexities demand a broader understanding of

resource management and relationship dynamics.

Resource management plays a crucial role in VCC in PPP projects. It involves

identifying, allocating and optimising resources such as financial capital, human

capital, equipment and technology to support the collaborative efforts of stakeholders

(Osei-Kyei & Chan, 2015). Effective resource management ensures that the necessary

inputs are available to enable VCC activities, such as knowledge sharing, collaboration

and innovation. However, resource management in the context of PPP projects requires

special attention due to the complex contractual arrangements, diverse stakeholder

interests, and the need for equitable distribution of resources among the involved

parties.

Relationship management is also a critical aspect of VCC in the B2B context of PPP

projects. Successful VCC relies on building and maintaining collaborative

relationships among stakeholders, fostering trust, effective communication and mutual

understanding (Matinheikki et al., 2016). Establishing and nurturing strong

relationships can enhance knowledge exchange, cooperation and joint problem solving,

facilitating value creation throughout the project lifecycle. However, managing

relationships within the multi-stakeholder environment of PPP projects presents

obstacles related to power dynamics, conflicting interests, and divergent organisational

cultures.

The third challenge identified in this study is the influence of institutional and

organisational antecedents on VCC practice in the PPP project context has been under-

investigated. Institutional factors refer to formal and informal rules, norms and beliefs

that govern the behaviour of actors in a specific setting, while organisational factors

refer to the structures, processes and practices that shape the behaviour of actors within

an organisation. In service-dominant logic, Vargo and Lusch (2015) argue that

institutions play a crucial role in the co-creation of value as institutions are necessary

for the creation, distribution and exchange of value and that institutions help shape the

norms, rules and practices that govern economic activity. Similarly, in the PPP project

context, both institutions and organisations play a critical role in shaping the behaviour

of the public and private partners, as well as other stakeholders involved in the project.

Despite the acknowledged importance of institutional and organisational antecedents in

shaping the practices of VCC in PPP projects, little research has been conducted on

this aspect. The existing studies have mainly focused on the role of institutions in the

formation of PPP projects (Pérez-D’Oleo et al., 2015), with less emphasis on how

institutional and organisational factors influence the VCC practices of PPP projects.

Moreover, the existing studies have tended to focus on incomplete institutional

frameworks that only contain legal and regulatory frameworks rather than on a holistic

approach that contains norms and beliefs that shape the behaviour of actors in the PPP

project context.

Consequently, there is a gap in understanding how informal institutions interact with

formal

ones

and

how

they

collectively

shape

actor

behavior

PPP

projects.

Additionally, there is scant research exploring how organisational factors, such as

governance structures, cultural dynamics, and partner capabilities, impact VCC

practices in PPP projects. Given the diverse organisational structures and cultures

involved in PPP projects, comprehending the interplay between organisational and

institutional factors is vital for fostering successful VCC.

1.3 Research Aim, Objectives and Questions

Several key challenges have been identified in the preceding sections that require

further investigation to achieve the research aim. First, there is a lack of consensus on

PPP project value, which has hindered the development of a comprehensive

understanding of how value can be created. Second, the VCC and VM approach to

value creation in PPP projects has not been thoroughly explored, as this approach has

not been fully integrated into the PPP context. Finally, the influence of institutional

and organisational antecedents on VCC practice in the PPP project context has been

under- investigated. Addressing these challenges is essential for developing a holistic

framework to guide PPP project managers in effectively implementing VCC practices.

Thus, three research questions and two sub-questions have been formulated to guide

the investigation.

RQ 1: What is the meaning of value to different stakeholders involved in a PPP project

throughout its entire lifecycle?

RQ 2: How is value co-created in a PPP project throughout its lifecycle, and what are

the mechanisms of VCC in PPP projects? This is divided into two sub-questions:

RQ 2.1 What are the specific VCC activities involved in PPP projects? and

RQ 2.2 What are the mechanisms of VCC for value creation in PPP projects?

RQ 3: Which contextual factors enable and facilitate project VCC activities in PPP

projects, and how do they influence VCC practice?

The first question is to determine the meaning of value for various stakeholders

throughout the PPP project’s entire lifecycle. The second question is concerned with

identifying how project value is co-created and the VCC mechanisms involved in PPP

projects. It also seeks to identify the specific VCC activities that take place in PPP

projects. Finally, the third question aims to examine the contextual factors that enable

and facilitate VCC activities in PPP projects. These research questions are crucial in

understanding the complexities of PPP projects and developing a comprehensive

framework for guiding managers in implementing VCC practices effectively.

Overall, this research aims to investigate the VCC mechanism in PPP projects, and to

develop a comprehensive framework that can deepen the theoretical understanding of

this process and provide practical guidance for managers to effectively engage in PPPs.

By examining the VCC process in both theory and practice, this study seeks to provide

a more nuanced understanding of how PPP stakeholders can collaborate to create value,

and to offer insights into the key factors that facilitate or hinder successful VCC in PPP

projects. Ultimately, this research aims to contribute to the knowledge of VCC in PPP

projects and provide practical implications for managers to enhance project value and

achieve success. In order to overcome challenges and achieve research aims, three key

objectives have been identified in this research, as shown in Table 1-2:

1. To specify the subjective and dynamic nature of value by taking an inclusive

perspective that considers multiple stakeholders and the entire project lifecycle.

The subjective and dynamic nature of value is a complex and multifaceted concept that

requires a more inclusive perspective of multiple stakeholders and the entire lifecycle.

This objective aims to provide a more comprehensive understanding of how value is

perceived and created by various stakeholders throughout the lifecycle of PPP projects.

Achieving this objective requires a detailed analysis of the different perspectives,

interests and objectives of the stakeholders involved in PPP projects, as well as the

different phases and stages of the project lifecycle.

2. To identify the specific VCC activities that are applicable to PPP projects. This

objective can be divided into two sub-objectives:

2.1 To examine the relationships between VCC elements and project value

activities.

2.2 To explore the mechanisms behind VCC activities for the creation of value for

stakeholders.

The first sub-objective focuses on identifying the VCC activities in PPP projects,

which can be a challenging task due to the diverse and complex nature of PPP projects.

This objective aims to provide a clear and comprehensive understanding of the

different VCC activities that are involved in PPP projects, and how these activities

contribute to value creation for various stakeholders. In addition, this objective aims to

examine the relationships between different VCC elements and project value activities,

to help identify the most critical factors that contribute to the success of PPP projects.

The second sub-objective focuses on investigating the mechanisms of VCC activities

for stakeholder value creation. Achieving this objective requires a detailed analysis of

how different VCC activities are implemented and how they contribute to stakeholder

value creation. This objective also helps identify the most effective VCC activities and

mechanisms that can be used to create value for various stakeholders involved in PPP

projects.

3. To identify relevant institutional and organisational factors and examine their

implications for VCC activities.

The third objective aims to identify relevant institutional and organisational factors and

examine how they impact VCC activities in PPP projects, contributing to a holistic

understanding of the contextual dynamics shaping successful VCC implementation.

Institutional and organisational factors play a crucial role in shaping the context and

conditions in which PPP projects are implemented. Achieving this objective requires a

detailed analysis of the different institutional and organisational factors that affect

VCC activities in PPP projects, and how these factors can be managed to ensure the

successful implementation of VCC activities.

Table 1-2 Research challenges, questions and objectives

Research

challenges

Research questions Research objectives

Fragmented

knowledge of PPP

project value

1. What does value mean to

different stakeholders involved

in a PPP project throughout the

entire lifecycle?

To specify the subjective and

dynamic nature of value from

an inclusive perspective of

multi-stakeholders and the

entire lifecycle.

Lack of

understanding of

how value can be

created for PPP

projects in a VCC

approach

2. How is project value co-created

throughout the project lifecycle?

What is the VCC mechanism of

PPP projects?

2.1 What are the VCC activities?

2.2 What are the mechanisms of

VCC for value creation?

To identify what are the VCC

activities in the PPP project.

To examine the relationships

between VCC elements and

project value activities.

To investigate the mechanisms

of VCC activities for

stakeholders’ value creation.

Few studies

examined the

implications of

institutional and

organisational

antecedents on

VCC practice in

the PPP project

context

3 What contextual factors impact

project VCC activities, and how?

To identify relevant

institutional and

organisational factors and

examine their implications for

VCC activities.

1.4 Overall Research Strategy

This study focuses on exploring VCC in PPP projects based on the literature of VCC

and service science from marketing (Vargo & Lusch, 2015) and VM literature from

engineering (Thiry, 2013). The study adopts a qualitative research approach to identify

genuine project value from a multi-stakeholder perspective and examine how value is

co-created through stakeholder engagement. A multiple case study design is employed,

starting with a pilot study to refine data collection methods, followed by the

establishment of the case context and the development of a conceptual framework to

guide data analysis and interpretation.

The scope of this research is PPP projects in China. This scope has been selected due

to the following reasons:

Significance of PPP in China: China has been actively promoting PPP as a mechanism

for infrastructure development and public service delivery. The Chinese government

has launched various initiatives and policies to encourage private sector participation

in sectors such as transportation, energy, healthcare, and education. This makes China

an important context for studying PPP projects.

Rapid Growth of PPP Projects: China has witnessed a rapid increase in the number of

PPP projects since the year of 2004. This growth presents a rich landscape for

examining various aspects of PPP implementation, including VCC practices.

Unique Institutional Context: China's institutional environment, including its

regulatory framework, government policies, and market dynamics, differs from other

countries. Understanding how these institutional factors influence VCC in PPP projects

is essential for developing insights that are specific to the Chinese context.

Learning Opportunities: Studying PPP projects in China provides valuable insights and

lessons that can benefit both domestic and international stakeholders. Given China's

scale and influence in the global economy, understanding the dynamics of VCC in

Chinese PPP projects can inform best practices and policy recommendations for

similar initiatives worldwide.

To align with the research objectives, critical realism is adopted as the philosophical

stance, which recognises the role of social and historical factors in shaping our

understanding of an objective reality that exists independently of human observation.

Abduction is used as the reasoning logic, combining deductive and inductive reasoning

to develop new hypotheses or explanations for gaps in the existing literature on the

VCC process in PPP projects. The interactive process of VCC in PPP projects is a

phenomenon that has been studied from various perspectives but lacks a structured

understanding. Therefore, by examining data collected from interviews and

summarising plausible patterns, this research aims to elaborate the theoretical

understanding of the nature of value and the process of its co-creation in PPP projects.

1.5 Outline of the Thesis

The thesis has six chapters.

Chapter 1: Introduction

The introductory chapter presents the essential underpinnings of the research. The

chapter identifies the main issues concerning VCC practices in PPP projects and how

these challenges can be addressed through the principles of VM and co-creation. The

rationale behind each of the research objectives, questions and aims is thoroughly

explained, providing a clear context for the research. The chapter outlines the research

strategy adopted and the key aspects of this investigation. Overall, this chapter sets the

foundation for the subsequent chapters which further explore the theoretical and

practical aspects of the research.

Chapter 2: Literature Review and Conceptual Framework

This chapter presents a comprehensive review of literature related to value creation

across diverse fields, such as project management, marketing and service literature.

This review establishes the conceptual foundation for this research and provides a

critical analysis of the various concepts surrounding value. Based on this review, a

conceptual framework is proposed which serves as the foundation for data analysis.

This framework enables a deeper understanding of VCC and VM practices in PPP

projects and their impact on project success.

Chapter 3: Research Design

This chapter presents the research design, encompassing the research methodology and

methods employed for this study. The chapter provides an overview of the context

surrounding the five cases examined in this research. It explains how the research was

conducted from philosophical, critical and practical perspectives. This chapter outlines

the methods used to collect and analyse data while demonstrating the validity of the

research. Overall, this chapter provides a solid foundation for the subsequent chapters,

highlighting the robustness of the research design.

Chapter 4: Findings and Discussion – Value Outcomes

The findings and discussion are presented into two parts (chapters). The first part,

Chapter 4, focuses on the first research question, which aims to identify the subjective

nature of value in PPP projects by exploring the diverse perspectives of different

stakeholders. Additional research questions emerged from the analysis, which includes

the relationship between different value outcomes and the methods to assess the value

of PPP projects. The discussion part of the chapter critically discusses the main

findings in relation to the existing literature. Drawing on the detailed discussion of

project value and its components, including the benefits and costs, this study proposes

an inclusive value assessment approach for PPP projects that has significant theoretical

and practical implications.

Chapter 5: Findings and Discussion – Value Co-creation Process and Contextual

Antecedents

This chapter aims to answer the second and third research questions with the focus on

the resource management and relationship management practices that define the PPP

VCC process. The chapter examines how these practices are enabled or motivated by

various contextual factors. In-depth discussions on the approaches that enable effective

resource management and relationship building among stakeholders are provided, with

a particular emphasis on their contribution to the co-creation of value for the project

and all parties involved. The chapter also presents a set of propositions based on the

findings from the previous chapter that explore the implications of these VCC practices

on value outcomes. Finally, the chapter provides a comprehensive understanding of the

contextual antecedents, including institutional factors and organisational enablers, of

the VCC process, contributing to the final framework of the PPP VCC mechanism.

Overall, this chapter provides valuable guidance for researchers and practitioners

interested in enhancing the success of PPP projects through VCC by offering a detailed

discussion of these practices and contextual factors. Overall, Chapters 4 and 5 explore

all research questions set for this study.

Chapter 6: Conclusions, Limitations and Recommendations

This concluding chapter summarises the main contributions of this research, including

the implications for industry stakeholders, particularly the public and private parties

involved in PPP projects. The chapter also acknowledges the limitations of this

research, highlighting areas for further investigation and development. Finally, this

chapter concludes with a call for further research to continue exploring the dynamic

and complex nature of VCC in PPP projects, with a focus on refining and improving

the conceptual framework and practical implications presented in this study. Overall,

this chapter provides a comprehensive summary of the contributions and implications

of this research, as well as a roadmap for future research in this field.

The set of appendices provide supporting material, complementing the findings and

analysis presented in this research.

Chapter 2

Literature Review and Conceptual Framework

2.1 Introduction

This chapter sets the groundwork for the research study by conducting a

comprehensive review of relevant literature related to the research question, which

aims to examine how value outcomes are co-created in a PPP project by all the

involved stakeholders. The main focus of this chapter is to explore the concept of VCC

and corresponding practices in the context of PPP projects. The overarching goal is to

develop a conceptual VCC mechanism framework that can explain how different

stakeholders co-create value in a successful PPP project based on which the multiple

case study is conducted and analysed.

To achieve this goal, the literature review is divided into two parts: the first part

explores the creation of value in projects while the second part delves deeper into the

concept of value across various management literature, with a particular emphasis on

marketing and service-related literature, as this field publishes many articles about

VCC.

Based on the literature review, the chapter proposes a conceptual VCC mechanism

framework that identifies the key components and processes involved in VCC in PPP

projects. The conceptual framework proposed in this chapter provides a theoretical

foundation for understanding how value is co-created in successful PPP projects, and

the multiple case studies that follow test and refine this framework. By examining

various perspectives and theories on value creation and co-creation, the chapter

establishes a solid foundation for the research and sets the groundwork for further

exploration and analysis in subsequent chapters.

2.2 The Evolving Perspectives and Approaches in Project Management

Modern project management (PM) can be traced back to World War II when it was

initially developed for military and construction projects. Since then, project

management has evolved and become a set of theories, principles, methodologies and

practices that are used worldwide (Vidal & Marle, 2008).

2.2.1 The Project Context

The modern world is characterised by a heavy reliance on project-based processes.

These processes are integral to most organisations, whether government entities or

private industries, as they facilitate change and revenue generation. Due to their

significance, projects have become increasingly formalised, with the project-based

organisation structure becoming more common. This formalisation gives projects

greater legitimacy and structure and provides organisations with a recognised business

process for any initiative labelled as a “project”. Indeed, the project-based approach

has become a key aspect of modern organisational operations.

Projects are temporary endeavours designed to achieve specific goals within a defined

timeframe and budget (Davies, 2017). The definition suggests three inherent

characteristics of projects. The temporary nature of projects means that they have a

clear beginning and end date, and once the project objectives have been achieved, the

project is complete. Specific goals imply the uniqueness of projects; that is, they are

unique and have specific goals and objectives that need to be achieved. “Defined

timeframe and budget” indicates projects need to operate within specific constraints,

including time, cost and quality.

Emerging from the degree of uncertainty, ambiguity and dynamism inherent in a

project as well as the interaction of various contextual factors shaping a project, the

concept of project complexity serves as a significant starting point for understanding

and managing projects. Scholars identified several dimensions of project complexity,

including technical complexity, organisational complexity and social complexity

(Baccarini, 1996; Bakhshi et al., 2016; Vidal & Marle, 2008). Technical complexity

refers to the complexity of the project’s technical requirements, such as the degree of

technological innovation required. Organisational complexity refers to the complexity

of the project’s organisational context, such as the number of stakeholders involved or

the degree of interdependence between project tasks. Social complexity refers to the

complexity of the project’s social context, such as cultural differences or political

influences. Project managers must navigate the complexities of a project environment

that is often dynamic and unpredictable, and they must ensure that the project

objectives are achieved within the constraints of time, cost and quality. In their

systematic review of project complexities, the authors underscore the multifaceted

nature of project complexity by highlighting the interplay between technical,

organisational and social dimensions, emphasising the need for project managers to

adeptly navigate these intricacies while delivering on project objectives within time,

cost and quality constraints (Geraldi et al., 2011). Furthermore, the study underscores

the importance of acknowledging that project complexity is not static but rather

emerges from the evolving dynamics of a project environment, underlining the

significance of adaptability and proactive management strategies to address the

inherent uncertainties and ambiguities in complex projects.

2.2.2 Three Levels of Project Management

One dominant literature strand that led to broadening the scope of project management

is from “project management” to “the management of projects” proposed by Morris

(1994). Project management and the management of projects are two related but

distinct concepts. While both are concerned with achieving project objectives, they

differ in their focus and scope. Project management is a discipline that involves the

application of knowledge, skills, tools and techniques to plan, execute and control

projects effectively. It is a formal process that follows a structured approach, typically

involving five phases: initiation, planning, execution, monitoring and controlling, and

closing (Kerzner et al., 2022). The project management process is iterative, meaning

that it involves continuous monitoring and adjustment to ensure that the project stays

on track.

Morris (1994) proposed the concept of the “management of projects” as an extension

of traditional project management. Morris argued that the traditional approach to

project management was too narrow, and there was a need to broaden the focus to

include the overall management of the project, including the project environment,

stakeholders and strategic goals. The management of projects approach emphasises the

importance of integrating project management with broader organisational strategies

and goals. It also emphasises the importance of stakeholder management and

communication to ensure that projects align with the needs and expectations of all

stakeholders. Morris’s approach recognises that projects do not operate in isolation but

are influenced by the broader organisational context. This includes factors such as

organisational culture, structure and strategy. Thus, effective project management

requires an understanding of these contextual factors and the ability to align projects

with broader organisational goals.

In 2011, the concept of managing projects was expanded to three levels by Morris and

Geraldi (2011). As shown in Figure 2-1, the first level, the technical core, is concerned

with project delivery and focuses on techniques and processes. The technical core is

the foundation of project management, which focuses on delivering the project’s

technical requirements efficiently and effectively. It includes processes, techniques and

tools to manage scope, schedule, budget, resources, risks and quality. The project

manager and the project team are responsible for the technical core. Their primary

objective is to complete the project on time, within budget, and to the required quality

standard.

Figure 2-1 Levels 1 to 3 in the management of projects

(Source: Morris, P. and Geraldi, J. (2011) Managing the institutional context for

projects, Project Management Journal, 42, 6, Fig. 1, p. 23)

The second level, the project’s strategic wrap, expands the domain to include the

project’s front-end development and definition and protects the technical core from

environmental turbulence. It is concerned with the relationship between the project and

stakeholders’ strategies, the importance of getting the front-end right, and the value

and effectiveness of the project. The strategic wrap ensures that the project is

strategically aligned with the organisation’s goals, vision and mission. It also addresses

stakeholder management, communication and engagement. The project sponsor and

the project board are responsible for the strategic wrap. Their primary objective is to

ensure that the project is strategically aligned, well-defined and valuable.

The third level, the institutional level, is about managing the context within which the

project occurs to enhance its effectiveness in the long term. This level is concerned

with processes, standards, guides and agreements outside of particular projects’

individual management issues and predominantly in their institutional environment.

The institutional level focuses on improving the organisation’s project management

capability, maturity and performance. It includes developing project management

methodologies, processes and standards, providing project management training and

development, and implementing project management governance and oversight. The

project management office (PMO) is responsible for the institutional level. Its primary

objective is to improve the organisation’s project management capability, maturity and

performance to ensure long-term project success.

In fact, institutional theory has gained relevance in the field of project management due

to the increasing recognition of the importance of institutional factors in shaping

project outcomes. This has led to a range of research examining the influence of

institutional factors, such as norms, values and regulatory frameworks, on project

performance, governance and stakeholder relations (Panayides et al., 2015; Qiu et al.,

2019). Additionally, scholars have explored the role of institutional work, which

involves actors’ efforts to create, maintain and disrupt institutional structures and

norms in shaping project outcomes (Javernick-Will & Levitt, 2010; Matinheikki et al.,

2021). The research has provided valuable insights into the complex and dynamic

institutional environments in which projects are embedded and has highlighted the

need for project managers and researchers to be attuned to these institutional factors.

Overall, Morris’s concept of the management of projects represents a shift from a

narrow focus on project management to a more holistic approach that integrates project

management with broader organisational strategies and goals. This approach

recognises that projects are not standalone entities but are influenced by the broader

organisational context and require a more integrated and strategic approach to project

management.

This perspective shift is pertinent to the PPP projects of interest. Li and Wu (2017)

argue that the first-generation PPP model in China was primarily concerned with

reducing procurement costs and increasing efficiency in delivering public services.

However, the second-generation PPP model in China, as seen in France and other civil

law countries, positions PPP as a tool for leveraging regional economic development

through partnerships between the public and private sectors. The emphasis is on

stimulating social capital investment through market-oriented reforms and improving

the charging and price formation mechanism, which allows for investment return based

on market-oriented operations. The focus is no longer solely on the government’s

ability to pay financial funds but rather on the PPP’s driving role in regional economic

development and market mechanism maturity.

Li and Wu further argue that PPPs can be a useful tool in achieving sustainable

development goals, particularly in areas such as education, healthcare and elderly care,

where the pressure on government finances and technical management limitations

make it difficult to achieve these goals through government departments alone. The

PPP model can better balance the contradiction between the provision of public goods

and the need for sustainable development. Therefore, the future direction of PPPs, i.e.,

the third-generation PPP model in China, must focus on the needs of people and put

people first, elevating the operation concept and target positioning of the PPP model to

new heights.

2.2.3 The Hard and Soft Paradigm of Project Management

Another trend has influenced project management to focus on both hard and soft

paradigms, moving away from a sole emphasis on the hard paradigm. This discourse

has become increasingly prevalent in academic literature and industry practices. The

phrases “hard” and “soft” are frequently used in both practical and academic contexts

of general and project management. However, their meanings are often unclear and

indefinite. In general, the term “hard” often refers to technical or tangible aspects of

management, such as tools, methods and processes. On the other hand, “soft” often

refers to the intangible aspects of management, such as human behaviour,

organisational culture and communication.

From the perspective of the philosophical stand, Pollack (2007) suggests that hard

approaches to management are based on a positivist, reductionist and realistic

philosophy, which emphasises the pursuit of objective knowledge. In other words, hard

approaches seek to understand complex systems by breaking them down into smaller

parts and analysing them in a logical and systematic manner. Hard approaches focus on

finding the best solution based on objective data and facts. In contrast, soft approaches

are rooted in constructive and interpretive schools of thought. Soft approaches focus on

the human element of management, recognising that individuals and groups have

different perspectives and experiences that influence their understanding of complex

systems. Soft approaches emphasise the creation of knowledge through collaboration

and communication among stakeholders. The goal is to develop a shared understanding

of the problem and potential solutions rather than finding the one “correct” answer.

From the perspective of approaches to problem solving and decision making, Green

(1994) suggests that value engineering follows a hard systems thinking approach that

emphasises optimisation, while VM takes a soft systems thinking approach focused on

learning and improvement.

In the project context, the hard paradigm emphasises the technical and quantitative

aspects of project management, such as schedule and budget management, risk

assessment and performance measurement (Sanderson, 2012). The focus is on

achieving project goals through a structured, linear approach, often using

methodologies such as Waterfall. In contrast, the soft paradigm emphasises the human

and social aspects of project management, such as communication, team dynamics,

stakeholder engagement, and leadership (Ahsan & Gunawan, 2010). The focus is on

building relationships, fostering collaboration, and creating a positive work

environment to promote creativity, innovation and adaptability. Soft methodologies

such as Agile and Scrum prioritise flexibility, responsiveness and continuous

improvement.

The shift from a hard to a soft paradigm reflects a growing recognition that project

success depends not only on technical competence but also on the ability to manage

human and social factors effectively. This shift has implications for project managers,

who must develop new skills and competencies to manage both the hard and soft

aspects of project management, as well as for organisations, which must adopt new

structures, processes and cultures to support this new paradigm (San Cristóbal Mateo

et al., 2022).

To better illustrate the hard and soft paradigms of project management, Crawford and

Pollack (2007) developed a framework to better understand the concepts of “hard” and

“soft” in project management. They identified seven dimensions that contribute to a

project’s hardness or softness: goal/objective clarity, tangibility, success measures,

project permeability, solution options, degree of participation and stakeholder

expectations. Detailed connotations are summarised in Table 2-1.

Table 2-1 The hard and soft dimensions framework

Dimension Hard Soft Comments

Goal/objective

clarity

Goals are already well-

defined and don’t need

further examination

There may be ambiguity in

goals and instead, focus on

learning, exploring and

defining problems

The soft method helps to prevent

incorrect identification of the

problem. The approach then

shifts towards negotiation,

debate, and finding common

ground.

Goal/objective

tangibility

Goals can be defined in

clear, measurable terms

Goals can be more

challenging to define and

often require subjective

interpretation and judgment

Project managers need to be

aware of the level of the

tangibility of their goals and

adjust their approach accordingly

Success

measures

Quantitative measures

provide an accurate

reflection of reality

Qualitative analysis

provides an in-depth

understanding of a situation

Project managers should be

aware of the limitations and

strengths of both approaches and

use a combination of methods

for a comprehensive

understanding of their projects

Project

permeability

Limited number of

project influences inside

and outside project

control

Large number of project

influences inside and

outside project control

When the determination of a

clear boundary and specified

scope is more problematic, soft

methods that focus on learning,

exploration and problem

definition may be more

appropriate.

Solution

options

Efficient delivery with

predetermined solutions

is handed down without

room for discussion

There is an opportunity for

questioning assumptions

and thus exploring

alternatives and seeking

innovative solutions

The soft paradigm could be

considered the "optimal

approach" that arises from inter-

subjective, rational

argumentation

Degree of

participation

Team members are

considered experts in

their respective fields

with clear roles and

boundaries

People are encouraged to

cross professional

boundaries and negotiate

between multiple

perspectives

The effective hard method may

be suitable for simple, routine

projects, while the participative

soft method may be more

suitable in complex, multifaceted

projects where participant

ownership is necessary

Stakeholder

expectations

The emphasis is on

control, assuming the

predictable behaviour of

people

The emphasis is on culture,

meaning and value,

assuming people are part of

a complex system

Given the importance of

understanding different

stakeholder expectations, soft

methods that require greater

stakeholder interaction are more

effective in complex projects

Based on the framework summarised in Table 2-1, it can be argued that PPP projects

have more soft elements than hard ones. PPP projects often involve complex and

ambiguous goals from the outset, and stakeholders may have different interpretations

of what the project should achieve. Therefore, a soft method approach allows for

exploration, learning and defining problems to ensure that the project’s goals are clear

and agreed upon by all stakeholders.

Besides, PPP projects involve complex relationships between public and private

entities, and the success of such projects cannot be solely measured by quantitative

metrics. The qualitative analysis provided by soft methods can help project managers

gain an in-depth understanding of the complex factors that contribute to the success or

failure of PPP projects.

From the stakeholder-related dimension, PPP projects are often complex and involve

various stakeholders from different sectors who have different interests, priorities and

expectations. Therefore, PPP projects can be seen as having a large number of project

influences inside and outside project control. Also, there may not be a single

predetermined solution that can be handed down without room for discussion in PPP

projects.

Most importantly, participation and collaboration between stakeholders is crucial for

the success of the PPP project. Thus, soft methods that focus on learning, exploration

and problem definition are more suitable for PPP projects as they facilitate open

communication and cooperation between stakeholders, leading to better problem

solving and decision making.

When exploring the development of project management, it becomes apparent that

projects are anticipated to provide value to their stakeholders beyond the mere delivery

of products. It is expected that projects offer long-term strategic value to their

constituents (Martinsuo & Killen, 2014). The following sections explore the theoretical

underpinnings of project value and the approaches employed to create value in projects.

2.3 Broad Examination of Value Concept in Management Literature

In the realm of project management, the search for distinct knowledge unique to this

field is a common pursuit in the literature. For example, the Project Management Body

of Knowledge (PMBOK®) guide only delineates knowledge relevant to project

management that is not readily available in other fields and this approach did not

adequately cover the knowledge required for project management as a profession

(Morris, 2013).

To that end, this section aims to first examine the concept of value as described in the

broader management literature before narrowing its focus to the context of PPP

projects. Through this approach, better understanding of the common and specific

knowledge required for successful value creation in PPP projects and its distinctiveness

from other management fields is provided.

2.3.1 Value-in-use vs Value-in-exchange

In general, people seek to pursue value for money or, more broadly, the best value

possible. However, the question of what constitutes genuine goodness has been queried

throughout the history of humankind (Hart, 1971), making value an abstract and

subjective concept. To address issues related to value, which encompasses what is

regarded as valuable and/or desirable (Biedenbach & Jacobsson, 2016), a term called

“axiology” has emerged, which aims to synthesise and examine questions pertaining to

value priorities (Given, 2008).

Various approaches exist to comprehend and interpret value. One of the archetypes is

summarised by Rescher (1969), who classifies value into eight categories: material and

physical value; economic value; moral value; social value; political value; aesthetic

value; religious value; and intellectual value. While this classification provides a

universal perspective of what is typically valued, a triadic-dimension argued by

Hartman (1961) includes intrinsic, extrinsic and systemic values and exhibits the logic

of value creation. Intrinsic value refers to the value with which something is endowed

itself, rather than the value achieved in a specific context or through certain ways

(Hartman, 1991). Extrinsic value is defined as “not supposed to be good in itself but in

its function” (Hartman, 1991). Systemic value means that something must fulfill a

specific logic structure set up for such a value, resulting in a binary criterion in which

something is either valuable or not valuable at all, without an intermediate position

(Biedenbach & Jacobsson, 2016). Similarly, Pojman (2005) divides value into intrinsic

and instrumental ones, with the former meaning inherently valued and the latter

referring to effectual functions to achieve worth pursued (Biedenbach & Jacobsson,

2016).

To clarify the value construct, Bowman and Ambrosini (2000) employ the distinction

between use value and exchange value. Use value is subjective and contextual,

referring to the quality of a product or service perceived by customers with regard to

their actual need, while exchange value is the monetary amount realised at the point of

exchanging such products or services (i.e., the price the consumer is willing to pay for

the product) (Bowman & Ambrosini, 2000). Thus, value creation depends on the

subjective value realised by the target user or buyer who is the focus of value creation

whether an individual, organisation or community. However, Lepak et al. (2007, p. 182)

suggest that “subjective value realisation must at least translate into the user’s

willingness to exchange a monetary amount for the value received”. Similarly, from a

service-dominant logic perspective, Vargo et al. (2008, p. 145) argue that “value is

fundamentally derived and determined in use – the integration and application of

resources in a specific context – rather than in exchange – embedded in firm output

and captured by price”.

In the realm of business, value-in-exchange pertains to the price that consumers are

willing to pay for the goods and services offered by a firm (Bowman & Ambrosini,

2000). As profit-maximising entities, firms employ various strategies to achieve the

highest value-in-exchange possible (Lepak et al., 2007). However, it is important to

note that value-in-exchange is contingent upon value-in-use. Hence, firms should

prioritise the pursuit of value-in-use rather than value-in-exchange, as the latter is a

consequence that emerges from its antecedent, which is value-in-use.

Furthermore, value-in-use pertains to the benefits and utility that consumers derive

from the products and services offered by a firm (Leroy et al., 2013). This concept is

rooted in the notion that consumers purchase goods and services not for their inherent

value, but for the benefits that they provide. Hence, firms should focus on delivering

superior value-in-use to their customers, as this is what drives demand and ultimately

leads to higher value-in-exchange. It is also worth noting that value-in-use is not

limited to the functional benefits that a product or service provides. Rather, it

encompasses a range of intangible factors such as emotional attachment, social status

and environmental impact (Payne et al., 2007). Hence, firms should aim to create

products and services that not only fulfill their functional needs but also accord with

their emotional and social aspirations while minimising any negative impact on the

environment.

In conclusion, while value-in-exchange is a crucial component of a firm’s success, it is

ultimately dependent on the value-in-use that its products and services provide. Thus,

firms should prioritise the pursuit of superior value-in-use as this drives demand and

ultimately leads to higher value-in-exchange. By creating products and services that

cater to the diverse needs and aspirations of consumers while minimising negative

externalities, firms can build sustainable competitive advantages and long-term

profitability.

2.3.2 Value Creation Content vs Value Creation Process

Based on the philosophical discussion of value, value has been endowed with a variety

of contextual connotations, and its characteristics of long-term process and multi-

stakeholder involvement have been identified in the field of management. At the

organisational level, Thomas and Mullaly (2008) categorise three approaches to assess

the value of an organisation: the return on investment approach, which quantitatively

focuses on the cost–benefit ratio; the balanced scorecard approach, which includes

financial and non-financial measures; and the organisational competency approach,

which emphasises the long-term and sustainable competitive advantage of companies.

At the project level, some scholars adopt the 3E view, which is economy, efficiency,

and effectiveness, to elaborate on value creation. Economy refers to maximising inputs

with regard to the money invested; efficiency refers to maximising outputs with regard

to inputs, and effectiveness refers to maximising outcomes with regard to output. To

achieve value for money of a project, it is necessary to maximise outcomes for every

dollar invested into it (Burger & Hawkesworth, 2011). While economy and efficiency

focus more on the financial facet, effectiveness measures if the designed outcome has

been attained, moving beyond the uni-dimensional perspective to focus more on the

lasting effects beyond the project itself. This perspective emphasises the need to treat

value creation as a long-term and ongoing process (Chang et al., 2013).

In addition to the emphasis on the long-term view of value, academic attention is also

paid to the individual-specific nature of value in projects. The Institute of Value

Management (2010) defines value as “the relationship between satisfying needs and

expectations and the resources required to achieve them”, drawing attention to the

significant role that diverse stakeholders play in determining value. This emphasis is

further explained in the definition of value management, which aims to improve and

sustain the best balance between satisfaction and resources through reconciling various

value priorities from diverse stakeholders (Institute of Value Management, 2010).

According to Chang et al. (2013), value creation has two important characteristics that

must be considered: content and process. The content of value creation refers to what

is considered valuable, who values it, and where the value resides. Meanwhile, the

process of value creation distinguishes the process of capturing value from its creation.

By understanding these two aspects, value creation can be seen as an ongoing and

long-term process that involves various stakeholders. A synthesis of existing literature

(broadly in general management or specifically in engineering and project management)

on value and VCC is provided in the table below.

Table 2-2 A synthesis of existing literature on value and VCC

Literature Key Findings

Vargo and Lusch

(2004)

Introduced the concept of service-dominant logic which

emphasises VCC as a collaborative process between

customers and providers. Emphasised the importance of

shifting from a goods-dominant logic to a service-dominant

logic.

Prahalad and

Ramaswamy (2004)

Argued that value is co-created through interactions between

firms and customers. Stressed the need for firms to view

customers as active participants in the value creation process

rather than passive recipients of value. Introduced the concept

of the “co-creation experience”.

Grönroos (2011) Proposed a “service logic” approach to VCC, emphasising the

central role of services in value creation. Highlighted the

importance of customer integration, relationship development,

and continuous dialogue in the co-creation process.

Payne et al. (2007) Developed a framework for managing VCC that includes four

key processes: understanding, creating, delivering, and

capturing value. Emphasised the need for firms to align their

resources, capabilities and processes with customer needs and

preferences.

Ramaswamy (2011) Introduced the concept of “cocreation platforms” as a way to

facilitate VCC in networked environments. Emphasised the

role of technology in enabling collaboration and knowledge

sharing among stakeholders.

Edvardsson et al.

(2011)

Explored the application of VCC in the context of

infrastructure projects. Highlighted the importance of

involving multiple stakeholders, such as clients, contractors

and end-users, in the VCC process. Emphasised the need for

effective communication and collaboration among

stakeholders.

Value creation is a complex and multi-dimensional construct that can be influenced by

a range of factors. The individual-specific nature of value highlights the importance of

recognising the diverse perspectives and priorities of stakeholders in determining value.

At the same time, the process of capturing value from value creation emphasises the

need to consider the various stages involved in the value creation process, from

ideation to delivery and beyond.

In summary, value creation is a dynamic and multifaceted concept that requires a

comprehensive understanding of its content and process. By recognising the

importance of these two aspects, stakeholders can work together to create and capture

value in a sustainable and mutually beneficial way.

2.3.3 Value vs Values

Understanding the difference between values and value is crucial in the fields of

management and project management. Values refer to the beliefs and principles that

guide decision making and behaviour, whereas value refers to the worth or benefit

derived from a particular action, investment or project (Martinsuo, Klakegg, et al.,

2019).

In the context of public administration, the difference between value and values is that

value is more concerned with the tangible benefits and outcomes of public policies or

services, while values are more concerned with the ethical and normative dimensions

of public administration. The two streams of public value research – the managerial

perspective (Rf. Moore, 1995) and the normative perspective (Rf. Bozeman, 2007) –

reflect these different emphases. The managerial perspective focuses on the efficient

delivery of services and the achievement of specific outcomes, while the normative

perspective places greater emphasis on the ethical and moral considerations of public

administration. The managerial perspective of public value research is grounded in the

notion that public policies and services should be designed and delivered in a way that

maximises their value to citizens (Petrescu, 2019). This perspective views public

administration as a means to achieve specific goals and outcomes and emphasises the

importance of performance measurement and evaluation. It is concerned with

improving the efficiency and effectiveness of public services, while ensuring that they

meet the needs of citizens and contribute to the public good. The normative perspective

of public value research, on the other hand, places greater emphasis on the ethical and

normative dimensions of public administration (Bozeman, 2002). This perspective

acknowledges that public policies and services are not neutral, and that they can have

differential impacts on different segments of society. It advocates for a more inclusive

and participatory approach to public administration, one that is guided by principles of

transparency, accountability and fairness. It recognises the importance of values such

as social justice, equity and democracy in shaping public policies and services

(Williams & Shearer, 2011).

In project management, delivering value is the ultimate goal (Thiry, 2002). This means

that a project should provide benefits or outcomes that meet the needs and expectations

of stakeholders, while also being completed on time, within budget, and to the required

quality. Project managers must balance the competing demands of stakeholders and

ensure that the project’s objectives align with the organisation’s overall strategy and

values. In contrast, values are more abstract and subjective. They reflect an

organisation’s culture and beliefs and guide decision making and behaviour (Martinsuo,

Vuorinen, et al., 2019). Values can influence project selection, prioritisation and

governance. For example, an organisation that values sustainability may prioritise

projects that reduce its environmental impact, even if they are not the most profitable.

Values can also impact project outcomes, as they may influence the way in which

stakeholders perceive and evaluate a project’s success.

While values and value are distinct concepts, they are interconnected. The values of an

organisation and its stakeholders can impact the perception of a project’s value

(Vuorinen & Martinsuo, 2019). For example, a project that aligns with an

organisation’s values may be seen as more valuable, even if it does not generate the

highest financial return. On the other hand, a project that conflicts with an

organisation’s values may be seen as less valuable, even if it generates significant

financial returns. In summary, values and value are both important concepts in

management and project management. Values guide decision making and behaviour,

while value refers to the worth or benefit derived from a particular action or investment.

Both concepts are interconnected and can influence project selection, prioritisation and

governance, as well as project outcomes and the perception of a project’s value.

2.3.4 Key Insights on Value and Its Creation in the Context of PPP Projects

The review of management literature has highlighted three central insights. These

arguments are as follows:

First, rather than creating multiple dimensions of value, researchers should focus on

creating a unique definition of value that considers its usefulness from the client’s

perspective. This research aims to explore the expressions of value outcomes that

emerge from the usefulness of a project, especially in the PPP context.

Second, the concept of value has multiple meanings in the management literature, and

there is a lack of communication between different management streams. Notably, the

service-dominant logic framework originating from the marketing discipline and VM

methodologies originating from the engineering discipline offer the most robust

literature on value. However, combining these two streams of literature and adapting

them to unique project settings requires further investigation and examination.

Third, there has been a shift from a transactional and independent approach to value

creation to a more interactive approach. This approach has been refined in the service-

dominant logic constructs, such as VCC, which may provide more useful value

outcomes, particularly to client organisations. Service-dominant logic may be

considered a long-awaited model to move away from neo-classical economics (Fuentes,

2020).

For this thesis research focus on PPP projects, three primary arguments regarding

value and its creation are proposed as above by drawing on the perspective of PPP

projects. Referring back to the main focus of this study on project management, the

following section is a more in-depth examination of the idea of value in the project

context. It delves deeper into the concept of value and analyses it in relation to project

settings, to provide a more thorough understanding of how value can be created and

maximised in projects.

2.4 Analysis of Value Concept in PPP Project Context

2.4.1 Value vs Similar Concepts

The definition of value in the context of PPPs is a complex and multifaceted concept

that varies among stakeholders. Since PPP projects involve diverse stakeholders and

last for a long time, capturing value from various stakeholder perspectives and

throughout the full lifecycle of the project is crucial to its success. Despite value being

seldom mentioned in PPP literature, scholarly explorations on value within the context

of PPP projects are emerging, with studies focusing on constituent facets such as

performance measurement, social responsibility and sustainability.

The concept of value in PPP projects is evolving, with a growing recognition of its

importance in ensuring project success. Stakeholders’ perceptions of value are varied,

and capturing value from diverse perspectives is necessary to achieve genuine success

in PPP projects. While studies on evaluating PPP projects beyond the traditional “time-

cost-quality” view are fruitful, further research is needed to explore the different

dimensions of value in PPP projects.

Value vs performance

PPP infrastructure projects are essentially construction projects, and thus it is necessary

to draw on the experience of construction performance measurement to evaluate them

effectively (Liu, Love, Smith, et al., 2015). Successful delivery of PPP projects is

influenced by several factors, including performance measurement (Liu, Love, Smith,

et al., 2015; Osei-Kyei & Chan, 2015; Osei-Kyei et al., 2017). Performance

measurement is fundamental in ensuring project success by providing stakeholders

with valuable information (Liu, Love, Smith, et al., 2015; Yuan et al., 2009). In the

construction industry, performance is typically assessed through key performance

indicators (KPIs) and performance measurement systems (PMSs) (Bassioni et al.,

2004). However, it has been argued that KPIs are often used as a marketing tool rather

than being integrated into business management, and that they should be combined

with an overall performance measurement system for effective use (Beatham et al.,

2004). According to Neely et al. (2001), performance measurement is the evaluation of

past actions’ effectiveness and efficiency, and it needs to be extended to the ex-ante

and whole lifespan (Love et al., 2015).

As a result, recent research has focused on systematically evaluating PPP projects’

performance with broader and more inclusive views. Some of this research has

concentrated on the longevity of PPP projects and has asserted that performance

measurement throughout the entire lifecycle is scarce (Love et al., 2015). Meanwhile,

Verweij (2015) has highlighted the significance of stakeholders’ engagement in the

implementation phase of PPP projects, emphasising that managers’ externally-oriented

actions lead to satisfactory outcomes, while their internally-oriented actions lead to

unsatisfying ones. Robinson and Scott (2009) argue that stakeholders’ perceptions

remain consistent in some situations but can conflict with each other in others.

Through a multi-case study on the effectiveness of performance monitoring on

compliance with output specifications, it was found that the principal (public partner),

agent (private partner), and independent audit body all held different views on output

specifications, leading to divergent opinions on performance monitoring systems and

payment mechanisms (Liu et al., 2016). Other scholars have developed multi-

dimensional evaluation frameworks, such as the Yuan et al. (2009) conceptual model

of performance objectives, which has three separate packages: project inputs,

requirements of stakeholders, and project implementation. Despite several

comprehensive measurement frameworks established in previous research,

performance measurement tends to omit the significant impact of PPP projects on the

community, leaving critical issues regarding social responsibility and sustainability

unaddressed.

Project value, on the other hand, is a multifaceted concept that extends beyond the

traditional boundaries of performance measurement (Yeo, 1991). While performance

measurement primarily evaluates a project’s efficiency and effectiveness in achieving

predetermined objectives, project value encompasses a broader spectrum of

considerations. Project value incorporates not only the quantitative aspects of project

delivery but also the qualitative and long-term impacts it has on stakeholders, society

and the environment.

To delve deeper into this distinction, it is crucial to highlight that project performance

measurement typically focuses on specific key performance indicators (KPIs) and

metrics that are often associated with cost, time and quality (Chang et al., 2013). These

metrics are essential for evaluating the immediate success of a project, ensuring it stays

on budget, adheres to the schedule, and meets quality standards. However, they may

fall short in capturing the project’s wider implications, such as its contribution to

sustainability, social wellbeing and stakeholder engagement.

In contrast, assessing project value entails a more comprehensive analysis that

considers not only the project’s immediate outcomes but also its long-term effects

(Laursen & Svejvig, 2016). This evaluation takes into account the project’s ability to

create lasting value for the community, the environment and the economy. It

encompasses a holistic perspective that goes beyond traditional performance metrics,

delving into areas like environmental sustainability, social responsibility and the

project’s alignment with broader societal goals. Furthermore, project value assessment

is a forward-looking and comprehensive approach that recognises the

interconnectedness of projects within their broader context (Smyth et al., 2018).

Consequently, project value assessment aims to determine the project’s overall impact

and its ability to bring about positive, sustainable change in the community it serves

(Martinsuo & Killen, 2014).

Value vs social responsibility

Social responsibility has gained significant attention in the construction industry,

particularly in infrastructure projects, which have significant impacts on the

community and the environment (Loosemore & Lim, 2016). Socially responsible

infrastructure projects usually involve various stakeholders with different interests and

value orientations that are often incompatible with each other. As a result, social

responsibility has emerged as a crucial value orientation (Van Marrewijk, 2007) that

contributes significantly to the success of infrastructure projects, most of which are

delivered through PPP models (Zhang et al., 2015). Therefore, taking on social

responsibility is a critical aspect of successful infrastructure project development

(Wang et al., 2017).

The concept of social responsibility is multi-dimensional, encompassing ecological,

economic, environmental, ethical, legal and political responsibilities (Zhou & Mi, 2017,

p. 1386). As PPP projects progress, the power and status of the seven stakeholder

groups (governments, developers, main contractors, district councils, consultants, non-

government organisations, and end-users) regarding social responsibility change (Lin,

Ho, & Shen, 2017). It is also pointed out that exploring the role of stakeholders and the

relationship between them could be a potential research agenda in the future (Zhou &

Mi, 2017). It is worth noting that while previous research has established

comprehensive measurement frameworks, the impact of PPP projects on the

community’s social responsibility and sustainability has not received sufficient

attention, leaving critical issues unaddressed.

However, social responsibility represents only one facet of the broader concept of

project value. While social responsibility is crucial, project value assessment takes a

more comprehensive approach. It goes beyond examining only the ethical, societal and

environmental dimensions of a project, as it encompasses various other facets, such as

economic viability, innovation and long-term sustainability. Project value assessment

inherently incorporates social responsibility as one of its elements, recognising it as a

critical component of a project’s overall impact. Consequently, project value

assessment provides a more holistic evaluation of a project’s contribution to society,

the environment, and the economy, considering a broader spectrum of value creation

aspects beyond social responsibility alone.

Value vs sustainability

There is an increasing emphasis placed on sustainability within the construction

industry and urban development (Koppenjan & Enserink, 2009; Ortiz et al., 2009).

Studies have concluded that PPPs are significant in achieving sustainability in

economic systems (Khayrullina & Arzamastseva, 2018). Sustainability, as defined by

the World Commission on Environment and Development (WCED) (1987), refers to

development that meets present generation needs without jeopardising the ability of

future generations to fulfill theirs. PPP projects can have an impact on community

sustainability across three dimensions: natural environment, regional life support

system, and community fragmentation (Mouraviev & Kakabadse, 2016). Shen et al.

(2016) add that sustainable infrastructure development is crucial and propose a triple-

bottom-line sustainability performance-based evaluation model comprising economic,

social and environmental indicators.

However, there is a research gap regarding a comprehensive assessment of the real

value of PPP projects in social infrastructure projects from an integrated perspective

across the entire project lifecycle and different stakeholders. Therefore, this study aims

to fill this gap by summarising and analysing value-related studies from both lifecycle

and stakeholder dimensions.

In comparing project value and sustainability, it is important to note that while

sustainability is a critical aspect of project value, the terms represent distinct yet

interconnected concepts. Sustainability emphasises the long-term viability and

responsible stewardship of resources, with a focus on meeting current needs without

compromising future generations’ wellbeing (Baba et al., 2021). It encompasses

environmental, social and economic considerations, making it a comprehensive

framework for evaluating a project’s impact on society, the environment and the

economy. On the other hand, project value is a broader concept that encompasses

various dimensions beyond sustainability, including economic efficiency, innovation,

stakeholder satisfaction and overall societal impact. While sustainability is an integral

component of project value, the latter extends to evaluate a project’s contribution to a

wider range of stakeholders and its capacity to create enduring benefits for the

community, the environment and the economy (Green & Sergeeva, 2019).

Thus, this study posits that for PPP projects to effectively capture the value associated

with social responsibility and sustainability, a comprehensive assessment of project

value must be conducted through integrated horizontal and vertical dimensions.

Specifically, this entails evaluating the project’s lifecycle dimension and stakeholder

dimension to ensure that all relevant factors are considered in the assessment process.

By evaluating PPP projects in a comprehensive and integrated manner, decision

makers can make informed decisions that balance economic, social and environmental

considerations and achieve desirable outcomes for all stakeholders.

2.4.2 Dimensions of Value

The concept of value has been a significant area of focus in management literature as

organisations search for alternative ways to create value. However, the meaning of

value may differ across various stakeholders, resulting in diverse interpretations across

different fields of management. As a result, it is essential to recognise that the

perception of value may vary among stakeholders, and understanding their unique

perspectives can lead to better outcomes for all involved parties. It is also essential to

note that the perception of value may change over time, even for the same stakeholder.

This evolution may be due to the pursuit of value, which could change as new

priorities emerge, or the experience of value, which may evolve through the utilisation

of the service.

Project lifecycle dimension

According to the European Investment Bank (EIB) (2012), the development process of

a PPP infrastructure project typically comprises eight phases: project selection and

definition, PPP option assessment, getting organised, pre-tendering work, bidding

process, contract and financial close, contract management, and ex-post evaluation.

However, the literature offers alternative classifications of the PPP lifecycle. For

instance, Liu, Love, Davis, et al. (2015, p. 5) summarised the above eight phases into

three major interrelated phases: (1) initiation and planning; (2) procurement; and (3)

partnership (e.g., construction, operation, and maintenance). Lin et al. (2017) divide

the PPP lifecycle into three stages: the initiating and planning stage, the execution

stage, and the controlling and closing stage. Similarly, Love et al. (2015) argue that

current performance evaluation of PPP projects focuses on input, output and outcome

while omitting evaluation of process. This study adopts the conventional classification

used by the European Investment Bank and treats the partnership phase as two separate

phases from a process perspective as a construction phase and operation and

maintenance (O&M) phase aiming to ensure a more precise theoretical evaluation

framework. While studies on stakeholders are fruitful, evaluating PPP projects from

the process dimension is scarce (Love et al., 2015). Based on the division of lifecycle

process, Liu et al. (2017) put forward a performance measurement framework

regarding PPP social infrastructure projects consisting of a series of indicators from

five dimensions: stakeholder satisfaction, strategies, processes, capabilities, and

stakeholder contribution. Lin et al. (2017) investigated the dynamic stakeholder power

regarding social responsibility in the construction project lifecycle, and identified a set

of social responsibilities in three phases of construction projects. In a study of

corporate social responsibility, Zhao et al. (2012) also shed light on the issues and

performance indicators at the project level regarding PPP projects based on four phases

divided from PPP projects’ entire lifecycle. Based on a lifecycle assessment

perspective, Ortiz et al. (2009) highlighted the growing importance of sustainability in

the construction industry and the role of lifecycle assessment (LCA) in achieving

sustainability objectives. They discussed the methodology and application of LCA,

compared different LCA approaches, and emphasised the need for a balanced approach

to development that considers social, economic and environmental factors.

Multi-stakeholder dimension

Due to the complex composition of stakeholders with diverse value orientations

involved in PPP projects, Kwak et al. (2009) stress that integrating multiple

stakeholders effectively would be conducive to delivering successful outcomes.

Notably, increasingly more scholars have paid attention to evaluate PPP projects in an

inclusive view with comprehensive indicators and stress the relationship between goal

congruity as well as multi-value integration and PPPs’ success. PPPs have been

researched

not

just

within

the

project

management

area but

have also

received

academic attention from other disciplines such as legal, social development, and

sustainability. Thus, several stakeholders have been identified from different

perspectives and research focus. In general, these stakeholders can be divided into

three groups: public sector, private sector and general public (Henjewele et al., 2011;

Yuan et al., 2012). Based on the general classification, Yeung et al. (2008) took the

infrastructure sector as another stakeholder dimension. Paying special emphasis to

social infrastructure, Liu et al. (2016) classified key stakeholders as public client,

creditor, shareholder, concessionaire, subcontractors, end-users, and professional

employees of service provision. Another comprehensive classification by Lin et al.

(2017) is governments, developers, and main contractors; district councils; consultants;

non-government organisations; and end-users. After integration and comparison and

considering the particularity of PPP projects in China, this thesis study classified the

stakeholders as 1) public sector, 2) private sector, 3) creditors, 4) end-users, 5)

professional employees of facility and service provision, and 6) community and

general public.

An array of indicators has been identified under the multi-stakeholder dimension. Yuan

et al. (2009) identified a list of performance objectives from different stakeholders in

an attempt to reflect their best-value orientation. Reckoning performance objectives as

the foundation of performance measurement and management, in a subsequent paper

Yuan et al. (2010) defined the level of performance objectives, through which to

explore preliminarily how to integrate all stakeholders’ points of value through a fuzzy

entropy method. Further, Yuan et al. (2012) pointed out that, although performance

objectives vary due to different standpoints of stakeholders, the key performance

indicators (KPI) should be consistent because all the stakeholders need to compromise

and collaborate to ensure PPP projects provide value for money.

Based on this argument, Yuan et al. (2012) developed a conceptual model for KPIs in

PPP projects including three perspectives and five aspects: 1) the perspective of project

inputs (consisting of physical characteristics of projects); 2) the perspective of the

requirements of stakeholders (consisting of financing and marketing; innovation and

learning; stakeholders); and 3) the perspective of project implementation (consisting of

the project process). Yeung et al. (2008) established a set of qualitative indicators to

measure partnering performance in Hong Kong’s construction industry. The indicators

were derived initially from interviews with major stakeholders involved in the

partnership, which are the private sector, public sector and infrastructure sector, and

then refined them into seven groups as time performance, cost performance, top

management commitment performance, quality performance, trust and respect

performance, effective communications performance and innovation and improvement

performance. With a special focus on operational management, Osei-Kyei and Chan

(2017) explored the different perceptions of stakeholders based on the critical success

factors of PPP projects. Koppenjan and Enserink (2009) explored how to reconcile the

private participation and sustainability within urban infrastructure development and

summarised a set of governance practices.

2.4.3 Principal Concepts Discrimination

Value is a central and multifaceted concept that is extensively discussed in this

research. With the aim to differentiate confusing concepts and clarify the connotation

of these concepts in this research, this section clarifies the various value-related

concepts that are referred to in this study.

The concept of project value is used to provide context for this research, specifically in

relation to PPP projects. In this context, project value refers to the overall benefits

created for the entire project, which includes value creation for all stakeholders

involved in the project, minus all relevant costs. Project value is the independent

variable in this research, and the ultimate aim is to investigate how to maximise the

project value of a PPP project.

Value creation, on the other hand, refers to the amount of value that is created through

various VCC activities. Despite a possibly more precise way to describe value creation

by referring to it as the emergence or formation of value (Grönroos & Voima, 2012),

the term “value creation” is commonly used and accepted in academia, and therefore it

is used in this research. However, as there are different categories and timing of value

creation during the entire PPP project lifecycle, the noun, value outcomes, is used to

refer to different categories of benefits that are created, dictating dimensions of the

interdependent variable.

Moreover, value co-creation refers to the actions taken by stakeholders with the aim of

creating value. It has the verb attribute in the research and represents the dependent

variable in the research. It involves the active participation of multiple stakeholders in

the creation of value, rather than being solely generated by the service provider or the

client. In the context of PPP projects, VCC involves a collaborative process between

the public and private sectors to create value for all stakeholders, including the

government, private sector partners, and the public at large.

The concept of VCC is closely related to the notion of value proposition, which is the

set of benefits that a service provider promises to deliver to the client or end-users. In

the context of PPP projects, value proposition should be aligned with the interests and

needs of all stakeholders, and it should be based on a thorough understanding of their

expectations and requirements. Effective value proposition can help to ensure that the

project delivers the intended benefits and creates sustainable value for all stakeholders.

2.5 Analysis of Service-Dominant Logic and Value Management

Literature

As stated in the second argument in Section 2.4, the concept of value has multiple

meanings in the management literature, and there is a lack of communication between

different management streams. Notably, the service-dominant logic framework

originating from the marketing discipline and VM methodologies originating from the

engineering discipline offer the most robust literature on value. However, combining

these two streams of literature and adapting them to unique project settings requires

further investigation and examination. The disparate interpretations of the concept of

value in different management fields imply a need for a more comprehensive

understanding of its meaning. Given the significant contributions of the service-

dominant logic framework and VM methodologies to the value literature, further

exploration of these areas of inquiry, particularly regarding their adaptation to unique

project settings, is crucial. Such investigations allow for a deeper understanding of the

complexities of value creation and provide insights into the most effective strategies

for creating value in different project contexts.

2.5.1 Service-Dominant Logic and Value Co-creation

The main theoretical foundation of this research is VCC. VCC is a business concept

that emphasises the collaborative creation of value between a company and its

customers or other stakeholders (Payne et al., 2007; Prahalad & Ramaswamy, 2004). It

suggests that value is not created solely by the company or producer, but rather

through a joint effort between the company and its customers (Normann & Ramírez,

1993). In this theory, the customer is not merely a passive recipient of the company’s

offerings, but an active participant in the value creation process. The company

provides the resources, products or services, while the customer provides their own

knowledge, skills, experiences and preferences to create a unique value proposition

that satisfies both parties (Karpen et al., 2015; Vargo & Lusch, 2007a). The

implementation of this theory requires a shift in mindset from the traditional view of

customers as passive receivers of value to an active, collaborative partner in the value

creation process. This can involve a range of activities such as co-design, co-

production, co-marketing, co- innovation and co-creation of knowledge (Fuentes et al.,

2019).

There are two main research strands identified in the VCC literature. One strand,

represented by scholars such as Stephen L. Vargo and Robert F. Lusch, is the well-

known service-dominant logic perspective in service science. The two renowned

scholars with an active community of scholars have facilitated the evolution of this

theoretical perspective. In service-dominant logic, Vargo and Lusch (2018) argue that

VCC occurs through a series of interactions between the firm and the customer. These

interactions involve the integration of resources, especially the operant resources

(Constantin & Lusch, 1994), from both parties to achieve mutually beneficial

outcomes. Service-dominant logic is built on a set of axioms that emphasise the

centrality of VCC, the importance of relationships, and the role of knowledge and

information (Vargo & Lusch, 2015). VCC emphasises the role of customers as active

participants in the creation of value who co-created value with firms by bringing their

own resources, knowledge and experience to the service encounter.

Service-dominant logic further suggests reexamining the role of customers from a

perspective of networks and systems, and thus introduces the concept of “service

ecosystems” which are networks of firms, customers and other stakeholders that

interact to create and deliver value (Vargo & Lusch, 2011). In a service ecosystem,

value is not created by isolated firms but by the interactions between actors, such as

customers, suppliers, competitors and regulators. This means that a service firm cannot

fully control the value that is created within a service ecosystem but must instead work

collaboratively with other actors to create value for all participants.

Differentiating from Vargo and Lusch’s emphasis on the broader network of actors

involved in VCC, another strand, represented by scholars such as Grönroos,

Ramaswamy and Prahalad, examines how value is created in the context of services by

defining the concepts of VCC and value creation, and exploring the roles of both the

customer and the firm in this process. In their views, VCC is analysed as a function of

the interactions between these two main entities not among a network. In addition,

Grönroos (2017) stresses that customers not only determine value, but they are also the

value creators. The firm can facilitate customers’ value creation by providing potential

value, which evolves into value-in-use during consumption. By establishing a platform

of co-creation during direct interactions, the service provider and the customer can

merge their processes into one interactive, collaborative and dialogical process,

allowing the firm to co-create value with the customer. Although the concept of VCC

is not clearly defined, it is generally believed that both customers and firms contribute

to it, making it a comprehensive process. There is a need to differentiate between the

roles and actions of the service provider and the customer in this process (Grönroos,

2012). On this point, Grönroos holds a different view from Vargo and Lusch’s more

systemic view of emphasising the interconnectedness of all actors involved in value

creation.

Other than this difference, both strands acknowledge the importance of interaction.

Such interaction is twofold. The first aspect of interaction is resource integration

(Vargo et al., 2008), which refers to how actors combine their resources and

capabilities during interaction to create value. This could include the exchange of

information, expertise, technology or other resources that enable actors to co-create

value. The second aspect of interaction relates to the relationship among actors

involved in the interaction (Lambert & Enz, 2012). This refers to the social dynamics,

trust and mutual understanding between actors that enable them to work together

effectively. When actors have a strong relationship, they are more likely to collaborate

and co-create value, leading to positive outcomes for all involved.

2.5.2 Value Management Methodology and Value Co-creation

VM is a systematic process that aims to optimise the value delivered by a project or

organisation while minimising the costs and risks involved (Martinsuo & Killen, 2014).

According to Thiry (2013), VM is a structured approach that involves identifying and

defining the functions required to meet the customer’s needs and wants, analysing the

value of these functions, and developing innovative solutions that meet these needs

more effectively and efficiently than traditional approaches. This relates to two

dimensions: the fit with expectations and the achievability of the solution. Meeting

expectations requires a neutral or positive ratio between the achieved outcomes and

expected outcomes, while achieving solutions requires a balance between available and

requested competence (Thiry, 2013).

Although VM stresses receiving an equitable return, whether in goods, services or

money, for something exchanged (SAVE International, 2007), it is not just about cost-

cutting but involves a holistic approach to creating value, including considering the

entire lifecycle of a project or product, assessing the potential impact of new

technologies and innovations, and actively involving stakeholders in the process.

Function is a fundamental concept that refers to the expected performance of the

customer in terms of their needs and wants (British Standard Institution (BSI), 2012).

Function analysis is a critical activity in VM methodologies used to identify what the

customer truly values, regardless of feasibility considerations (British Standard

Institution (BSI), 2020). Functions are typically use-oriented and independent of

specific solutions. For example, a closet is a solution, while storing things is a function.

However, storing things can be accomplished by other solutions besides a closet, such

as storage boxes or garages. Functions are typically described as an active verb

followed by a measurable noun, such as “closet” = “store things”. This approach

encourages creative alternatives to be generated based on the customer’s needs, rather

than relying solely on the project team’s competence. Function analysis distinguishes

VM from other problem-solving or process improvement methods and fundamentally

connects VM and VCC. At the project level, functions can be associated with business

benefits since a project aims to seek benefit.

VM and VCC are two interconnected concepts that aim to create value for customers.

VM focuses on identifying the customer’s needs and wants and developing solutions to

meet

those

needs,

while

VCC

emphasises

the

collaborative

efforts

multiple

stakeholders in creating value. Both concepts are aimed at enhancing customer

satisfaction and creating long-term value for all stakeholders involved in a project.

Function analysis, a critical activity in VM, aligns with VCC, which emphasises the

co-creation of value through collaborative efforts between stakeholders. At the project

level, functions can be associated with business benefits, since a project aims to seek

benefit. Therefore, VM and VCC are complementary and can be used together to

enhance the value proposition of a project.

2.6 Analysis of Value Co-creation in the Management of Project Literature

2.6.1 Institutional Factors

Institutional factors in PPPs: Gaps and reasons for investigation

With the inception of organisations as a field of research in 1950, scholars started to

investigate organisational structures and behaviours from the institutional perspective

(Dimaggio & Powell, 1983). As Vargo and Lusch (2015, p. 18) maintained, value

creation cannot be fully understood without “including the institutions and institutional

arrangements that enable and constrain value creation”. However, while previous

research efforts in infrastructure project management have examined VCC mechanisms

in some detail, the role of institutions in shaping or hindering VCC behaviours in the

PPP context remains largely understudied especially empirically (Pérez-D’Oleo et al.,

2015), despite the relevance of this issue.

Research and discourses regarding institutional theory vary significantly, with one

notable difference being the diverse levels of analysis employed by scholars in the field

of project management (Scott, 2014). Although taking a risk to be arbitrary given the

extremely wide range of social phenomena, Scott (2014, p. 105) identified six levels of

analysis in institutional research: world system, society, organisation field,

organisational population, organisation, and organisational subsystem. These

categories are divided according to the scope of the phenomena encompassed. Using

data from the World Bank and the institutional framework developed by (Kaufmann et

al., 2009), one extant salient research stream has focused on the influence of

institutional environment and factors on the governance of PPP projects such as risk

allocation (Wang et al., 2019) and transferring (Percoco, 2014), adoption of PPP

projects (Panayides et al., 2015), PPP project termination (Ruiz Díaz, 2020), and PPP

project success (Pérez-D’Oleo et al., 2015). However, this research provides a cross-

national perspective on PPP project governance from a macro institutional perspective

on a global level. However, so far, very little research has been done to reveal

institutional impacts on PPP projects at the meso level, which is the organisational

level (the project).

Therefore, the thesis research fills this gap by focusing on investigating institutional

factors at the project level with regard to their impacts on stakeholders’ practice on

VC, particularly in the Chinese context. Given this research objective, the three

mutually supporting and reinforcing pillars of institutional factors developed by Scott

(2014) are used.

Among others, institutional factors are asserted in the thesis research to be amongst the

most influential factors having effects on VCC behaviours. The first reason is that a

PPP per se is an institutional arrangement (Akbari Ahmadabadi & Heravi, 2019). Each

stakeholder involved in a PPP project brings their own institutions to the project and

therefore institutional arrangements are assembled collectively. Thus, Vargo and Lusch

(2015) argue institutions to be the coordinating mechanisms of VCC. Furthermore, as

van Marrewijk et al. (2008) suggested, decisions regarding a PPP project mainly

represent three levels: first, to decide whether to invest resources into a certain project;

second, to decide whether to adopt PPP as the delivery approach; and finally, how to

manage the PPP project for better performance. It should be noted that decisions

regarding the first two levels are beyond the scope of this research and the focus of this

research is on activities practised by stakeholders at the level of PPP projects (as a

temporary organisation). Thus, the second reason for only investigating institutional

factors effects in the thesis research is because the focus is on how to do the project

right instead of how to do the right project. From this point, other factors that matter,

such as economic environment, are not discussed in this research given it is more

related to the adoption or the success of PPPs (Hueskes et al., 2019).

An overview of institutions

The institution is a multifaceted concept that has been studied by numerous scholars

for centuries from various dimensions, levels and perspectives and has resulted in a

variety of arguments, analytic elements, differences and debates. For example, Berger

and Thomas (1967, p. 58) referred to institutions as symbolic systems that are

“experienced as possessing a reality of their own, a reality that confronts the individual

as an external and coercive fact”. Seen from a more objective perspective, institutions

are referred to as a system of norms that “regulate the relations of individuals to each

other” (Parsons, 1990, p. 327). Davis (1949, p. 71) defined institutions as “a set of

interwoven folkways, mores, and laws built around one or more functions”. Ostrom

(2009) considered institutions are social norms and rules. Thornton and Ocasio (2008,

p. 804) defined institutional logic as “the socially constructed, historical patterns of

material practices, assumptions, values, beliefs, and rules by which individuals produce

and reproduce their material subsistence, organise time and space, and provide

meaning to their social reality”. Aiming to bring some order to the discussion, Scott

(2014, p. 56) proposed a broad definition of institutions through a comprehensive

review of institutional research since 1970s: “Institutions comprise regulative,

normative, and cultural-cognitive elements that, together with associated activities and

resources, provide stability and meaning to social life”.

Scott’s definition of institutions has two parts. One part is the symbolic system which

includes rules, norms and cultural-cognitive beliefs and the other part is the associated

activities and resources that produce and sustain the symbolic system. This is aligned

with many other institutional theorists who have been empathising on the mutual

effects between institutions that are constructed socially among actors and actors who

are subject to constraints of institutions. Relevant concepts and perspectives are well

developed such as institutionalisation (Parsons, 1937), institutional entrepreneurs

(Dimaggio, 1988), institution logic and institutional work (Thornton & Ocasio, 2008),

and institutional change (Scott, 2014). However, it should be noted that while such

effects are closely intertwined, the impacts of actors on institutions from an agent-

based point of view are outside the scope of the analysis of this study. This research

only focuses on the institutional effects and processes to allow a more concentrated

examination of VCC behaviours. Thus, only the first part of Scott’s definition is

discussed, that is, the three pillars of institutions: the regulative system, normative

system and cultural-cognitive system.

According to Scott (2014, pp. 59-70), regulative institutions are associated with “rule-

setting, monitoring and sanctioning activities” with the underlying logic being

instrumental: they are devised for increasing interests and they are conformed with to

seek rewards or avoid punishment. The normative system consists of values and norms

that “impose constraints on social behaviour” and at the same time, “empower and

enable social action”. Values relate to what should be achieved while norms are

connected with how to achieve it. Finally, the cultural-cognitive system refers to the

“shared conceptions that constitute the nature of social reality and create the frames

through which meaning is made”. This pillar stresses the cognitive frames, which

mediate humans’ response to external stimuli through different interpretive meaning-

making processes as well as the cultural frameworks that shape such internal

interpretive processes.

Built on the delineation of the three pillars, Scott (2014) also suggested empirical

indicators for each of them. For the regulative system, rules, laws and formal structures

of control such as sanctions and rewards are relevant. For the normative system,

accreditations and certifications according to formulated standards by relevant

institutions are included. For the cultural-cognitive system, common beliefs and shared

logics of action which most of the time are in the form of being taken for granted have

been recently developed (Scott, 2014). While these suggested empirical indicators

provide concrete objects for studying institutions, the attributes relating to them require

further elaboration. According to Hair (2018), constructs consist of the focal object and

the attribute. The focal object is the entity that the construct is meant to measure while

the attribute is the certain feature that the construct is about to describe. Since the

objects of each pillar have already been derived, the next paragraph focuses on the

attributes they represent.

Institutional factors manifest independently across various research domains, including

Critical Success Factor (CSF) investigations, examinations of drivers and barriers

impacting the success of PPP projects, risk identification inquiries, and assessments

related to stakeholder satisfaction. The three constituent components, regulative

systems, normative systems and cultural-cognitive systems, combine to create a

comprehensive framework for understanding institutions as a whole. However, it is

worth noting that these components represent somewhat divergent concepts and, as

such, require careful delineation. Scott (2014) emphasises the importance of not only

recognising these three components but also differentiating them from one another.

With this in mind, the thesis research endeavours to explore both the common

attributes and the unique facets of each of these three components.

Definitions and characteristics of the three pillars

The following section elucidates how the three aforementioned pillars can be mapped

onto the context of PPPs, with a specific focus on the organisational level. In the

Chinese PPP project context, the regulative pillar manifests itself in the form of

relevant regulations given there is no national PPP law yet. One common attribute that

all of the three institutional pillars share is constraints. North (1990) defined

institutions as the constraints which are devised by people and affect the interactional

activities of people. Thus, all the institutions including regulations are basically

constraints put on behaviours of social actors which, however, are not necessarily

negative. As opposed to this, the maturity of legal and regulatory frameworks as well

as the supervision system is important to PPP success (Eybpoosh et al., 2011; Hwang

et al., 2013; Osei-Kyei & Chan, 2015; Xu et al., 2012). Such constraints are imposed

through enforcement which means any violation will result in punishment by law.

Another attribute linked with the regulative system is complexity. This can be found in

both literature and in practice. In the literature, factors such as changes of laws and

political support are identified as risks (Bing et al., 2005; Eybpoosh et al., 2011;

Hwang et al., 2013; Ke, Wang, & Chan, 2010; Ng & Loosemore, 2007; Osei-Kyei &

Chan, 2015). In China, after a boost in the development of PPP projects from 2014 to

2018, many regulations have been published to normalise PPP development. Thus, the

attributes of the regulative pillar in the PPP context are constraints and complexity.

Similar to the regulative system, the normative system works first as constraints on

actors’ behaviours as it guides actors on what should be achieved and how to achieve it.

In Chinese PPP project practice, PPP demonstration projects represent a highly

promoted and vigorously supported model. PPP demonstration projects are initiatives

that encourage the adoption of standard PPP models, with the objective of establishing

exemplary and easily reproducible implementation practices. These projects also strive

to establish robust normative frameworks that facilitate the widespread adoption and

effective implementation of PPP standards, promoting the sustainable development of

PPPs. For example, demonstrative projects are easily financed and make it easy to get

public support. Another attribute of the normative system is conflict. All the

stakeholders involved in a PPP project normally hold various or even conflicting

values which thus lead to distinct norms of behaviours such as different working

methods and know-how (Bing et al., 2005; Hwang et al., 2013; Ke, Wang, & Chan,

2010). This makes a clear mutually beneficial goal (Khan et al., 2013) in the front end

of the project very important.

The constraints of the cultural-cognitive system function in the form of frames within

which social actors perceive the world (Schmeltz, 2014) and respond accordingly. In

the PPP context, this is relevant to how different stakeholders consider a PPP project

which is manifested in different ways such as the mutual trust among principal

stakeholders, the public support to the project, and the negative attitude among actors.

It also represents a major attribute as change. Such change can be exemplified by the

public support for a PPP project when such infrastructure projects can really provide

enhanced service for people, and the government function transforms from the service

provider to a service purchaser. Also, taking the citizen as the most important

stakeholder of a public (service) project is increasingly reflected in the “New Public

Management” wave to create public value (Kelly et al., 2002).

2.6.2 Mapping Value Co-Creation into PPP Context

According to Grimsey and Lewis (2007), the core of a PPP lies in the purchase of a

stream of services with pre-determined terms and conditions, rather than the

acquisition of an asset by the public sector. In contrast to traditional project

management, which is often considered a rigid process with fixed goals and resources,

VCC in projects is characterised by a learning process that seeks to improve the

understanding of the situation and address it more effectively (Thiry, 2013).

Researching VCC in the context of PPP projects is a relatively new area of research.

Through the contributions of scholars from different fields on extending and expanding

the concept, VCC research has expanded in different directions both in theory and in

practice resulting in an abundant output yet an equivocal conceptualisation on an

ambiguous theoretical base (McColl-Kennedy et al., 2012). To be more specific, VCC

is investigated in extant research based on separate focus and theoretical domains

resulting in a lack of convergence of the concept (Hamidi et al., 2019). To reveal the

core conceptual elements of VCC, Ranjan and Read (2014) conducted a

comprehensive and rigorous literature review on VCC and concluded that there are two

main theoretical dimensions of VCC with three conceptual elements under each

dimension. The first dimension is co-production (CoP) with knowledge, equity and

interaction as subordinate conceptual elements while the second dimension is value-in-

use (ViU) with experience, personalisation and relationship as subordinate conceptual

elements (Ranjan & Read, 2014). Similar arguments can be found in previous research

that also views VCC from the perspectives of both the production process and

consumption process (Etgar, 2007; Lember et al., 2019; Lusch & Vargo, 2016;

Voorberg et al., 2014).

In the marketing field, customers are increasingly encouraged to participate in the

production process by firms to create value (Bendapudi & Leone, 2018) through

interactions, deep engagement, interactivities and resources sharing. Such activities are

motivated by the willingness and ability of both parties based on equal dialogue with

shared decision-making power (Etgar, 2007; Lember et al., 2019; Prahalad &

Ramaswamy, 2004; Voorberg et al., 2014). However, VCC remains to be extended

beyond the production process where customers are viewed as co-producers to the

consumption process where customers’ subjective evaluation matters. Vargo and

Lusch (2007a) contended that value can only be created when the consumption process

begins, and the value created therein is value-in-use. It is worth noting that co-

production and value-in-use are connected together rather than being separate from

each other (Lusch & Vargo, 2016). Such combination characterises VCC among actors

within social constructions.

However, the concept of co-production and value-in-use cannot be directly mapped

into the PPP context. In the marketing field, co-production is characterised by the

active participation of customers in various activities conducted through the production

process (Voorberg et al., 2014), involving various forms of cooperation between

customers and firms (Etgar, 2007). As active co-producers instead of passive receivers

of products or services (Bendapudi & Leone, 2018), customers may engage in the

production process through direct or indirect interactions and information seeking and

sharing with firms (Prahalad & Ramaswamy, 2004). Similarly, co-production in public

service research entails shaping public services by involving active input from citizens

(Lember et al., 2019).

Although co-production and co-creation are used interchangeably in some studies

(Gebauer et al., 2010), most scholars consider co-creation as an umbrella concept

encompassing co-production (Galvagno et al., 2014). As suggested in Ranjan and Read

(2014)’s work, another main dimension discussed under the concept of VCC is value-

in-use (ViU). As can be interpreted literally, value-in-use can only be generated during

the consumption process when a certain product or service is used (Grönroos, 2011;

Vargo & Lusch, 2018). However, such value needs to be framed in advance. The

importance of value-in-use is brought to the fore by Robert Lusch and Stephen Vargo’s

extensive studies (e.g., Lusch & Vargo, 2014; Vargo & Lusch, 2007a, 2015; Vargo &

Lusch, 2018) supported by other contributing scholars (e.g., Grönroos, 2011; Karpen et

al., 2011; Payne et al., 2007) on service-dominant logic. The service-dominant logic

sees service as the basis of exchange and asserts value can only be determined by the

service receivers based on their own perception and the context. As opposed to value-

in-exchange, value-in-use will not be realised until the customers consume or use a

product or service (Payne et al., 2007). Thus, value is generated through experiential

interactions under individual perceptions embedded in relationship networks (Vargo &

Lusch, 2011).

However, this research adopts a different level of observation and unit of analysis from

previous research. For the level of observation, the exchange phenomenon is mostly

observed at a meso-social level which consists of organisations, systems and networks

(Leroy et al., 2013). Regarding public service provision, the level of observation is

mostly set as the macro-social level, including the whole society (Voorberg et al.,

2014). However, significant value is created at all levels of observation (Austin &

Seitanidi, 2012). As such, this research integrates the two levels of observation

mentioned above but with the emphasis on a variety of relevant stakeholders (i.e.,

individuals, organisations and communities) involved in a PPP project. Therefore, both

the sources and users of value creation (Lepak et al., 2007) are expanded to discuss

VCC in the PPP project.

For the unit of analysis, most extant studies have focused on actors while some other

research has looked at organisations (Leroy et al., 2013). That is because in marketing

and public service research the exchange process often happens where the customers

(and customer networks) or citizens (and communities) are uncertain but the product or

the service provided create certainty. In other words, the objective of exchange is

uncertain, but the content of exchange is certain. However, in the context of PPP

projects, the exchange process differs. While certain stakeholder groups, such as public

and private partners (first-order stakeholders), employees, end-users, and communities

(second-order stakeholders), are involved, the nature of the service being exchanged

remains uncertain. The thesis study takes the PPP project as the unit of analysis and

discusses how value can be co-created in it for various stakeholders at different levels

of observation (Fuentes & Smyth, 2016).

2.6.3 Value Co-Creation Elements

The creation of value involves determining what value to create and how to create it. In

the traditional value creation process, the focus is on maximising production efficiency

and achieving value-in-exchange, which is the monetary amount obtained in exchange

for goods or services.

In project management, value creation occurs at different stages of a PPP project,

starting from the initiation phase followed by the procurement phase and extending to

the implementation phase. However, these stages are not always clearly distinguishable

due to the complexity of PPP projects, which often involve multiple sub-projects and

sub-systems. For instance, while a PPP project may have distinct design and

construction stages, these stages often have multiple sub-stages, making it challenging

to differentiate them clearly (Eriksson et al., 2017). Additionally, a PPP project may

involve various sub-systems, each with its design and implementation processes. In

such cases, the production of one sub-system may occur before the design of another

sub-system, further complicating the value creation process.

It is crucial to acknowledge these complexities and understand that value creation in

PPP projects requires a holistic approach that considers the various stages and sub-

stages of the project. By doing so, project managers can identify areas where value can

be created and optimise their efforts to ensure the project’s success.

To overcome this complexity, this research does not divide the value creation process

into stages that parallel the PPP project phases, but instead groups the activities

according to the management of resources and relationships. This approach helps to

map the value creation practices in the context of PPP empirically. This perspective is

in accordance with the conclusion derived from the pilot case studies, discussed in

Chapter 3, where the interviewees suggested changing the division dimension from

“phase” to another relevant dimension. This is because many of the identified

indicators are designed in one phase of the PPP process and then applied in a later

phase. Therefore, using “phase” as the division dimension may not accurately capture

the interdependencies between different phases and their impact on value creation.

Instead, other relevant dimensions, such as “stakeholder engagement” and “resource

management”, could be used to capture the dynamic nature of value creation in PPPs.

Relationship management

Relationship management is a critical practice that involves analysing and investing in

long-term relationships with stakeholders in PPP projects, going beyond the basic

features of a product or service, and seeking to achieve long-term benefits. According

to Smyth and Edkins (2007), relationship management entails creating comprehensive

strategies and processes to partner with selected counterparts and stakeholders, thereby

fostering sustainable relationships that create superior value (Zou et al., 2014). This

involves identifying, establishing, maintaining, enhancing, and, if necessary,

terminating relationships, as highlighted by Grönroos (2000).

To be effective, relationship management must go beyond transactional interactions

and focus on building trust, mutual understanding, and a shared commitment to

achieving common goals. This requires an understanding of the needs and expectations

of stakeholders and adapting strategies to create a positive impact on their business and

the broader community. The benefits of successful relationship management are

numerous, including increased stakeholder satisfaction, improved project outcomes,

and a better reputation for the organisation.

This section explores relationship management as another element of VCC in project

management, especially in PPP projects. The review focuses on several themes that

have emerged from the literature including relational contracts, social value creation,

teamwork quality, stakeholder management strategies, trust, relationship learning, and

project governance.

One of the key themes that emerged from the literature is the importance of relational

contracts for VCC in PPP projects. Baker et al. (2002) define relational contracts as

agreements that rely on trust, cooperation and the exchange of information between the

parties involved. According to Baker et al., relational contracts are particularly useful

in situations where formal contracts are inadequate due to the complexity and

uncertainty of the project. Similarly, Dyer and Singh (1998) argue that cooperative

strategies and relational contracts can provide sources of interorganisational

competitive

advantage.

Another

theme

that

emerged

from

the

literature

the

importance of social value creation and relational coordination in PPP projects.

Caldwell et al. (2017) argue that social value creation can be achieved through

relational coordination between public and private partners. They define social value

creation as the process of creating economic, social and environmental value for all

stakeholders involved in the project. The authors suggest that relational coordination

can facilitate social value creation by increasing communication, trust and cooperation

between the partners.

Teamwork quality is another theme that emerged from the literature. Hoegl and

Gemuenden (2001) define teamwork quality as the extent to which team members

share a common understanding of the project goals and objectives, communicate

effectively, and collaborate to solve problems. The authors argue that high quality

teamwork is essential for the success of innovative projects. Similarly, Mills and

Razmdoost (2016) suggest that managing VCC requires effective teamwork and

collaboration between stakeholders. Stakeholder management strategies also emerged

as a key theme in the literature. Jayasuriya et al. (2020) explore the impact of

stakeholder management strategies on managing issues in PPP projects. The authors

suggest that effective stakeholder management can help to prevent issues and conflicts

from arising during the project. The authors propose three stakeholder management

strategies including the identification of key stakeholders, the development of

appropriate communication strategies, and the use of appropriate conflict management

strategies.

Trust is another important theme in the literature. Jiang et al. (2016) examine the

relationship between trust and project success from the perspective of both owners and

contractors. The authors suggest that trust can facilitate communication and

cooperation between the parties involved, which can lead to a successful outcome.

Similarly, Kadefors (2004) explores trust in project relationships and suggests that trust

is built through a process of social interaction and communication between the parties

involved.

Relationship learning is another theme that emerged from the literature. Kohtamäki

and Partanen (2016) explore the co-creation of value from knowledge-intensive

business services in manufacturing firms. The authors suggest that relationship

learning can facilitate VCC by increasing the knowledge and understanding of the

partners involved. The authors propose that relationship learning can be achieved

through a process of communication, interaction and collaboration between the

partners.

Finally, project governance is a key theme that emerged from the literature. Müller et

al. (2015) examine the impact of relational norms on information technology project

success and the moderating effect of project governance. The authors suggest that

relational norms can facilitate communication and cooperation between the parties

involved, which can lead to a successful outcome. The authors propose that project

governance can moderate the effect of relational norms on project success by providing

a framework for decision.

Resource management

In service-dominant logic, the creation of value in service exchanges is seen as a

collaborative effort between the service provider and the customer. This collaborative

process involves the use of two types of resources: operant and operand resources.

Operant resources are the resources that the service provider controls, such as their

knowledge, skills and abilities, as well as their communication and interaction with the

customer. These resources are essential in creating value through the interaction

between the service provider and the customer. On the other hand, operand resources

are the physical goods, technology and other tangible resources that are used in the

production and delivery of services. These resources are transformed or consumed

through the application of operant resources.

Service-dominant logic emphasises that value is co-created through the interaction of

operant and operand resources. Both the service provider and the customer actively

participate in the co-creation of value, as they contribute their own operant resources to

the exchange. This highlights the importance of the service provider–customer

interaction in the value creation process. The use of operant resources is crucial for

service providers to differentiate themselves from their competitors by creating unique

value propositions that cater to the specific needs and preferences of their customers.

By leveraging their operant resources, service providers can create a competitive

advantage that allows them to provide a more personalised and tailored service.

Resource management is a key element of VCC in project management, which is

similar to its application in PPPs requiring attention from project managers. VCC

emphasises that the value of a project is not just created by the project team but also by

the stakeholders, including the clients and the contractors. Such interactions involve

and mainly refer to the resource integration (Vargo & Lusch, 2007a).

For example, Grönroos (2011) critically analysed the concept of VCC in service logic.

The author emphasised that VCC should focus on interaction and collaboration

between stakeholders to achieve common goals. This perspective is relevant to PPP

projects, where multiple stakeholders collaborate to achieve a common goal. Moreover,

the study by Keeys and Huemann (2017) examined project benefits co-creation and its

role in shaping sustainable development benefits. The study concluded that effective

resource management is necessary for project benefits’ co-creation in PPP projects.

The authors suggested that project managers should focus on stakeholder engagement

and collaboration to co-create value. In a study by Fuentes et al. (2019), co-creation of

value outcomes was examined from a client’s perspective on service provision in

projects. The study revealed that clients’ contribution to the project team’s resource

management is critical to the success of the project. Therefore, resource management

in projects should not only focus on internal project team activities but also on external

collaboration with clients.

Some scholars also study resource management in combination with other areas such

as relationship management, value management and stakeholder management. In their

study, Suprapto et al. (2015) investigated the role of relational factors in owner–

contractor collaboration, and the mediating role of teamworking. The authors found

that effective resource management in PPP projects is essential for building and

maintaining strong relationships between the project owner and contractor. Effective

collaboration and resource management are critical to achieving VCC in PPP projects.

Furthermore, in a study by Normann and Ramírez (1993), the authors suggested that

VCC should focus on designing interactive strategies that promote collaboration and

resource sharing among stakeholders. The authors emphasised that resource

management

should

considered

from

broader

perspective

that

includes

stakeholders’ roles and interactions. In addition, a study by Martinsuo and Killen (2014)

focused on VM in project portfolios, identifying and assessing strategic value. The

authors concluded that resource management should prioritise strategic value creation

in PPP projects. Project managers should also focus on the stakeholders’ needs and

expectations in VCC.

Several articles highlight the importance of understanding the VCC process from a

dyadic perspective. Aarikka-Stenroos and Jaakkola (2012) discuss how joint problem

solving is critical to co-creation in knowledge-intensive business services. Similarly,

Razmdoost et al. (2019) emphasise the role of multiple stakeholders in co-creating

value in unique service exchanges. These studies suggest that resource management in

VCC should focus on fostering collaboration and interaction among stakeholders.

Another theme that emerges from the review is the significance of absorptive capacity

in VCC. Aboelmaged and Hashem (2019) explore the mediating effects of sustainable

organisational capabilities on green innovation adoption in SMEs. They argue that

firms with higher absorptive capacity are better equipped to leverage external

knowledge resources and co-create value with stakeholders. Similarly, Sirmon et al.

(2007) highlight the importance of managing firm resources to create value in dynamic

environments. This study suggests that resource management for VCC should focus on

building absorptive capacity and aligning resource allocation with dynamic business

environments.

Previous studies also shed light on the role of marketing interaction and service

innovation in resource management for VCC. Ballantyne and Varey (2016) argue that

creating value-in-use through marketing interaction involves a process of relating,

communicating and knowing. This study suggests that effective resource management

for VCC should focus on understanding customer needs and preferences. Lusch and

Nambisan (2015) provide a service-dominant logic perspective on service innovation,

arguing that innovation should be co-created with customers to improve value-in-use.

This study suggests that resource management for VCC should focus on identifying

and allocating resources to support service innovation. Lenney and Easton (2009)

argue that effective resource management in VCC requires firms to identify and

manage four key elements: actors, resources, activities, and commitments. This study

suggests that resource management should be aligned with the VCC process, with a

focus on ensuring that the right actors are involved, the right resources are allocated,

the right activities are performed, and the right commitments are made. Finally,

Takahashi and Takahashi (2022) emphasise the need to analyse the front-end dynamics

of VCC with multiple stakeholders. They argue that resource management should

focus on aligning stakeholder interests, managing power dynamics, and building trust

among stakeholders.

In conclusion, this section highlights several themes in resource management for VCC

in PPP projects. The review emphasises the importance of understanding the VCC

process from a dyadic perspective, building absorptive capacity, focusing on marketing

interaction and service innovation, aligning resource management with the VCC

process, and analysing front-end dynamics. Collaboration and communication among

stakeholders, as well as the interaction of risks and relationships between stakeholders,

are crucial factors that influence the success of projects. These insights can inform

effective resource management strategies for VCC in PPP projects.

2.7 Conceptual Framework

The conceptual framework plays an essential role in case study research by providing a

guiding structure for the analysis of data in a case study. It provides a foundation for

examining both conceptual and empirical evidence, ensuring that the research question

is addressed effectively. The conceptual framework of this research is presented in

Figure 2-2 which is based on four major fields of research in project and value

management as well as research in the service science of marketing. The conceptual

framework has been designed to investigate the process of co-creating and assessment

of value outcomes.

From the project management literature, Morris (2013) has inspired this research on

providing useful insights into how value can be (co-)created and configured,

particularly in the front-end of a project. This research argues that the assessment of

value should be conducted throughout the project lifecycle, with a particular focus on

the front-end, where the most value can be created and configured. This indicates the

dynamic nature of value in the context of a project as well as a new perspective of the

project lifecycle. In this research, the extended lifespan of projects with a special

emphasis on the project front-end is especially pertinent to PPP projects. From the

management of value and project literature, this research is influenced by Thiry (2013)

and integrates VM into the overall project management framework to ensure that it is

an integral part of the project planning and implementation process. The thesis research

argues that it is essential to adopt a comprehensive and integrated approach that

combines VM with project management that incorporates value as a key element of

project success. This requires identifying stakeholders, understanding their

requirements and expectations, and defining the project objectives and outcomes

accordingly.

From the VCC literature, Vargo and Lusch (2018) and Grönroos (2012) influenced the

research the most. The scholars suggests that VCC occurs through a series of

interactions between the firm and the customer. These interactions involve the

integration of resources, especially the operant resources (Constantin & Lusch, 1994),

from both parties to achieve mutually beneficial outcomes. Both strands acknowledge

the importance of interaction. Such interaction is twofold. The first aspect of

interaction is resource integration (Vargo et al., 2008), which refers to how actors

combine their resources and capabilities during interaction to create value. This could

include the exchange of information, expertise, technology or other resources that

enable actors to co-create value. The second aspect of interaction relates to the

relationship among actors involved in the interaction (Lambert & Enz, 2012). This

refers to the social dynamics, trust and mutual understanding between actors that

enable them to work together effectively. This relational aspect of interaction

underscores the importance of social dynamics, trust, and mutual understanding in

fostering effective collaboration and VCC. Indeed, when actors have a strong

relationship, they are more likely to collaborate and co-create value, leading to positive

outcomes for all involved.

While both Vargo and Lusch and Grönroos offer invaluable insights into the

mechanisms of VCC, they espouse differing perspectives on the nature of interaction.

Vargo and Lusch adopt a systemic view that emphasises the interconnectedness of all

actors involved in the VCC process, highlighting the holistic and interdependent nature

of value creation endeavors. In contrast, Grönroos examines VCC through the lens of

direct interaction between involved parties, focusing on the direct exchange of

resources and capabilities.

For this research, the perspective of direct interaction is more appropriate, given its

alignment with the organisational-level collaboration inherent in VCC initiatives

within the project management context. By focusing on the intricacies of direct

interaction between organisational actors, this study seeks to elucidate the mechanisms

through which collaborative efforts at the organisational level for VCC outcomes.

Furthermore, it is imperative to underscore the conceptualisation of project value

within the VCC literature, which emphasises value-in-use over value-in-exchange.

This shift in perspective underscores the paramount importance of delivering value to

end-users or customers, thereby emphasising the practical significance of VCC

endeavors within the project management domain.

In essence, by drawing upon the insights of Vargo and Lusch, Grönroos, and other

seminal scholars in the VCC literature, this research endeavors to advance our

understanding of the intricate dynamics underpinning VCC within organisational

settings, with a particular emphasis on the collaborative endeavors at the organisational

level. Through a nuanced exploration of the mechanisms of resource and relationship

integration, this study aims to elucidate the pathways through which organisational

actors can effectively collaborate to co-create value and deliver meaningful outcomes

to stakeholders.

Based on the management of projects and value, as well as the service science in

marketing, this research proposes the conceptual framework as presented in Figure 2-2.

It has four key elements: interaction environment, interaction practice, interaction

performance and project value.

Interaction practice is the focal element in the framework. By stressing the role of the

customer, scholars in marketing and service science suggest that interaction is the

premise for firms to deliver value to customers (Vargo & Lusch, 2018). By definition,

interaction refers to “mutual or reciprocal action or influence” (Merriam Webster

Online, 2023). The element of interaction practice aims to find out reciprocal actions

conducted by different stakeholders as different roles to maximise the project and their

own projects. Based on the theoretical perspective of service-dominant logic, this

element puts emphasis on “service” and “actor”. According to Vargo and Lusch

(2007b), service refers to the application of knowledge and skills which are operant

resources. By emphasising VCC actors, this research focuses more on the roles that

public and private parties play in a dyadic relationship. Through a nuanced

examination of resource integration and the dynamics of relationships between these

parties, this research seeks to uncover the mechanisms through which VCC unfolds

within the project management landscape. By delving into the intricate interplay of

actions, influences, and relationships among stakeholders, this element aims to

elucidate the pathways through which value is co-created, negotiated, and exchanged

within the PPP project. Moreover, it underscores the importance of fostering

collaborative and synergistic interactions among stakeholders, thereby fostering a

conducive environment for VCC to thrive.

In essence, the concept of interaction practice serves as a guiding framework for

understanding the complex interdependencies and dynamics inherent in VCC processes

within project management contexts. By shedding light on the reciprocal actions and

interactions between stakeholders, this element offers valuable insights into the

mechanisms through which value is generated, exchanged, and realised within project

ecosystems, ultimately paving the way for more effective and value-driven project

outcomes.

At the heart of the framework lies the overarching goal of attaining project value,

which serves as the ultimate objective driving the endeavors among PPP stakeholders.

Embracing the paradigm shift advocated by Prahalad and Ramaswamy (2004), the

framework pivots towards the pursuit of value-in-use rather than the traditional value-

in-exchange paradigm. This paradigm shift underscores the imperative of prioritising

the end-user experience and the tangible benefits derived from project outcomes,

thereby redefining the notion of project value.

Central to the framework's conception of project value is the recognition that it

encompasses not only the tangible outcomes delivered by the project but also the

inherent value perceptions of both the public and private parties involved. Project

value is thus viewed as a multifaceted construct which is more than financial

transactions, encompassing the broader spectrum of stakeholder value propositions and

aspirations.

Moreover, project value is intricately influenced by several factors, chief among them

being the interaction practice and performance exhibited through PPP collaboration.

Interaction practice, rooted in the dynamic exchange of actions and influences among

stakeholders, serves as the cornerstone upon which VCC efforts are founded. It

encapsulates the collaborative endeavors undertaken by diverse stakeholders to

maximise project value and advance their individual objectives.

In parallel, interaction performance emerges as a pivotal determinant of project value,

serving as both a consequence of interaction practice and a driver of value realisation.

The efficacy and effectiveness of interactions among stakeholders directly contribute

to the attainment of project objectives and the delivery of value to stakeholders.

Furthermore, the characteristics of stakeholders and the institutional factors that shape

the interaction environment exert significant influence on project value. Stakeholder

characteristics, such as their motivations, capabilities, and expectations, shape the

dynamics of interaction and ultimately impact the VCC process. Similarly, institutional

factors, including regulatory frameworks, cultural norms, and governance structures,

shape the context within which interactions occur, thereby influencing the outcomes of

VCC efforts.

Ultimately, the realisation of project value depends upon a harmonious interplay

between interaction practice, performance, stakeholder characteristics, and institutional

factors. By comprehensively addressing these dimensions, the framework seeks to

provide a holistic understanding of the mechanisms through which project value is

generated, exchanged, and realised within the project management domain, thereby

paving the way for more effective and value-driven project outcomes.

Together, these four key elements of the conceptual framework provide a

comprehensive and integrated perspective on the co-creation of value in PPP projects.

By focusing on the interactions between stakeholders, the framework acknowledges

the importance of collaboration and the role of stakeholder engagement in delivering

successful PPP projects. The framework also emphasises the dynamic nature of value

creation, recognising that value is not a fixed or static concept but rather a process that

unfolds over the lifecycle of the project.

Figure 2-2 Tentative framework for VCC in PPP projects (developed for this study)

2.8 Chapter Summary

This chapter focused on the need to understand how value can be designed and

configured across the project lifecycle. The key research question is exploring how

value outcomes can be co-created in PPP projects. The chapter provided a critical

review of the evolution of project management perspectives and approaches,

highlighting the shift towards value delivery. The concept of value and VCC in both

the wider management literature and projects has been examined in depth. It highlights

that the concept of VCC is primarily studied in marketing and service-related literature,

with a focus on examining value from the perspective of the client organisation rather

than the supplier organisation. The chapter extensively examined the service-dominant

logic and value management methodologies, which are considered as two robust

frameworks to analyse the concept of VCC. The next chapter presents the research

design, which is influenced by the conceptual analysis in this chapter and provides the

foundations for this research. The aim is to explore how value outcomes are co-created

at the micro-level of the project through direct interaction.

Chapter 3

Research Design: Methodology and Method

The research design constitutes a critical blueprint for conducting this study. Section

3.1 outlines the philosophical foundations, including ontology and epistemology, and

distinguishes between deductive, inductive, and abductive approaches to theory

development. The abductive approach is adopted in this research. Strategies for the

study are also discussed, covering case selection, data collection, and data analysis.

Detailed information is provided on sampling methods and interview protocols.

Section 3.2 introduces the essential process of collecting and analysing data within the

research design. Finally, in Section 3.3, research quality is assessed based on validity

and reliability.

3.1 Research Design - Methodology

The research is designed in the decision sequence suggested by Saunders et al. (2019),

of first determining the research philosophy, followed by the reasoning approach,

methodological choice, strategy and time horizon, before choosing the data collection

techniques and data analysis procedures. The research process is illustrated in Figure 3-

1 and is further elaborated in Sections 3.1 to 3.3.

Figure 3-1 Main phases and activities of the research process

3.1.1 Philosophical Underpinnings

Research philosophy refers to a set of beliefs and assumptions that underpins the way

that one develops knowledge (Saunders et al., 2019). These beliefs and assumptions

manifest how one believes the nature of reality is (ontology) (Miles et al., 2020) and

what knowledge one thinks to be valid and legitimate (epistemology) (Burrell &

Morgan, 1979).

Specifically, ontology is a philosophical perspective that shapes how researchers view

and study their research objects. In the field of social science, research objects can

include organisations, management practices, individual experiences in the workplace,

and various events and artifacts within these contexts. The researcher’s ontology,

therefore, influences how they understand and interpret the world of social science,

which subsequently determines the focus of their research project. For instance, a

researcher who adopts a positivist ontology would view the world of social science as a

fixed, objective reality that can be studied through objective, empirical methods. In

contrast, a researcher who takes a constructivist ontology would view the world of

social science as a socially constructed reality that is shaped by individuals and their

interactions. This would lead to different research questions and methods of inquiry.

Epistemology refers to a researcher’s assumptions about knowledge and what is

considered valid and legitimate knowledge, as well as how knowledge can be

communicated to others. In the field of social science, there are various types of

knowledge that can be considered legitimate, including numerical data, textual and

visual data, facts, opinions, narratives and stories. The multidisciplinary nature of

social science research implies that researchers may adopt different epistemological

perspectives when conducting their research. For example, some researchers may

adopt an empirical or positivist epistemology, where they believe that objective and

measurable data are the only legitimate forms of knowledge. Other researchers may

adopt a constructivist or interpretivist epistemology, where they believe that

knowledge is constructed through social and subjective processes and that personal

experiences and interpretations are just as valid as objective data. Furthermore, the

diverse range of knowledge in social science research means that different research

methods can be used to generate valid and legitimate knowledge. These methods can

include archival research, which involves analysing historical documents and records,

and autobiographical accounts, which involve studying the personal experiences and

perspectives of individuals.

There are five major philosophies in social science: positivism, critical realism,

interpretivism, postmodernism and pragmatism (Saunders et al., 2019). Of these,

critical realism is chosen as the philosophical foundation of this research.

Philosophical underpinning of this research: critical realism

Critical realism is a philosophical underpinning that aims to understand the

relationship between the external, social world and the internal, subjective experiences

individuals.

Critical

realism

claims

external

and

independent

reality

not

accessible directly through observation, and at the same time, accepts that each social

actor has their own interpretation of the reality according to different social

conditioning (Saunders et al., 2019). Critical realists emphasise the importance of

understanding the bigger picture of which we see only a small part and the need to

identify what we do not see through practical and theoretical processes. Critical realist

research also focuses on providing an explanation for observable organisational events

by looking for the underlying causes and mechanisms through which deep social

structures shape everyday organisational life.

As this research intends to identify genuine project value from a multi-stakeholder

perspective and how value is co-created in the entire lifecycle through stakeholder

engagement, critical realism matches well with this realist ontology and interpretivist

epistemology (Tashakkori & Teddlie, 2010). It helps to identify one possible but not

necessarily the only possible explanation of the phenomenon (Bhaskar, 2016). This

makes critical realism the most suitable philosophical underpinning of this research.

Ontologically, critical realism suggests that VCC practices and value outcomes

observed in PPP projects are objective where they are carried out. However, critical

realism also recognises that this objective reality is often complex and multifaceted and

may be influenced by social and cultural factors that shape the way individuals

perceive and interpret the reality. Epistemologically, critical realism acknowledges that

the subjective experiences and perceptions of individuals involved in PPP projects are

also important in shaping how value is co-created.

Critical realism allows the researcher to go beyond just describing the observable

events and instead examine the underlying structures and mechanisms that shape those

events. This can provide a more comprehensive understanding of the phenomenon and

help identify potential areas for intervention or improvement.

3.1.2 Approach to Theory Development

The theory development approach, which is also called the reasoning approach

(Lehtinen & Aaltonen, 2020), is a crucial aspect of research design. Theory

development refers to the process of constructing explanations or models that help to

explain observed phenomena or patterns. There are mainly three approaches of theory

development: deductive reasoning, inductive reasoning, and abductive reasoning

(Saunders et al., 2019). The three reasoning approaches are compared in Table 3-1,

adopted from Saunders et al. (2019).

Deductive theory development involves deriving hypotheses from existing theory and

testing them through empirical research, which leads to a confirmatory research design.

In other words, it starts with a general statement, or premise, and then applies it to a

specific case to derive a conclusion. This is why deduction is often described as

generalising from the general to the specific. In this process, the researcher first

develops a general theory or hypothesis based on existing knowledge and observations.

The researcher then makes specific predictions or deductions about what should

happen in a particular situation based on that theory or hypothesis. If the premise is

true and the reasoning is valid, then the conclusion must also be true. This deductive

process is commonly used in scientific research to test hypotheses or theories where

quantitative data is used most of the time given that quantitative data has the ability of

precise measurement.

Inductive theory development, on the other hand, involves generating theories or

hypotheses from the data collected through exploratory research, which leads to an

exploratory research design. In other words, it starts with specific observations or data,

and then makes generalisations or hypotheses based on those observations. This is why

induction is often described as generalising from the specific to the general. In this

process, the researcher first collects data through observation or experimentation, and

then looks for patterns or themes in that data. Based on those patterns or themes, the

researcher forms a hypothesis or generalisation about how the phenomenon works.

Inductive reasoning is commonly used in exploratory research, where the goal is to

identify patterns or relationships in the data that can then be used to generate new

theories or hypotheses. However, unlike deduction, induction does not guarantee that

the conclusion is true. Rather, it provides a framework for generating new ideas or

theories that can then be tested using deductive reasoning or other methods.

Abductive theory development is a combination of the two, where hypotheses are

generated from data while taking into account existing theories. It starts with specific

or sometimes surprising observations or data, and then generates hypotheses called

plausible theory that can explain those observations. Unlike deduction and induction,

abduction involves identifying possible explanations for a phenomenon without

knowing whether they are true or false. This is why abduction is often described as

generalising from the interactions between the specific and the general. In this process,

the researcher first collects data through observation or experimentation, and then

looks for patterns or themes in that data. Based on those patterns or themes, the

researcher forms a tentative hypothesis or explanation for how the phenomenon works

by going back and forth between the data and the existing theories. This hypothesis is

then tested using additional data collection and analysis, with the goal of either

confirming or refuting the hypothesis. Abductive reasoning is commonly used in

hypothesis-generating research, where the goal is to generate new theories or

hypotheses that can then be tested using other methods. However, it can also be used in

hypothesis-testing research, where the goal is to develop explanations for unexpected

or anomalous observations.

Table 3-1 Deduction, induction and abduction: from reason to research

Deduction Induction Abduction

Logic In a deductive inference,

when the premises are true,

the conclusion must also be

true

In an inductive inference,

known premises are used to

generate untested

conclusions

In an abductive inference,

known premises are used

to generate testable

conclusions

Generalisability Generalising from the

general to the specific

Generalising from the

specific to the general

Generalising from the

interactions between the

specific and the general

Use of data Data collection is used to

evaluate propositions or

hypotheses related to an

existing theory

Data collection is used to

explore a phenomenon,

identify themes and

patterns and create a

conceptual framework

Data collection is used to

explore a phenomenon,

identify themes and

patterns, locate these in a

conceptual framework and

test this through

subsequent data collection

and so forth

Theory Theory falsification

or verification

Theory generation

and building

Theory generation or

modification; incorporating

existing theory where

appropriate, to build new

theory or modify existing

theory

Reasoning approach of this research: abduction

Abduction is adopted in this research aiming to combine the credibility of deductive

reasoning rooted in the extant literature on value, with the creativity of inductive

reasoning from new empirical insights and the researcher’s own experience (Alvesson

& Skoldberg, 2018). The interactive process of VCC is a phenomenon that, on one

hand, has been studied from various perspectives, and on the other hand, requires more

exploration on structured understanding that is lacking in existing literature. This

situation is perfectly suited for abduction. Abduction can be used to develop new

hypotheses or explanations for the gaps in our current understanding of the VCC

process

PPP projects.

examining

the

data

collected

from

interviews

and

summarising plausible patterns of what might be the mechanism behind the VCC

process, this research intends to elaborate the theoretical understanding on the nature

of value and the process of its co-creation in PPP projects.

3.1.3 Methodological Choice and Research Strategy

It is generally accepted that there are three main methodological choices in research:

quantitative, qualitative, and mixed methods. Normally, quantitative research involves

collecting and analysing numerical data, while qualitative research involves collecting

and analysing non-numerical data such as words, images and video recordings. Mixed

methods research involves using both quantitative and qualitative methods in a

complementary way to gain a more comprehensive understanding of a phenomenon.

However, this is an intuitionistic view but can be a narrow distinction that is not

sufficient for choosing between quantitative and qualitative research methods. Instead,

the choice of methodology should be informed by philosophical assumptions and

approaches to theory development and strategies (Yin, 2016).

There are many choices of research strategy under different methodological choices.

The quantitative method normally includes experiment and survey while the qualitative

method normally includes archive research, ethnography, grounded theory, action

research and case study. The selection of methodological choice and research strategy

is not only based on the philosophical stance but also on the nature of the research.

Methodological choice and research strategy of this research: qualitative

research design and multiple case study

This research uses critical realism as its philosophical stance. Critical realism is a

philosophical position that emphasises the existence of an objective reality that is

independent of human observation, but also recognises the role of social and historical

factors in shaping our understanding of that reality. Critical realism emphasises the

need for theories to be grounded in empirical evidence, but also recognises the

limitations of empirical methods in capturing the complexity of social phenomena.

Given the philosophical assumption of critical realism, a qualitative research method

would be appropriate for this research. Qualitative research methods are well-suited for

exploring complex social phenomena and understanding the subjective experiences of

individuals. Qualitative research methods allow for a deep exploration of the

underlying meaning and context of social phenomena, which aligns with the critical

realist emphasis on the role of social and historical factors in shaping our

understanding of reality. Furthermore, critical realism emphasises the need for theories

to be grounded in empirical evidence. Qualitative research methods can provide rich

and detailed empirical evidence that can be used to develop and refine conceptual

frameworks.

Qualitative research methods also correspond to the exploratory nature and theory

building objective of this research. This research aims to explore how value is

perceived by different stakeholders in the whole lifecycle and opens the black box of

the mechanism whereby these value outcomes are co-created by various stakeholders.

Given the subjective nature of value, this research seeks to understand every

stakeholder’s value perception. In addition, given the complexity of the VCC process

contextual factors must be considered.

Multiple case study is adopted to study the VCC phenomenon in this research.

Multiple case study design involves conducting an in-depth investigation of multiple

cases that share similar characteristics, which can help to develop a deeper

understanding of the underlying phenomenon (Eisenhardt & Graebner, 2007). This

research strategy is particularly useful in this research, as it allows exploration of a

wide range of factors that may influence the VCC phenomenon being studied.

Studying multiple cases can help identify similarities and differences across cases, and

develop a more nuanced understanding of the underlying factors that influence VCC.

Multiple case studies can also help to identify patterns and relationships that may not

be apparent from a single case study.

3.1.4 Approach to Case Selection

Before the case selection, it is important to define the case and bound the case first

(Yin, 2018). “Case” in a case study typically refers to a particular entity or

phenomenon that is being studied in depth. This could be an individual, a group of

individuals, an organisation, a specific event or situation, a process, or any other

distinct entity or phenomenon that is the subject of analysis. In this research, the case is

defined as a PPP project.

To select appropriate cases, the first step is a literature review. The process began with

an extensive literature review focused on infrastructure PPP projects in China,

encompassing various industries. This review helped identify previous case studies,

both within and outside China, that were pertinent to the research questions and

objectives. These prior studies served as a valuable resource for identifying potential

cases for replication logic. Then, initial screening was performed to identify a pool of

potential cases. This involved assessing the relevance and alignment of the identified

cases with the research’s theoretical framework and objectives. Then, drawing on the

conceptual framework of the study, which aimed to generalise the VCC process in

infrastructure PPP projects across different industries, cases were selected based on

their potential to contribute to the development of theoretical concepts and constructs

identified in the literature or previous research.

To ensure that the chosen cases align with the research objectives and enhance the

study’s validity, generalisability and theoretical development, the replication logic is

adopted. Replication logic is different from the statistical sampling logic used in

survey research, but is rather a form of theoretical sampling. Replication logic in case

selection refers to the process of selecting cases for a case study that are similar or

comparable to previous cases that have been studied. By selecting cases that are similar

to previous cases, researchers can test the validity and generalisability of their findings

across different contexts and situations.

There are two main types of replication logic in case selection: literal replication and

theoretical replication. Literal replication involves selecting cases that are similar to

previous cases in terms of their characteristics and features. For example, a researcher

might choose to study a new company that is similar to a company that was previously

studied in terms of its industry, size and organisational structure. The goal of literal

replication is to test whether the findings from the previous case study can be

replicated in a new, similar case. On the contrary, theoretical replication involves

selecting cases that are different from previous cases in terms of their characteristics

and features but are expected to yield similar findings based on the same theoretical

concepts and mechanisms. This also involves selecting cases based on their potential to

contribute to the development of theoretical concepts or constructs identified in the

literature or previous research. The goal of theoretical replication is to test whether the

theoretical concepts and mechanisms identified in the previous case study can be

generalised to different contexts and situations.

Theoretical replication is adopted in this research aiming at generalising the VCC

process in infrastructure PPP projects in China regarding various industries. While

theoretical replication was a primary consideration, practical factors such as

accessibility and feasibility were also taken into account. Ensuring access to relevant

stakeholders and data within a reasonable timeframe was crucial. Additionally, the

geographic location of the cases and logistical considerations were weighed.

Five PPP project cases from three industries are selected, labelled Case Alpha, Beta,

Gamma, Delta and Epsilon. The goal of the selected cases is to provide the maximum

amount of information and insights relevant to the research questions. In addition, the

research uses both retrospective and current investigation methods. Retrospective cases

have the advantage of allowing for controlled selection since the success or failure of

the case is already known. However, they are susceptible to recollection bias and may

face difficulties in establishing a clear sequence of past events. On the other hand,

current investigations may be more time-consuming and open-ended, but they offer

certain advantages when studying complex behaviours since they eliminate the issue of

relying on the memory and ability of interviewees to verbalise such constructs. Case

Epsilon uses the current perspective as it is still in its construction phase. This also

provides the opportunity to directly observe how different stakeholders created value

together.

The quantity of cases selected in this research is dependent on the concept of saturation.

Saturation refers to the point in the data collection process at which new data no longer

provides additional insights or information relevant to the research questions or

objectives. When saturation is reached, it suggests that the sample of cases or

participants selected is sufficient and additional data collection is unlikely to yield new

or meaningful insights.

3.2 Data Collection and Analysis Process – Methods Selected

Data analysis involves organising, interpreting and drawing conclusions from the data

collected during the research process. The goal of data analysis is to identify patterns,

relationships and insights that can help answer the research questions and contribute to

the development of new knowledge.

The data analysis process includes several key steps. First, a pilot case study is

conducted to test the research approach and refine the data collection methods such as

interview questions. Then, the case context is established to provide a clear

understanding of the specific phenomenon being studied. Finally, the process of data

collection and analysis is described in detail with a description of adaptive theoretic

reasoning logic.

3.2.1 Pilot Case Studies

To test the data collection procedures, interview questions and case selection criteria to

ensure that the study’s objectives can be met, three pilot case studies were conducted.

In the case study context, a pilot test is not a pretest. The pretest is an opportunity to

conduct a formal rehearsal of the data collection plan, with the aim of ensuring that the

final plan is as accurate as possible. During the pretest, the researchers use a

methodology that is as close as possible to the final plan, in order to minimise errors

and bias, and increase the accuracy and validity of the study results. On the contrary, a

pilot test is a small-scale trial run of a study’s procedures, methods or instruments. The

pilot test is typically conducted before the full study to identify and correct any

potential problems or issues that may arise during the full study. The goal of a pilot test

is to refine and improve the study design and methodology to ensure that the full study

runs smoothly and efficiently.

In the three pilot case studies, 17 experts were interviewed from the public party, the

bank, the academic and the consultant company with at least 3 years of experience of

PPP projects (see Table 3-2). The main objectives of the pilot case studies were to find

out what is perceived as value by different stakeholders throughout the entire project

lifecycle of a PPP and to explore the mechanism among all the stakeholders on how to

reconcile these different value perceptions and co-create value for PPP projects used to

build social infrastructure. The pilot case studies were conducted systematically

according to a protocol (see Appendix 2).

The results of the pilot case studies were threefold. First, the participants suggested

that it is better to separate the value measurement indicator from the value success

factor. According to them, the value indicators identified from previous research and

literature are sometimes confused with the factors that contribute to them. By

separating these two concepts, it is possible to clearly identify the specific factors that

contribute to long-term value creation and assess the impact of each factor on value

creation. In fact, this differentiation contributes to the classification of mid-term value

outcomes and long-term value outcomes that are derived from empirical data which

lead to a more accurate and comprehensive understanding of value creation in the

context of PPPs.

The second suggestion was to change the division dimension from “phase” to another

relevant dimension such as “stakeholder engagement”. This is because many of the

identified indicators are designed in one phase of the PPP process and then operated in

a later phase. Therefore, using “phase” as the division dimension may not accurately

capture the interdependencies between different phases and their impact on value

creation. Instead, another relevant dimension, such as “stakeholder engagement”, could

be used to capture the dynamic nature of value creation in PPPs. Indeed, the resource

management practices and relationship management practices summarised from the

data reflect the dynamic nature of value and the co-creation process without clearly

focusing on “phases”, but in a more integrated way.

The third suggestion was to apply VM principles to investigate how to achieve

maximum value for all stakeholders in the context of PPPs. VM is a structured

approach that involves identifying and prioritising stakeholders’ needs and preferences,

defining project objectives, and optimising the use of resources to achieve those

objectives. This was not considered in the pilot test because initially the researcher

took a position to criticise the tendency to focus on cost-efficacy of project research.

However, criticism should not be focused on cost management but on the lack of

consideration of all the stakeholders (subjectivity) and the entire lifecycle (dynamics).

By applying VM principles to PPPs, researchers can identify the most effective ways

to maximise value creation for all stakeholders, including public and private sector

partners, investors, and end-users. This contributes to the definition of value in this

research which can lead to more successful and sustainable PPP projects that generate

maximum value for all stakeholders involved.

Table 3-2 Overview of participants in the pilot case studies.

No. Sector Experience in

PPPs (years)

Position

1 Public sector 7 Implementation Specialist

2 Bank 6 PPP Specialist

3 Academic 3 Lecturer

4 Academic 12 Professor

5 Academic 9 Assistant Professor

6 Academic 5 Lecturer

7 Academic 4 Lecturer

8 Academic 5 Postdoctoral Researcher

9 Academic 4 Lecturer

10 Consultant company 3 Senior Consultant

11 Consultant company 3 Senior Consultant

12 Consultant company 5 Manager

13 Consultant company 8 Manager

14 Consultant company 8 Manager

15 Consultant company 3 Senior Consultant

16 Consultant company 9 Manager

17 Consultant company 11 Manager

3.2.2 Case Context

All the five cases selected for the main study are registered in the National PPP

Database which means they are all legitimate PPP projects. Due to the rapid promotion

of PPP projects by central state-owned enterprises (SOEs) in recent years, accumulated

risks need to be resolved. Such risks mainly come from the contract arrangement of the

public party such as a repurchase agreement and promised return to attract private

investment. This “debt nature in the name of equity” of the private party’s investment

expanded the hidden debt of the government side and increased the financial risks of

local governments. As such, since 2017, the central government has carried out long-

term and systematic reforms on PPPs to weed out illegitimate PPP projects from the

National PPP Database. The selected cases are described below. Tables 3-3 and 3-4

present the overview characteristics of the five cases and compare the demographic

characteristics of the cases. The organisation structure of each case is in Appendix 3.

Table 3-3 Overview of case characteristics

Case

Code

Industry Area Investment Starting

time

Cooperation

period

Payment

Mechanism

Alpha Sewage

treatment

Liaoning

Province

164 million

RMB 2017 28 years End-user

Payment

Beta Sewage

treatment

Hebei

Province

484 million

RMB 2015 30 years End-user

Payment

Gamma Municipal

roads

Liaoning

Province

23 billion

RMB 2015 25 years Government

Payment

Delta Municipal

roads

Shandong

Province

560 million

RMB 2017 15 years Government

Payment

Epsilon Health

industry

Shandong

Province

666 million

RMB 2016 22 years Feasibility gap

subsidy

Table 3-4 Comparison of the demographic characteristics of the five cases

Alpha Beta Gamma Delta Epsilon

End-user payment

√ √ √

State-owned enterprise as

private party

√ √

Government fiscal capacity Good Poor Good Poor Good

Project scale Small Medium Large Medium Medium

100

Case Alpha

Case Alpha is a PPP project focused on sewage treatment, consisting of two sections.

One section involves the construction of a state-of-the-art sewage treatment station and

surrounding pipe networks, while the other involves taking over old pipe networks

from the government and maintaining them. The private party in charge of Case Alpha

is a state-owned public company that has advanced sewage treatment techniques.

What makes Case Alpha unique is that it represents the first underground sewage

treatment station in the north-east region of China, with a roof that has been afforested.

The water standard set by this project exceeds national requirements, making it an

exemplary model for other sewage treatment projects in the country. In addition, the

station plays a vital role in the area’s economic development, particularly in attracting

new manufacturing companies. Its ability to solve wastewater problems and provide

affordable reclaimed water is a valuable asset to the local government in attracting new

investors.

Overall, Case Alpha is an innovative and effective PPP project that demonstrates the

value of PPPs for sewage treatment. By combining the expertise of a state-owned

public company with the support of the local government, Case Alpha has been able to

achieve impressive results, providing a high-quality water supply for the region while

also supporting economic growth through attracting new businesses.

The construction of an underground sewage treatment station with a roof that has been

afforested is an innovative approach that is both environmentally friendly and

aesthetically pleasing. The use of advanced sewage treatment techniques by the state-

owned public company overseeing Case Alpha has allowed the project to surpass

national water quality standards. This achievement, coupled with the station's ability to

provide cost-effective reclaimed water, has played a pivotal role in attracting new

manufacturing companies to the area. As a result, it has not only created jobs but also

spurred

economic

growth,

showcasing

how

PPPs

can

deliver

both

public

and

101

substantial economic benefits to the local community.

The success of Case Alpha has led to its replication in other parts of China, as

policymakers recognise the value of the PPP model in addressing the country’s

pressing water and sanitation challenges. By leveraging the strengths of both the public

and private sectors, Case Alpha and other similar projects have demonstrated the

potential of PPPs to drive sustainable development and improve the lives of people in

China and beyond.

Case Beta

Case Beta is another sewage treatment PPP project, but in this case, it was initiated by

the private party involved. Prior to Case Beta, the private party had already been

involved in operating a sewage treatment station for the public party. Through this

experience, they realised that the demand for sewage treatment in the city was far

greater than what was currently being met. This led them to initiate Case Beta as a new

PPP project. The private party in charge of the project is a state-owned public company

with a strong track record of successful operation and collaboration with the public

party.

Case Beta is located in a poorer area at the national level, and the PPP model was used

to build a critical urban infrastructure to improve the quality of life for local residents

and promote regional development. By partnering with the private sector, the local

government was able to address the area’s pressing need for sewage treatment and

enhance its overall infrastructure. The success of Case Beta demonstrates the potential

of PPPs to drive sustainable development and improve the quality of life for people

living in disadvantaged areas.

Case Beta represents an important collaboration between the public and private sectors

to address a critical social and environmental issue. The lack of adequate sewage

treatment infrastructure in many areas of China has long been a major concern for

102

policymakers, as it poses a significant risk to public health and the environment. With

Case Beta, the private party’s experience in sewage treatment operation and

collaboration with the public party was critical in ensuring the project’s success.

The location of Case Beta in a state-level poor area highlights the importance of

infrastructure development as a means of promoting regional development and poverty

reduction. Through the PPP model, the local government was able to leverage the

expertise and resources of the private party to build much-needed infrastructure that

supports the growth of the region’s economy and improves the quality of life for local

residents.

Overall, Case Beta is a compelling example of how PPPs can be used to tackle

pressing social and environmental challenges in innovative and effective ways. By

bringing together the strengths of both the public and private sectors, PPPs can drive

sustainable development, improve infrastructure, and support the long-term prosperity

of communities across China.

Case Gamma

Case Gamma is a significant municipal road PPP project that has been in the planning

stage since 2002. Recognising the urgent need for a transportation solution, the

government began exploring different options for improving the city’s infrastructure.

The government therefore invested heavily in feasibility analysis and due diligence

work before deciding to adopt a PPP model. The main reason is that the government

faced significant funding constraints, as the project was estimated to cost several

billion dollars.

There was a careful selection of the private partner and the construction technique by

the public party. This involved a rigorous evaluation of different construction

techniques, with the government ultimately settling on the “immersed tube” technique

for the undersea tunnel component of the project. This was because the private party

103

invited the public party to visit another nationally renowned subsea tunnel project and

carefully explained and analysed the feasibility and advantage of their proposition.

During the construction process, the project confronted its first big challenge. The site

of the tunnel construction was located in a highly sensitive environmental area, which

required extensive environmental impact assessments and mitigation measures. But all

the parties worked as a single team and took active action to amend the design scheme

and get the permit to construct.

Case Gamma is expected to be operational by June 2023, with both the undersea tunnel

and the complementary municipal road being completed at that time. Unlike the other

four cases in the research, Case Gamma has not yet entered the operation stage. The

decision to include this project was deliberate, as the research aims to provide a current

perspective on the interactions between public and private stakeholders during the

procurement and construction stages of the project. One of the key advantages of

studying Case Gamma at this stage is the opportunity to observe first hand the ways in

which stakeholders work together to co-create value for the project. This includes the

researcher attending regular meetings with project participants to gain insights into

their communication strategies and decision-making processes.

Case Delta

Case Delta is a municipal road PPP project that was planned and executed with the

goal of solving the transportation problem in the region. The project was initiated by

the government, which wanted to improve the road network and infrastructure in the

area to support economic development. The private party involved in the project is a

well-established company with expertise in road construction and maintenance, which

made them an ideal partner for the government.

During the construction stage, the private party worked closely with the government to

ensure that the road was built according to specifications and completed on time. The

104

construction process was carried out smoothly, and the road was put into operation

shortly after completion. The private party’s role in maintaining the road has also been

essential, as it has ensured that the road remains in good condition even after years of

heavy use.

One of the key benefits of Case Delta is that it has helped to alleviate the government’s

financial deficit problem. By partnering with a private company, the government was

able to spread the cost of the project over a more extended period, which reduced the

burden on the government’s budget. Additionally, the government has recognised the

private party’s excellent work in maintaining the road, which has boosted their

reputation and credibility in the industry.

The successful completion of Case Delta has had a significant impact on the region’s

economic development. The improved road network has made it easier for businesses

to transport goods and access markets, which has led to an increase in economic

activity in the area. As a result, the region has transformed into an economic

development zone, attracting more investment and creating more job opportunities for

local residents. This case has demonstrated the benefits of PPP models in infrastructure

development, showcasing how PPPs can provide a win–win solution for both parties

involved.

Case Epsilon

Case Epsilon is a unique PPP project that combines a public hospital and an aged care

home into one comprehensive healthcare facility. The public hospital was initially a

Chinese medicine hospital that had limited scale and patients, but through PPP, the

government was able to upgrade it to a larger scale hospital that offers a combination

of Chinese and Western medicine. This upgrade significantly alleviated the medical

pressure in the local area, especially in the post-pandemic era. The government will

pay for the hospital’s construction over a period of 20 years.

105

For the aged care facility in Case Epsilon, the private party is required to build four

buildings as a profitable aged care home whose service will be paid by the end-users,

and the profits will be used to cover the construction costs. The private party is

responsible for taking all the operational risks and sharing any excess earnings with the

government. To enhance the competitiveness of the aged care home, Case Epsilon

takes full advantage of the hospital’s resources and opened a Hospital Green Channel

for the aged residents in the care home. This channel provides immediate access to

medical treatment, which can significantly reduce their anxiety and worries. In

addition, Case Epsilon was intended to enable a policy transformation which allows

the patients in the aged care home to use national medical insurance in the hospital.

This results in lower expenses for hospitalised elderly people, while the private party

earns more profits and is also motivated to provide better services. Overall, Case

Epsilon is an innovative PPP project that combines healthcare and aged care, which not

only meets the local residents’ needs but also promotes a sustainable business model

on the integrated solution of medical and elderly care.

3.2.3 The Process of Data Collection

Three types of evidence are collected in this research: documentation, interviews and

direct observation. The selection of these data collection tools was guided by the aim

of achieving a comprehensive understanding of the phenomena under investigation.

Each type of evidence serves a specific purpose and contributes to the richness and

depth of the case study, aligning with the principles of high-quality research advocated

by Yin (2018).

Documentation, such as project reports, contracts, and policy documents, provides

valuable historical context and background information essential for understanding the

evolution and dynamics of the PPP projects examined in this study. By analysing these

documents, it can uncover insights into project objectives, stakeholder roles,

106

contractual arrangements, and project outcomes.

Interviews offer a unique opportunity to gain insights directly from key stakeholders

involved in the PPP projects, including representatives from public and private sectors,

project managers, and other relevant parties. Through semi-structured interviews,

stakeholders' perspectives, experiences, motivations, challenges, and decision-making

processes can be explored, thereby capturing nuanced insights that may not be fully

captured by documentary evidence alone.

Direct observation complements both documentation and interviews by providing

firsthand insights into project activities, interactions, and dynamics as they unfold in

real-time. By immersing myself in the project environment, I can observe stakeholder

interactions, communication patterns, project management practices, and other

contextual factors that may influence project outcomes. This method allows for the

validation of information obtained from other sources and provides a deeper

understanding of the context in which PPP projects operate.

In summary, the selected data collection tools – documentation, interviews, and direct

observation – are deemed suitable for this research due to their ability to provide

diverse perspectives, rich contextual insights, and a comprehensive understanding of

the complex dynamics inherent in PPP projects. By triangulating evidence from

multiple sources, this research aims to enhance the validity, reliability, and robustness

of its findings.

The documentation used in this research includes two different types: publicly

available electronic documents and internal documentation (see Table 3-5). Publicly

available electronic documents include various reports, contracts and news articles

related to the projects that can be found on the internet. These documents were

collected systematically before conducting the interviews to provide a better

understanding of the case contexts and to support the interview data. Internal

documentation,

the

other

hand,

includes

meeting

memos,

tender

materials,

107

completed contracts and performance reports that are not publicly available on the

internet. Access to these internal documents, typically restricted to individuals directly

involved in the project, has been made possible through a collaborative effort and the

willingness of the interviewees to contribute to research endeavours. The interviewees,

recognising the importance of the research and the need to advance understanding in

the field, graciously shared these internal documents.

Prior to obtaining access, formal consents and permissions were diligently secured to

ensure ethical and responsible data handling. This study received ethics approval from

the UTS Human Research Ethics Committee (Approval Number: UTS HREC ETH18-

2820), and all prescribed ethical guidelines and protocols were rigorously followed

throughout the research process. A copy of the ethics approval is attached as Appendix

7. Stringent measures were implemented to safeguard the confidentiality and

anonymity of sensitive information within the documents. This collaboration and

commitment to ethical data practices have allowed a comprehensive examination of

the project, offering valuable insights that contribute significantly to the research’s

depth and credibility.

Table 3-5 Overview of documentation data for the study

Case

Number

Meeting

memos

(Times/pages)

VfM report

(pages)

Financial

affordability

report

(pages)

Implementation

plan

(pages)

Contract

(pages)

Periodic

performance

report

(Times/pages)

Alpha 3/18 30 22 174 84 None

Beta 5/23 27 24 168 89 1/125

Gamma 5/33 41 29 184 96 N/A

Delta 2/8 20 19 162 79 1/133

Epsilon 7/42 19 26 176 81 2/304

108

Using internal documentation enabled a deeper understanding of the cases being

studied and improved the ability to explain the phenomena. By using both publicly

available electronic documents and internal documentation, the researcher acquired a

more comprehensive understanding of the case and its context by finding access to

relevant information.

Five case projects were selected based on the theoretical sampling approach mentioned

earlier and their accessibility. Each selected case had at least one designated contact

person who facilitated the interview process. Public and private representatives, as well

as third-party project participants, were approached for interviews through these initial

contact persons. Table 3-6 provides an overview of the interviewees in each case.

109

Table 3-6 Overview of interview data for the study

Case Alpha

Code Party Position Project experience (years) Time (mins)

A1 Public Enforcement body 10 112

A2 Private Project manager 14 105

A3 Private Accountant 5 85

A4 Private Operation manager 6 93

A5 Third party Project consultant 6 100

Case Beta

Code Party Position Project experience (years) Time (mins)

B1 Public Enforcement body 9 108

B2 Public Bureau of finance 9 95

B3 Private Project manager 12 114

B4 Private Operation manager 6 75

B5 Third party Project consultant 7 81

Case Gamma

Code Party Position Project experience (years) Time (mins)

G1 Public Enforcement body 9 108

G2 Private Contract manager 7 95

G3 Private Engineer 10 114

G4 Private Operation manager 9 75

G5 Third party Project consultant 8 81

G6 Third party External expert 18 96

Case Delta

Code Party Position Project experience (years) Time (mins)

D1 Public Enforcement body 8 112

D2 Private Project manager 11 110

D3 Private Contract manager 6 110

D4 Private Operation manager 7 108

D5 Third party Performance manager 5 98

Case Epsilon

Code Party Position Project experience (years) Time (mins)

E1 Public Enforcement body 7 98

E2 Public Development and Reform

Commission

12 106

E3 Private Project manager 9 110

E4 Private Contract manager 6 85

E5 Private Operation manager 8 93

E6 Third party Project consultant 6 80

E7 Third party External expert 9 77

110

In total 28 interviews were conducted following a case study protocol developed for

this research (see Appendix 1). The interviews commenced with inquiries on the

interviewee’s background, their specific role within the project, and the project’s

demographic characteristics. Interviewees were encouraged to articulate their

perspectives on the assessment of a PPP project’s value, followed by an evaluation of

the project under consideration. Interviewees were also asked about project

stakeholders, their interactions, and levels of engagement, aimed at gaining a

comprehensive insight into the project’s processes. Throughout the interviews, an

open-ended semi-structured approach was employed, encompassing both closed and

open-ended questions. Open-ended questions were specifically used within the sections

addressing interaction practices, the project’s interaction environment, and its

interaction performance. This approach was chosen to prioritise the interviewee’s

individual narrative and their interpretation of roles, practices, events and causal

relationships among these various factors.

Direct observation was conducted in Case Gamma which is in its construction stage.

Despite being in the construction phase, Case Gamma was deemed suitable for the

study as it provided a unique opportunity to gain insight into the project from a current

perspective. For a period of four months, the researcher became part of the project

team as an observer to conduct non-participant observations on the evolving

collaboration among team members. Additionally, the researcher interviewed multiple

project team members to gain a deeper understanding of their perspectives on the

collaboration and the project as a whole. As a non-participant observer, the researcher

did not actively participate in the project but rather observed both parties’ interactions,

behaviour and collaboration from an outsider’s perspective. This allowed the

researcher to gather data on how the team worked together, how they communicated,

and how their collaboration evolved over time. Through these observations, the

researcher was able to gain insights into the dynamics of the team and how they

tackled challenges throughout the project.

111

3.2.4 The Process of Data Analysis

The data analysis process involved two significant phases: within-case and cross-case

analyses. The primary focus was on examining projects, starting from the front-end

phase and continuing until the implementation phase was completed. A conceptual

framework derived from a comprehensive literature review on relevant and extant

research provided a starting point of data analysis. The unit of analysis was the PPP

project, and the analysis was conducted at the organisational level. The primary

objective of the analysis was to acquire a comprehensive understanding of the roles

and practices of stakeholders in VCC throughout the project lifecycle. This involved

studying the different events and causality relationships among these practices, as they

related to the interaction performance and the ultimate value of the project.

Within-case analysis

In the within-case analysis, each case was individually investigated as a standalone

entity after the researcher familiarised herself with the interview transcripts and

documentation of the project’s events, and stakeholder interaction. The next step

involved creating comprehensive case descriptions to summarise the main events of

the project as well as the roles and interactions of involved stakeholders by making

notes of first impressions and ideas (Hsieh & Shannon, 2005). This step was essential

for gaining insights and understanding each case as a standalone unit. The third step

involved preparing for conventional content analysis by formulating initial ideas and

codes to capture how value is perceived by various stakeholders and how they co-

create value for the project (Miles et al., 2020). This step was critical to ensure that all

relevant information was captured and organised in a meaningful way.

Conventional content analysis was adopted to progress from specific details of the data

to more general and abstract ideas, in order to conceptualise dimensions of interaction

112

practices and stakeholders’ value perception. Conventional content analysis is a

research method typically used to describe a particular phenomenon, such as the VCC

process of PPP projects in the research. It is employed because the existing theories or

literature on a phenomenon are incomplete and sometimes contradictory.

Adopting abductive reasoning, the analysis commenced with a preliminary

understanding of the VCC phenomenon grounded in existing theories and literature.

This understanding served as a guiding framework for the analysis process. The

methodology involved iterative analysis and revision, where the initial understanding

continuously evolved in response to emerging data and insights (Aarikka-Stenroos &

Jaakkola, 2012). This analytical approach encompassed both deductive reasoning,

which facilitated the identification of relevant concepts and themes based on the initial

understanding, and inductive reasoning, which allowed the data to shape and refine

these concepts and themes.

Here is an example of the analysis process and generation of the results through

abduction (also see Figure 3-2). There are two second-order codes derived from

empirical data which are then summarised as an aggregated dimension of mid-term

value outcomes. These two second-order codes which are visible value and potential

value are summarised under the abductive reasoning. In the VCC literature, experience

is emphasised as having the most impact on the value perceived by the stakeholders

(Ramaswamy, 2011). In service-dominant logic literature, interactions among

stakeholders are viewed as the main mechanism of VCC. Thus, a preliminary

assumption was held that value perceived by the stakeholders involved in the PPP

projects may be classified according to their experience of different dimensions of

interaction. By examining the patterns emerging from the data and comparing the

patterns with extant literature of VCC, service-dominant logic and management of

project and value, finally two second-order codes were generated which are visible

value and potential value.

113

The goal of within-case analysis is to gain a comprehensive understanding of the case

and its unique characteristics, as well as to identify patterns, themes and relationships

that can inform further research. This process is essential in this research, as it helps to

develop a detailed understanding of the phenomenon being studied and to be prepared

for the cross-case analysis.

Figure 3-2 The analysis process and results generation through abduction

Cross-case analysis

The cross-case analysis in this research consists of two main phases aimed at

developing a better understanding of how value is co-created and assessed by all the

stakeholders involved in a PPP project. In the first phase, within-case code hierarchies

and associated concepts developed from the five cases were compared, exploring their

similarities and differences to create a single robust code hierarchy and set of concepts.

This

involved

identifying

tentative

relationships

between

the

codes,

themes

and

114

associated concepts for the five cases, refining these relationships through replication

logic, and eliminating significant differences based on insufficient evidence. The result

was a final code hierarchy that provided two dimensions of value outcomes and two

dimensions of interaction practices.

An example of coding procedure is displayed as follows. An interviewee’s detailed

description “We tried to clarify our expectation as early as the market testing phase.

This helped us rule out unqualified potential private parties to save time and facilitated

our own reflection on whether the requirements are too impractical” was coded into the

first-order code of “Value framing” and was then coded into the second-order theme of

“Dialogue approach”. A similar approach to conventional content analysis was

followed to identify codes and themes related to VCC phenomenon and stakeholders’

value perception. The first-order codes and second-order themes were compared for

the differences and similarities between the cases. This allowed the identification of

aggregated dimensions of “resource management” and “relationship management” that

were common to all cases. Then cross-analysis of data was performed to confirm and

refine the findings, ensuring that they were reliable and valid across all cases. This

process of cross-validation helped to establish the robustness of the findings and ensure

that they were not limited to a specific context or case.

In the second phase, a set of propositions was developed to explain the mechanism of

VCC in PPP projects by elaborating the role of value perception of stakeholders. Based

on the conceptual framework, it was interpreted and theorised about how stakeholders

pursue and assess the value of a PPP project, and thus interact with each other for co-

creating value for the project. Specifically, areas examined were what are the

interaction practices, what project value outcomes can be achieved as the consequences

of such interaction, and what are the antecedents of such interactions institutionally

and organisationally. Finally, ten propositions were derived that constitute a model of

these relationships addressing the research question.

115

3.3 Research Quality

The quality of any research design can be evaluated based on certain logical tests.

These tests are commonly used to establish the quality of most empirical social

research, and they also apply to case study research since it is part of this larger body.

The work of Miles et al. (2020) aligns with the critical realist tradition and explores

five primary issues that are interconnected to some extent. In this research, three of

these issues are identified as overlapping with Yin (2018)’s perspectives. The three

logical tests are as follows.

3.3.1 Construct Validity

This refers to whether the research accurately measures what it is intended to measure

(Gibbert et al., 2008). In the case of case study research, this involves ensuring that the

case is representative of the phenomenon being studied.

To increase the construct validity of the research, information was gathered from

multiple sources in a way that promotes convergence and consistency in the data. The

researcher also established a clear chain of evidence, which is also relevant during data

collection. This involved documenting all of the steps taken during the study and the

reasoning behind them, so that the research process can be easily traced and

understood (Denzin & Lincoln, 2000). In addition, the draft case study report was

reviewed by key informants. Having the report reviewed by individuals who are

knowledgeable about the topic being studied can help ensure that the interpretation

accurately reflected the participants’ opinion. This also helps to identify any biases or

errors in the research design and provides an opportunity for feedback and suggestions

for improvement.

116

3.3.2 External Validity

This refers to whether the research findings can be generalised to other populations or

contexts (Yin, 2018). In the case of case study research, this involves ensuring that the

findings are not specific to the case being studied and can be applied to other cases

(Lincoln & Guba, 1986).

To increase the external validity of the research, the research questions focused on the

“how” and “why” of the VCC process, rather than just documenting events or activities.

This helped to arrive at more meaningful analytic generalisations and made it easier to

demonstrate the external validity of the findings. Multiple sources of evidence were

used to ensure that the findings are consistent with other similar studies and were not

just unique to the particular cases selected in the discussion section (see Chapters 4 and

5). The discussion encourages convergence and can help to establish the credibility and

generalisability of the research.

3.3.3 Reliability

This concerns the consistency and stability of a study’s results over time and across

different settings or researchers. In the case of case study research, this involves

ensuring that the same findings can be obtained if the study were repeated

(Krippendorff, 2004).

To increase the reliability of the research, detailed documentation of the procedures

and methods used in the research was kept. This documentation was clear and explicit,

detailing every step taken in the research process. Furthermore, a case study protocol

was used and a case study database developed to address the reliability problem. The

case study protocol (see Appendix 1) outlined the specific procedures and methods to

be used in the research, while the case study database included all the relevant data and

documentation. By making these resources available, other researchers can potentially

replicate the study and arrive at similar conclusions.

117

3.4 Chapter Summary

This chapter outlined the research design and associated research process used in this

study, including the methodology and methods used, as well as the five project case

studies examined. It also provided details about the data collection and conceptual

framework used for analysis. The chapter concluded by discussing the steps taken to

ensure the quality and rigour of the research.

This chapter serves as a roadmap for the research, outlining the key components that

inform the study’s design and execution. It highlighted the importance of using a

robust methodology and rigorous data collection methods to ensure the validity and

reliability of the findings. It underscored the significance of having a well-defined

conceptual framework to guide the analysis and interpretation of the data. Finally, the

chapter emphasised the importance of quality control measures to ensure the research

meets the highest standards of excellence.

118

Chapter 4

Findings and Discussion – Value Outcomes

Key findings of this research are reported in Chapters 4 and 5, each of which includes

a section on findings and a section on discussion. Findings include the key codes,

themes and dimensions (i.e., constructs) that are derived from within and across cases

based on thematic pattern matching with code hierarchies and quotations as evidence,

and cross-tabulation analysis of each theme against the five cases to provide a holistic

view of all five cases and a foundation to analyse theoretical relationships among the

constructs. Discussions include the answers to research questions by illustrating

relationships and implications of the constructs according to the derived conceptual

framework in Chapter 2 and comparing empirical findings in this research with

previous relevant studies. Testable propositions are presented accordingly.

These two chapters are structured according to the logical process of VCC in PPP

projects, which follows the three research questions explained in Chapter 1.

Specifically, the two chapters answer the questions of what project value is pursued

and attained by different stakeholders, how project value is co-created during the

project lifecycle, and what factors enable and facilitate such co-creation practices.

This chapter addresses the first research question on what project value is pursued and

obtained by various stakeholders involved in a PPP project. This is important because

project value is increasingly receiving attention from academia and practitioners as a

more inclusive and comprehensive perspective to assess a project over the traditional

“iron triangle” as a success measure. Also, the main objective of this research is to

investigate how to maximise project value for all stakeholders which makes a good

understanding of project value a primary task.

Section 4.1 reports findings on project value by listing different value outcomes

observed in the five cases. According to the temporal nature of project value, mid-term

and long-term value outcomes are identified from the data. In addition, long-term value

119

outcomes are classified into economic value and social value according to the

subjective nature of value. Mid-term value outcomes are summarised into visible value

and potential value under the framework of service-dominant logic. Cross-tabulation

analysis shows that public and private parties prioritise different long-term value

outcomes but attach the same importance to mid-term value outcomes. Section 4.2

discusses the relationship among these finely sorted value outcomes that appeared in

PPP projects and how to assess a PPP project in a value-oriented perspective. The

phenomenon of neglecting value thinking is also discussed briefly.

4.1 Findings – Value Outcomes

This section describes the final code hierarchy regarding project value observed in the

investigated five cases and divides them into respective categories according to the two

features of value which were identified from the literature and confirmed in the data

collected. Specifically, empirical evidence shows that project value is understood

differently by different stakeholders at different times during the project lifecycle.

There are two dimensions of project value outcomes: the horizontal dimension, relating

to the project process; and the vertical dimension, relating to the various stakeholders

involved. In the horizontal dimension, project value contains mid-term and long-term

value outcomes, and in the vertical dimension, project value involves economic value

and social value. Both dimensions are discussed in detail in this chapter.

4.1.1 Mid-term and Long-term Value Outcomes

Two code categories of value outcomes were identified that are important to consider

in the entire PPP lifecycle: mid-term value outcomes and long-term value outcomes.

Despite this classification not being new in project business and value literature, it

highlights the dynamic feature of project value and allows a concrete discussion of the

cumulative process of value creation.

120

It is worth noting that this research considers value of PPP projects only from the mid-

and long-term timeframes and excludes the short-term value. This is because short-

term value normally refers to the value-in-exchange instead of value-in-use that can be

realised at the moment of exchange. However, in the PPP project context, value is

perceived as being co-created from the exchange of service among all stakeholders in

this research. Different from other contexts, such as commercial and marketing, the

exchange of service in PPP projects normally does not result in instant value outcomes

so that the short-term value outcomes are not discussed in the research.

Mid-term value outcomes refer to the benefits realised during the VCC process

although they are not the ultimate goal of stakeholders. Compared with long-term

value outcomes, mid-term ones are value outputs generated in the project lifecycle.

They are either outcomes of value by themselves or are conducive to further value

creation through facilitating VCC practices. There are seven mid-term value outcomes

identified in the five cases: risk mitigation, effective procedure, innovative solution,

competence enhancement, trust improvement, solidarity, and sense of belonging.

Although these types of value outcomes are not the ultimate goal of beneficiaries, they

are an essential stage in realising long-term value outcomes. Data shows that

practitioners are aware of and acknowledge the merit of mid-term value outcomes. For

example, the engineer from Case Gamma stated: “The success of a project is

influenced by numerous factors, including the effectiveness of procedures. Long-term

objectives are constructed incrementally from fundamental tasks and units of work.”

Mid-term value outcomes represent a process view of value creation. PPP projects

usually last for at least 15 years and go through many stages. Just as in the saying

“Three feet of ice does not form in a single day”, a PPP project must be viewed over

the long run which represents a process perspective. On one hand, mid-term value

outcomes obtained in the process can keep everyone informed about how the project is

going. In other words, they can also act as the performance indicators showing whether

the project is on the right track. However, these are the soft rather than the hard

121

indicators. Government payment criteria are a good example to illustrate this function

of mid-term value. All the five cases specified clearly when and how much to pay the

private party. The criteria include construction progress, delivery quality, service level

and so on. These criteria could be taken as the mid-term value outcomes based on

which the public party evaluates the private party’s performance. In addition,

qualitative criteria are used by all the five projects to impose a value-oriented principle

on performance management rather than a strict and inflexible prescription. This

encourages the motivation and innovation of the private party to a certain extent.

On the other hand, mid-term value outcomes obtained in the VCC process of a PPP

project make different stakeholders understand each other’s value perception more

clearly. This can be observed from Case Delta as the operation manager said1:

“Despite my primary role in road maintenance, I have been involved

in the project from its inception. Numerous milestones must be met

before my ultimate objective of providing cost-effective, high-quality

road service can be achieved. For instance, I contributed to contract

negotiations and assisted in securing a more equitable performance

indicator list for our team. This accomplishment is expected to yield

significant intermediate-term benefits, given its potential to enhance

our ability to achieve our goal of providing high-quality road

service at a reduced cost.”

The negotiated performance indicator list serves as a road map showing both parties’

bottom line. This builds a solid foundation for their follow-up collaboration in the rest

of the project.

Long-term value outcomes, on the other hand, refer to the sustainable results that a PPP

project achieves over the entire lifecycle, even after the transition stage. They are

1 All quotes in this thesis study are translated from the Chinese.

122

typically the ultimate goal of a beneficiary in conducting the PPP project which will

evolve and endure across the entire lifecycle. Such value outcomes are embedded with

the temporal nature and are not easy to assess before they are tested by time. However,

they are able to be envisioned before they are claimed to become true. A government

officer from Case Epsilon supported this view:

“Despite the limited two-year operational period of this healthcare

centre, we are confident that it will continue to have a positive

impact on the community beyond the initial two years. This is owing

to the growing population of aging individuals, which ensures

profitability, as well as the performance-based payment mechanism

that incentivises private parties to maintain and deliver quality

service.”

There are eight long-term values identified from the cases: financial feasibility,

lifecycle investment saving, profit, scale economy, environmental value, people

welfare, reputation, and regional value.

One defining feature of long-term value outcomes is that they should be sustainable

which differentiates them from mid-term value outcomes. Sometimes the mid-term

value outcomes may be the same as the long-term ones. For example, in both Case

Alpha and Case Beta, high quality infrastructure service is the government’s primary

expectation and is achieved in operation so far. However, the public party in both cases

expressed that they would not relax their vigilance on performance governance until

the project is successfully transferred to the government. This is because there have

been cases that ended with a project failure despite a good start.

Another defining feature of long-term value outcomes is that they are of use to the

beneficiaries in terms of their ultimate goals. While mid-term value outcomes

sometimes serve as interim achievements during the VCC process, long-term value

outcomes represent the stakeholders’ most pertinent goals. This can be supported by

123

the data as the government officer from Case Gamma said: “Although the investment

is more than the original design after the change on the use right of the sea area, we

still would like to continue the project because our objective is to connect the two

districts facilitating the area’s development. We can see the long-term value of the

project.”

Table 4-1 summarises the distinctions between mid-term and long-term value

outcomes in the context of PPP projects.

Table 4-1 The distinctions between mid-term and long-term value outcomes

Aspect Mid-Term Value Outcomes Long-Term Value Outcomes

Nature and purpose Benefits realised during VCC

process

Sustainable results achieved

over entire lifecycle

Timeframe Intermediate stages of project

lifecycle

Throughout project lifecycle and

beyond

Examples

Risk mitigation, effective

procedures, innovative

solutions, competence

enhancement, trust

improvement, solidarity,

sense of belonging

Financial feasibility, lifecycle

investment savings,

profitability, scale economy,

environmental value, people

welfare, reputation, regional

value

Function Performance indicators and

soft indicators

Reflects sustainable impact and

alignment with goals

Value perception

Enhances mutual

understanding of value

perceptions

Represents fulfilment of ultimate

stakeholder goals

Sustainability Important steps towards long-

term goals

Lasting impact and benefits over

extended timeframe

Alignment with

stakeholder goals

Contributes to achievement of

long-term objectives

Represents fulfilment of ultimate

project purpose

Mid-term and long-term value outcomes have distinct characteristics. Mid-term value

outcomes materialise during the collaborative VCC process, representing benefits

124

achieved in the project lifecycle. These outcomes, observed within intermediate project

stages, serve as performance and progress indicators, shaping the project’s trajectory.

Examples include risk mitigation, effective procedures, innovative solutions, and trust

improvement. They also facilitate mutual understanding among stakeholders regarding

value perceptions. On the other hand, long-term value outcomes encompass sustained

and enduring results achieved over the entire project lifecycle and beyond. These

outcomes, such as financial feasibility, lifecycle investment savings and environmental

benefits, align with stakeholders’ ultimate goals. Long-term value outcomes underpin

the project’s lasting impact, representing the culmination of stakeholders’ overarching

aspirations. In essence, mid-term value outcomes are pivotal steps towards long-term

goals, while long-term value outcomes epitomise the sustained and substantial

achievements of PPP projects.

Given the discussion above, the thesis proposes:

Proposition 1. PPP project value shows its dynamic nature by

being comprised of mid-term and long-term value outcomes.

Long-term value outcomes are discussed in detail in Section 4.1.2 while mid-term

value outcomes are discussed in Section 4.1.3. The relationship among all these value

outcomes identified in the cases is shown in Figure 4-1.

125

Figure 4-1 Value outcomes identified in the cases

4.1.2 Economic Value and Social Value

The previous section pointed out that PPP project value cannot be viewed in the same

way but rather as mid-term and long-term value given the dynamic nature of value. For

the long-term values, value outcomes vary among different stakeholders given the

subjective feature of value. Although mid-term value outcomes also differ in different

stakeholders’ eyes, such differentiation is not the focus in this section. Mid-term value

outcome archetypes based on experience, derived from the VCC research strand, are

discussed in the next section.

There are two categories of long-term value outcomes summarised from the data:

economic value and social value. Such classification is not limited to parties as

different individuals in the same party may value things in different ways. However,

there is a tendency that the private party focuses more on the economic value while the

public party focuses more on social value as shown in Table 4-2.

126

Table 4-2 Different long-term value focus among parties and cases

Economic

value Public Private Alpha Beta Gamma Delta Epsilon

Financial

feasibility H L

√ √ √ √

Lifecycle

investment

saving

H H

√ √ √ √ √

Profit M H

√ √ √ √ √

Scale economy L H

√ √ √

Social value Public Private Alpha Beta Gamma Delta Epsilon

Environmental

value H H

√ √ √ √ √

People welfare H M

√ √ √

Reputation H H

√ √ √ √

Regional value H L

√ √ √

Note: “H” indicates the party shows high interest in the value while “L” indicates the party has relatively

low interest in the value. The symbol “√” denotes that the indicated value has been observed in the

corresponding case.

4.1.2.1 Economic value

Economic value refers to financial benefits pursued and realised from the PPP project

by different stakeholders. First-order codes covering economic value include financial

feasibility, lifecycle investment saving, profit, and scale economy. As shown in Table

4-2, most public parties are concerned about financial feasibility and lifecycle

investment saving, while most private parties focus more on lifecycle investment

saving, profit, and scale economy. The process of coding with economic and social

value is shown in Figure 4-2.

127

Figure 4-2 Coding process of economic and social value

Financial feasibility refers to the phenomenon that the government could not conduct

the project without choosing PPP. Indeed, this is one of the PPP functions that it can

smooth or assist with government expenditure and allow infrastructure development in

an area when the fiscal budget is not sufficient. This value is emphasised by public

parties in most of the cases other than Case Alpha. This may be because Case Alpha is

smaller in scale than the other cases and because Case Alpha was an expanded project

of a Build-Operate-Transfer (BOT) project which means the consideration of the PPP

mode did not depend heavily on the financial feasibility, but rather the lifecycle

investment saving. In the other four cases, financial feasibility is the foremost reason

as well as the main economic value that the public parties pursued and obtained in the

PPP projects.

Lifecycle investment saving refers to the phenomenon that the PPP mode could save

investment compared with alternative methods in delivering infrastructure projects

from an entire lifecycle perspective. There is repeated evidence obtained from the data

128

to support this phenomenon. Both public and private parties have acknowledged this

economic value in all five cases. For the public party, lifecycle investment saving is

another reason for choosing PPP as the infrastructure delivery mode. This does not

mean that all infrastructure projects are suitable for PPP with less lifecycle investment.

On the contrary, only the projects that have survived the Value for Money assessment

can be delivered in PPP mode. For the private party, pursuing less lifecycle investment

makes them become conscious about the importance of planning and designing, and be

willing to input more money in the project front-end with the aim of saving later on.

Profit denotes literally how much profit the private party can earn. According to the

data, profit is the most pertinent economic value the private party is concerned with.

For example, the contract manager from Case Gamma said: “To be honest, our primary

concern is profitability, even though we recognise our social responsibility as a state-

owned enterprise. While we are committed to fulfilling our obligations to society, we

must also generate revenue and ensure the sustainability of our business operations.” In

other words, no matter how much other value can be obtained by the private party from

a PPP project, they will not join the project if they know clearly there will be no profit

or even a loss. The project manager in Case Epsilon said: “PPP projects are typically

significant ventures that necessitate substantial investments. These projects differ from

regular corporate operations, as each of them must be profitable in order to be

successful.” On the other hand, the public party shows less enthusiasm for this

economic value indicator. The contracts of all the five cases show that for the end-user

payment and feasibility gap subsidy PPP projects such as Cases Alpha, Beta and

Epsilon, the public parties signed a contract on the distribution of excess income with

the private party; for the government payment cases, such as Case Gamma and Case

Delta, the public parties have no relation with the project profit. However, in all five

cases, the government officers all expressed that they need to control private parties’

profit at a reasonable level, that is, the profit should not be too high otherwise the

public interests cannot be guaranteed, and the profit could not be too low, otherwise the

129

private parties cannot be motivated. In this sense, the project’s profit is not just a value

objective of the public parties, but an instrument to balance public interest and the

private party’s motivation.

Scale economy refers to the phenomenon that the private party has more bargaining

power through the collaboration in a certain PPP project for their further collaborations

with the government and/or financial institutions. There are two observations in the

data that indicate that the private party can achieve scale economy from a PPP project.

In Case Gamma and Case Delta, the managers in the private parties revealed that they

could gain momentum in winning more projects from the local government given their

relationship foundation built in the studied projects. Moreover, the project manager in

Case Beta stressed another key economic benefit they derive from the PPP project, that

is, they earned more credits from the finance institutions by having the franchise rights.

This enables their company to get loans more easily from the bank as the franchise

rights are considered a reliable asset. In other words, “companies that hold a greater

number of franchise rights are generally perceived as more creditworthy by financial

institutions” (Project manager, Case Beta). On the contrary, the public party does not

show much interest in it.

4.1.2.2 Social value

Social value refers to positive social impact of the project on the broad community and

the primary stakeholders as well. First-order codes identified in cases include

environmental value, people welfare, reputation and regional value. It is worth

mentioning that while the beneficiaries of social value are the people and community,

the private party is the implementor of all the social values, while the government is

accountable for them. The project consultant from Case Alpha said: “Despite the

profit-seeking nature of capital, we also sincerely hope the project is successful in

terms of its social impact, and we put lots of effort into it”.

130

Environmental value refers to the extent to which the environment of PPP projects is

protected and/or improved. Both the public and private parties are concerned with

environmental value despite having different motivations. For the public parties,

environment protection is becoming increasingly important in the government’s job as

the commonsense of the “environment is valuable” prevails. In China, protecting the

environment while developing is a key emphasis in the work of the government. There

are many related laws and regulations that are strictly implemented by environment

bureaus. On the contrary, the private parties’ pursuit of environmental value is mainly

because of the imposed environmental laws and regulations. Especially for the

industries such as sewage treatment in Cases Alpha and Beta, environmental value is

the most important performance indicator. In other cases, such as Case Delta, the green

belt’s build and maintenance is also an important performance indicator. In Case

Gamma, the environmental value even led to a huge design change for the whole

project. As the first design of the immersed tube tunnel would destroy the environment

for undersea life, as assessed by the environment bureau, the private party was forced

to persuade the design company to change the original design. The project consultant

from Case Gamma said: “The change in the assessment regulation was an unexpected

risk, but fortunately, the government was understanding and covered the additional

costs associated with the design change.” This indicates that the public party not only

values the environment, but is also willing to pay for it.

People welfare refers to the general happiness of the local community brought about

by the PPP project. One basic function of infrastructure development is to improve the

welfare of people in the local community. This is logically at the top of the list of the

public party’s value priority. For example, the sewage treatment plants in Cases Alpha

and Beta contribute to the local environment and cleaner water and thus improve

people’s welfare. When choosing the private party, the public parties in the two cases

put the sewage treatment capability at the top of the list to ensure people’s welfare. In

other situations, the public party would seek the chance to improve people’s welfare

131

through innovative solutions. In the meantime, while the private party would cooperate

as much as they can, they are not motivated to initiate such value pursuit. For example,

in Case Gamma, the public party conceived of a plan to build playgrounds under the

highway interchanges which they learnt when visiting another city. The government

officer then communicated this idea to the private party in a timely manner. The

engineer said “As they (the public party) shared the idea in time so that we were able

to change the design as we haven’t dealt with the area under the highway”, “and of

course, they pay us extra money for it.” This shows that the public party cares more

about people’s welfare than the private party.

Reputation refers to the opinions held by the involved stakeholders in the PPP project

about other stakeholders during and after the collaboration. The data shows that both

public and private parties are concerned about reputation. For the public party, the

government needs to build their reputation among people to maintain the government’s

accountability. For example, the government officer in Case Gamma said:

“Maintaining a good reputation for the government is crucial, as it ensures

accountability and builds trust with the people.” Moreover, the public party needed to

maintain their credit to attract more investment as the government officer in Case Bata

said: “Paying on time is not only important for our own financial health, but also

crucial to maintain the government’s reputation and credit. This in turn would attract

more private capital to invest in our projects.” For the private party, reputation may

serve as an advertisement for them to the local community so that they can reduce

local resistance when constructing the infrastructure. For example, in Case Alpha, the

private party used their patent technology to build an underground sewage treatment

plant. They also built a playground on top of it for the community. This made the

residents very happy as it was published in the local newspaper. With such good

reputation, the private party won three other sewage treatment plant projects with

neighbouring governments. Moreover, reputation means more to the private party if

they want to expand into new business areas. The operation manager in Case Epsilon

132

said: “We are putting a lot of effort into building our reputation because we want to

expand our business into health and eldercare through this project.”

Regional value refers to the phenomenon that PPP projects can help expand the local

economy. For example, the government officer shared his view on Case Gamma’s

strategic objective:

“The subsea tunnel is a crucial link connecting the G and Z districts

of the city, which are separated by the sea. It enables the

development of the G district by providing access to the resources

and opportunities available in the Z district.”

A similar idea was expressed by the government officers in Cases Beta and Epsilon. In

Case Beta, the government officer said: “after building the sewage treatment plant, we

were able to invite more investment in this area because we not only can handle the

sewage the plants generate, but also we can provide cheap reclaimed water to them.” In

Case Epsilon the government officer also said that this PPP project activated the local

economy because people’s health considerations are well taken care of, people are

more likely to develop the economy. However, the data shows that private parties pay

less attention to such value.

From a cross-case analysis, it is evident that the public party pays more attention to

social value while the private party cares more about the economic value. For example,

the government officer from Case Delta said: “For me, the priority is not just saving

money but also ensuring the timely completion of the road project. The sooner the road

is completed, the sooner the public can benefit from it.” The opinion from another

government officer in Case Beta also supported that view: “Currently, the situation is

such that the government has limited financial resources, while private entities have

greater flexibility in selecting the cities and projects in which they wish to invest and

construct. Therefore, it is imperative for us to present attractive projects that offer high

profitability.” While the project manager in Case Gamma admits that the private party

133

cares more about finance, he also stresses that:

“We prioritise the social impact of the project because it reflects our

professionalism and ethical values, which ultimately affects our

reputation. Additionally, we have a sense of social responsibility

towards the community and aim to make a positive impact through

our projects.”

It is also interesting to find that the public party and private party of the same project

could have different perceptions on value creation. For example, the project manager

from Case Alpha said: “We are currently facing financial losses in operating the

sewage treatment plant, as the actual operating costs were significantly higher than our

initial estimates during the bidding process.” However, the government officer said:

“The private party benefited greatly from this project, as it served as a successful

model and led to the acquisition of seven additional similar projects in Northeast

China.” This shows that different stakeholders not only experience the value

differently, but they also view other’s value creation differently.

To sum up, the cores of each economic and social value outcomes are shown in Table

4-3.

134

Table 4-3 The core of each economic and social value outcomes

Constructs Contents

Economic value Financial benefits pursued and realised

Financial

feasibility

The phenomenon that the government could not conduct the

project without choosing PPP

Lifecycle

investment saving

The phenomenon that PPP mode could save investment

compared with alternative methods in delivering infrastructure

project from an entire lifecycle perspective

Profit How much profit the private party can earn

Scale economy The phenomenon that the private party gains more bargaining

power through the collaboration in a certain PPP project for

their further collaborations with the government and/or

financial institutions

Social value Positive social impact of the project on the broad community

and the primary stakeholders

Environmental

value

The extent the environment of PPP projects is protected and/or

improved

People’s welfare The general happiness of the local community brought by the

PPP project

Reputation The opinions held by the involved stakeholders in the PPP

project about other stakeholders during/after the collaboration

Regional value The phenomenon that PPP projects can help expand the local

economy

The findings in this section show the subjective nature of value which requires inter-

subjective interaction in managing PPP project value to satisfy various stakeholders

involved. Thus, it is proposed:

Proposition 2. Project value is a subjective feature given by

various stakeholders involved in the project. Long-term value

outcomes include economic value and social value which require

coordination in management and realisation.

135

4.1.3 Experience of Function vs Interaction

Value is highly subjective as different beneficiaries have different perceptions of it.

This has been highlighted repeatedly in the service-dominant logic and broader VCC

literature. Prahalad and Ramaswamy (2004) pointed out the experience of customers

would be a new source of competitive advantage which can only be achieved through

co-creation. In the same vein, Vargo and Lusch (2007a, p. 7) updated their

fundamental premises on service-dominant logic and stressed that “value is always

uniquely and phenomenologically determined by the beneficiary.” This subjectivity of

value has also been supported by the empirical data and discussed in the previous

section regarding long-term value outcomes. This section takes a further step in

discussing this subjective feature by combining the experience of function and the

experience of interaction and proposes the archetypes regarding mid-term value

outcomes.

Value is assessed by the beneficiaries according to their experience when they

consume the value propositions or service provided by other parties, and this leads to

the subjective feature of value. In the process of VCC, beneficiaries’ experience

depends on their experiences on the function and interaction. Function experience

refers to how useful a person rates a service provided by others while interaction

experience refers to how a person feels when engaging in an interaction with other

parties. According to the extent of function experience and interaction experience, four

value archetypes are summarised as shown in Figure 4-3.

136

Figure 4-3 The archetypes of value outcomes according to experience

The top right quadrant indicates the better experience of function and interaction.

Accordingly, visible value is defined as the value outcomes that are of better function

experience and less interaction experience. Conversely, potential value is defined as

the value outcomes that are of less function experience and better interaction

experience. Mid-term value outcomes identified from the data include first-order codes

such as risk mitigation, effective procedures, innovative solutions, competence

enhancement, trust improvement, solidarity, and sense of belonging. As shown in

Figure 4-1, visible value includes risk mitigation, effective procedures, innovative

solutions, and competence enhancement while potential value includes trust

improvement, solidarity, and sense of belonging. The boundaries between visible and

potential value are to some extent blurred because of the subjectivity of experience. In

general, visible value focuses more on the function experience and potential value

focuses more on the interaction experience. The process of coding with visible and

potential value is shown in Figure 4-4.

137

Figure 4-4 Coding process of visible and potential value

The value outcomes with both better experience of function and interaction are defined

as co-created value while the value outcomes with both less experience of function and

interaction are defined as co-destructed value. Long-term value outcomes discussed in

the last section are co-created value. While co-destructed value is an important topic in

VCC (Echeverri & Skålén, 2011, 2021; Fuentes, 2019; Prior & Marcos-Cuevas, 2016),

it is out of this research’s scope. As to the last archetype, co-created value refers to

both parties collaborating in a reciprocal way and creating value-in-use for and with

each other. What needs illustrating is that there are no explicit boundaries among

visible value, potential value and co-created value. This is because of the subjective

nature of value, which different stakeholders experience differently. The artificial

classification proposed in this research aims to provide a relatively clear foundation to

take a close look at what value looks like in the PPP projects and how it is co-created

among stakeholders. Table 4-4 shows the different mid-term value focus among parties

138

and cases.

Table 4-4 Different mid-term value focus among parties and cases

Visible value Public Private Alpha Beta Gamma Delta Epsilon

Risk mitigation H H √ √ √ √ √

Effective procedures H H √ √ √ √ √

Innovative solutions L H √ √ √ √ √

Competence Enhancement L L √ √ √

Potential value Public Private Alpha Beta Gamma Delta Epsilon

Trust improvement H H √ √ √ √ √

Solidarity M M √ √ √

Sense of belonging L M √ √ √ √

Note: “H” indicates the party shows high interest in the value, “M” indicates the party shows medium

interest in the value, and “L” indicates the party show relatively low interest in the value. The symbol “√”

denotes that the indicated value has been observed in the corresponding case.

4.1.3.1 Visible value

The pursuit of value-in-use reflects the underlying rationale of the subjective nature of

value, that is, only the usefulness deserves effort. Mid-term value outcomes such as

risk mitigation, effective procedure and innovative solutions can be regarded as visible

value. This is because such value outcomes are perceived as direct contributors to

realise long-term value that is pertinent to stakeholders’ concerns. Differing from

long-term value outcomes that are valued by different stakeholders and appear in

different cases, all visible value and potential value are observed from both public and

private perspectives in all cases.

Risk mitigation refers to the extent to which risks can be mitigated for different

stakeholders. This is one of the main functions of PPP and is valued by both public and

private parties. For example, the contract manager from Case Epsilon said:

139

“The government’s sharing of population and industry data is

crucial in determining future market needs and evaluating future

market competition. These data help to manage risks associated with

project operations, particularly in the early stages.”

The contract manager also confirmed that operational risk mitigation can be regarded

as a mid-term value that is obtained in the VCC process and should be given high

priority given its direct impact on the project success.

Effective procedure primarily relies on the successful execution of the procurement

process, seamless financing arrangements, and obtaining necessary building permits.

The procurement process involves negotiating contracts and requires close

collaboration among all involved stakeholders. Smooth project financing requires

timely disbursement of funds from the bank, as well as the use of a letter of guarantee

mechanism to safeguard public interests. In addition to procurement and financing,

securing building permits, including construction and environmental permits, is also

crucial to the project’s overall success. These permits serve as the legal foundation for

construction activities, and their timely acquisition is essential for project completion

in the set timeframe.

Innovative solutions can be described as novel approaches that are used to address

complex issues that arise during the course of a project. These solutions can take on a

variety of forms depending on the particular circumstances, but they share the

characteristic of being emergent and ground-breaking. An example of this can be seen

in Case Gamma, where a newly enacted regulation mandated that the project team

obtain a usage right for a sea area from the National Ministry of Ecology and

Environment. This process was anticipated to be arduous and time-consuming, and as a

result, the public and private stakeholders collaboratively developed a new design for

an artificial island that allowed them to obtain the use right from the provincial level

instead of the national level. This innovation also gave rise to new technological

140

advancements, such as the creation of an immersed tunnel.

Competence enhancement refers to the process whereby stakeholders involved in PPP

projects develop and refine their professional skills, which in turn facilitates the

success of the PPP venture. This phenomenon is often mutually reinforcing, as the

enhanced competence of stakeholders can contribute to the effectiveness of the PPP

project, while the project itself can serve as a platform for further competence

enhancement. Many public sector entities involved in PPP projects have reported that

their improved competence in areas such as project governance, as opposed to micro-

management, has not only contributed to the smooth implementation of current

projects but has also helped to advance the government’s broader PPP agenda. For

example, the government officer in Case Gamma said: “We were able to successfully

adjust to our new role in the project and improve our abilities to lead by setting

objectives and governing through principles instead of participating in every detail.”

Indeed, competence enhancement is a critical aspect of PPP projects, as it enables

stakeholders to better navigate the complex landscape of PPP development and

implementation. Through the development of new skills and competencies,

stakeholders can effectively manage risks, collaborate with partners, and achieve

project objectives in a manner that aligns with the broader goals of the PPP initiative.

This is also supported by the project consultant in Case Delta who suggested:

“Throughout the project, I noticed a significant improvement in my

professional skills, particularly in areas such as policy interpretation,

conflict resolution, and providing valuable recommendations.

Overall, this project provided me with valuable learning experiences.”

As such, fostering competence enhancement among PPP stakeholders should be a key

priority for governments and other entities seeking to develop and implement

successful PPP projects.

141

4.1.3.2 Potential value

In the context of this research, achieving value-in-use is a complex task that cannot be

achieved by any individual party alone. Instead, it requires collaboration and co-

creation of value between multiple parties. Consequently, the experience of co-creating

interactions has become an integral component of project value. This perspective is not

novel in the field of marketing VCC literature. Payne et al. (2007) have explicated how

customers engage in VCC through interactions with suppliers and the significance of

the interaction experience. Prahalad and Ramaswamy (2004) also argued that the

interaction between a company and its customers serves as the fundamental building

block for facilitating the co-creation of experience. Empirical evidence from data

analysis supports the notion that the interaction experience is crucial in VCC. For

example, the project manager in Case Beta said:

“As I evaluate the project, the quality of interaction with the

government is a crucial factor. When there’s reciprocal

collaboration, it creates a positive working environment and helps

increase efficiency and effectiveness by ensuring that the project team

is well- coordinated.”

While a positive interaction experience may not directly generate the value that

stakeholders prioritise, it can aid in the creation of tangible value and may even have

the potential to evolve into long-term value. As a result, the thesis proposes that a

positive interaction experience can be considered as potential value. Trust

improvement, solidarity and competence enhancement are among the first-order codes

identified through empirical analysis that reflect the potential value of a positive

interaction experience. These codes illustrate the various ways in which positive

interactions between stakeholders can lead to potential value such as improved

relationships, increased trust and enhanced competencies.

Trust improvement pertains to the observable trend of stakeholders developing a higher

142

level of trust in each other throughout the VCC process. While it is true that there is an

initial foundation of trust between public and private parties, this trust can be further

enhanced as the VCC process progresses. In all five cases examined, trust

improvement was highly valued by all stakeholders involved. For example, the

operation manager in Case Alpha said:

“As our collaboration progressed, I noticed a growing sense of trust

between us. This increased level of trust has allowed us to work

together more cohesively and effectively, and we both value and aim

to maintain it.”

Solidarity in the context of VCC refers to the phenomenon of mutual support and

converging interests, opinions and objectives within the PPP project team. This trend

was observed across several cases, with Case Gamma being a notable example. One

government officer in Case Gamma stated that the team had a strong sense of solidarity,

and that they worked together to address any challenges that arose. The private party

engineer in the same case also shared this sentiment, emphasising the collaborative and

supportive nature of the team as presented in the quote below:

“The public party was supportive to some extent, and we often faced

external challenges together rather than directing our efforts

against each other. For instance, when the project underwent a

governmental leadership audit, we went above and beyond our

responsibilities to assist the public party in preparing the necessary

materials.”

Sense of belonging refers to the feeling of being valued and connected to the ongoing

project. This was more frequently observed among private parties. In PPP projects, a

sense of belonging among stakeholders is crucial for the success of the project.

According to an external expert in Case Epsilon, when both parties feel like they are

part of a community working towards a common goal, they are more likely to stay

143

committed to the project for the long term. This highlights the importance of fostering

a collaborative and inclusive environment that promotes a sense of unity and shared

purpose. Furthermore, as noted by the operation manager in Case Gamma, having a

sense of belonging in a PPP project is not just about feeling connected to colleagues

but also about feeling part of something bigger than oneself. This emphasises the need

to communicate the project’s larger purpose and how it can create positive change in

the world. By creating an environment that fosters a sense of belonging and a shared

vision for the project’s success, stakeholders are more likely to remain committed to

the project and work collaboratively towards achieving its goals. Thus, it is essential

for PPP projects to prioritise the creation of a supportive and collaborative work

culture that fosters a sense of belonging among all stakeholders involved.

To sum up, the cores of the visible and potential value outcomes are shown in Table 4-

Potential value may not be thought of highly by some of the stakeholders because of

their own subjectivity on value perception, however it has the potential to transform

into visible value or further the long-term value. Hence, the following proposition is

developed:

Proposition 3. Mid-term value outcomes include visible value

and potential value according to how the beneficiaries experience

the function of the service and the interaction when the service is

exchanged.

144

Table 4-5 The cores of the visible and potential value outcomes

Constructs Contents

Visible value Value outcomes that are of better function experience and less

interaction experience

Risk mitigation The extent risks can be mitigated for different stakeholders

Effective

procedure

The procurement procedure, smooth project financing and

various building permits

Innovative

solutions

The innovative ways solving different problems occurred in the

project process

Competence

enhancement

The phenomenon in which stakeholders experience

improvements in their professional skills

Potential value Value outcomes that are of less function experience and better

interaction experience

Trust

improvement

The phenomenon in which various stakeholders increasingly

trust each other in the VCC process

Solidarity The phenomenon in which there is mutual support within the

PPP project team and every party’s interests, opinions and

objectives are converging

Sense of

belonging

The feeling of being valued, and connected to the current project

4.2 Discussion – Value Outcomes

This chapter aims to answer the first research question “what does value mean to

different stakeholders involved in a PPP project?” Section 4.1 showed the dynamic and

subjective nature of value in the PPP project and how different stakeholders pursue

different value outcomes at different times.

In the course of data analysis, this question generated two more questions: “what is the

relationship between different value outcomes?” and “how to assess the value of a PPP

project?” This discussion makes an effort to answer these two additional questions.

Cross-case analysis indicates the relationship between mid-term and long-term value

145

outcomes. The comparison between the findings and previous studies suggests an

assessment framework of PPP projects in a value-oriented perspective. In addition,

empirical evidence also suggests that such value assessment application in practice is

not enough.

4.2.1 The Relationship between Mid-term and Long-term Value

There are three relationships between mid-term and long-term value outcomes

identified from cross-case analysis. Mid-term value outcomes are the results achieved

in the near term, usually before the operation stage in PPP projects. Long-term value

outcomes, on the other hand, refer to the sustainable results that a PPP project achieves

over the entire lifecycle, even after the transition stage. In the first situation, mid-term

value outcomes and long-term value outcomes sometimes appear to be similar.

Nevertheless, as discussed previously, the defining feature of long-term value is

sustainability. Hence, the secret of transforming such mid-term value outcomes

(mostly, visible value) into long-term outcomes is to try to duplicate and sustain the

realised value.

The second situation would be mid-term value outcomes in conflict with the long-term

ones. The most representative example would be the cost now or cost later question,

and cost later would probably lead to more cost. To maximise mid-term value

outcomes, some project managers are inclined to save the cost as much as possible in

the construction stage. However, such cost saving would possibly incur more costs in

the following operation stages. In this situation, successful project experiences suggest

that the long-term value outcomes should out weigh the mid-term value outcomes.

In the third situation which is also the most common one, mid-term value outcomes

would be conducive to long-term value outcomes. Both visible value and potential

value have the ability to facilitate long-term value outcomes.

146

Figure 4-5 Relationships between mid-term and long-term value and respective

strategies

By identifying the above three types of relationship between the mid-term and long-

term value outcomes, this research can help project stakeholders to better understand

the dynamics of value creation and sustainability in PPP projects. Three respective

strategies (as shown in Figure 4-5) usually adopted by stakeholders, i.e., replication,

compromise or facilitation, are summarised from the cases. Overall, by understanding

the different types of relationships between mid-term and long-term value outcomes in

PPP projects, stakeholders can make more informed decisions and take actions that

support the long-term sustainability of the project and its value to society.

4.2.1.1 Mid-term value outcomes comply with long-term value outcomes

In the cases, there were several respondents reporting that mid-term value outcomes

are the same as long-term ones for themselves. Taking Case Beta as an example, one of

the long-term goals of the private party was to build a sound relationship with the

public party. After the effective and smooth contract negotiation, the public and private

parties achieved a solid relationship. As the government officer said: “we were

satisfied with our partner [the private party], they are professional, active and reliable”.

147

However, as the project manager from the private party said: “there is a good

relationship foundation between us, but the relationship requires maintenance”. A good

relationship has been achieved as a mid-term value does not automatically ensure it

can be sustained in the long term.

In this situation, stakeholders chose to maintain the achieved mid-term value outcomes

for a long-term purpose. In the above example, potential value such as a good

relationship provides the opportunity to become a long-term value outcome. In fact,

most of the visible value realised in the mid term would fit with this situation. This is

reasonable because visible value is perceived by the beneficiaries as useful and as a

direct contributor to the long-term value. For example, one of the most important long-

term value outcomes is to satisfy the end-users’ needs and meet their expectations.

However, during the entire PPP project lifecycle, on many occasions of a long duration

project, such fulfilments of expectations are always required and achieved as mid-term

value. The engineer in Case Gamma said: “The problem is how to meet everyone’s

need in the long run”.

The achievement of mid-term value outcomes often leads practitioners to adopt the

“replication” strategy to sustain these outcomes. Specifically, if stakeholders perceive

that the achieved outcomes align with long-term goals, they tend to identify the

underlying practices that led to such outcomes and replicate them to ensure the desired

outcomes persist over time. In other words, when VCC members achieve visible or

potential value outcomes that are consistent with their goals, they seek to maintain

those mid-term value outcomes by emulating the practices that were instrumental in

their attainment.

The adoption of the replication strategy to sustain mid-term VCC outcomes is driven

by incentives. When stakeholders achieve such outcomes, they are motivated to

continue the behaviours that led to their success, with the expectation of obtaining

further value. The success of this strategy depends on two key factors identified in the

148

case analysis. First, stakeholders must be able to identify the VCC practices that led to

the perceived positive mid-term outcomes. For example, the private party in charge of

Case Alpha identified the value of using advanced sewage treatment techniques and

afforesting the roof of the underground treatment station, which led to the project

exceeding national water quality standards and providing an environmentally friendly

and aesthetically pleasing infrastructure. Similarly, local government in the same case

identified the value of attracting new manufacturing companies to the area through the

affordable reclaimed water provided by the sewage treatment station, which led to job

creation and economic growth. The private party involved in operating a sewage

treatment station for the public party identified the value of increasing sewage

treatment capacity to meet the high demand in the city, which led to initiating Case

Beta as a new PPP project. The local government identified the value of improving

infrastructure and enhancing the quality of life for local residents in the state-level poor

area, which led to partnering with the private party to build the much-needed sewage

treatment infrastructure through the PPP model.

However, there could be several reasons why stakeholders may not be able to identify

the VCC practices that led to the perceived positive mid-term outcomes. One possible

reason is that the benefits of VCC are often diffused and intangible, making it difficult

to pinpoint the exact practices that led to the positive outcomes. For example, while

stakeholders may perceive improved trust and collaboration as a positive outcome, it

may be challenging to identify the specific VCC practices that contributed to this

outcome. Another reason could be a lack of awareness or understanding of the VCC

concept itself. Stakeholders who are not familiar with the VCC approach may not

recognise its contribution to the mid-term outcomes they are experiencing. Finally, it is

possible that stakeholders may not prioritise the identification of VCC practices.

Instead, they may be more focused on the outcomes themselves, such as improved

infrastructure or increased economic growth, without necessarily tracing these

outcomes back to specific VCC practices. While stakeholders may not always be able

149

to identify the specific VCC practices that led to positive outcomes, it is important for

them to recognise the benefits of the approach and continue to foster collaboration and

innovation in future projects.

Second, stakeholders must have a comprehensive understanding of the lifecycle of the

VCC process in PPP projects and be committed to ensuring that the value lasts beyond

the medium term. Thus, to sustain the achieved VCC outcomes in PPP projects,

stakeholders need to possess both the capability to identify the successful practices and

the willingness to maintain the value over the long term. For example, in Case Gamma,

the government and the private party worked as a single team to overcome the

environmental challenges faced during the construction stage, demonstrating their

commitment to ensuring the project’s long-term sustainability. The project has not yet

entered the operation stage, but the stakeholders are already taking steps to co-create

value that will last beyond the medium term. In Case Delta, the private party’s role in

maintaining the road has been essential, as it has ensured that the road remains in good

condition even after years of heavy use. This demonstrates their commitment to

ensuring that the value created by the project extends beyond the medium term. In

Case Epsilon, the private party is responsible for taking all the operational risks and

sharing any excess earnings with the government, which incentivises the private party

to provide better services and ensures the project’s long-term sustainability. The

project also takes full advantage of the hospital’s resources to provide better healthcare

services to the elderly residents in the care home, demonstrating the stakeholders’

commitment to co-creating value that lasts beyond the medium term.

However, in PPP projects, stakeholders may not always have a comprehensive

understanding of the lifecycle of the VCC process or be committed to ensuring that the

value lasts beyond the medium term. There are several reasons for this, such as the

lack of long-term planning, limited communication and collaboration, or misaligned

incentives. In addition, external factors such as changes in government policy or

economic conditions may also impact stakeholders’ commitment to ensuring the value

150

lasts beyond the medium term. These factors can lead to a focus on short-term gains

and neglect of the long-term sustainability of the project. For example, if the private

partner is primarily motivated by short-term profits, they may focus on maximising

their returns during the construction and operation stages of the project without

considering the long-term impact on the community or the sustainability of the project.

Similarly, if the government is primarily concerned with meeting immediate

infrastructure needs, they may prioritise the construction stage over long-term

maintenance and monitoring, which can lead to a loss of value over time. To ensure the

success of the VCC process in PPP projects, it is essential that stakeholders have a

shared vision and commitment to sustainability. They should be willing to invest in

ongoing maintenance and monitoring to ensure the asset’s longevity and the long-term

benefits for all involved parties.

In addition, the mid-term value outcomes that are aligned with long-term ones are

normally taken as indicators assessing project performance (Liu et al., 2016). This is

because such mid-term value outcomes provide a perspective of process in the course

of the PPP project (Yuan et al., 2009). In fact, sustaining mid-term value over the long

run helps to build trust and confidence among stakeholders. When stakeholders see that

the project is delivering consistent and sustainable value over time, they are more

likely to support and invest in the project. This can help to attract additional funding,

improve stakeholder relations, and ultimately contribute to the long term. Thus, this

research involves such mid-term value outcomes in the PPP project value assessment

framework as well, as elaborated in Section 4.2.2.

To sum up, sustaining mid-term value over the long run is crucial for the success of

PPP projects. By focusing on both mid-term and long-term value outcomes, project

stakeholders can create a sustainable and successful PPP project that delivers value to

society over the long run. Stakeholders are encouraged to choose a replication strategy

to sustain the material value for the long run. Such mid-term value outcomes contribute

to the holistic assessment of PPP project value.

151

4.2.1.2 Mid-term value outcomes conflict with long-term value outcomes

According to reports and feedback from participants in Cases Alpha, Gamma, Delta

and Epsilon, there is a conflict between mid-term and long-term value outcomes. Mid-

term outcomes are related to cost and time savings through efficient procedures. This

conflict between mid-term and long-term outcomes was identified as a commonality

among the cases studied. For instance, in Case Alpha, the government wanted the

private party to begin construction before receiving authorisation from the

environmental protection department. The project manager said:

“I couldn’t accede to the demand as the risk was high. Illegal

construction not only would impact the project but our company as

well. All I could do was to assist the public sector to get the permit

as soon as possible and got well-prepared to start construction.”

In Case Epsilon, the private party encountered difficulties when attempting to secure a

loan from a bank. The bank requested additional information about the project and an

endorsement letter from the government. A government officer explained that this

requirement was sensitive because the regulations on PPP projects prohibit the

government from promising to pay back the loan if the private party is unable to do so.

However, after consulting with professionals, an endorsement letter was generated that

included liability exemption. A similar phenomenon was observed in Case Delta as the

operation manager said:

“We invested more money on the good quality cable when [we]

constructed the road and it was worth it because we know that if the

cable has any problems in the next 15 years, we need to pay more to

repair it.”

In Case Alpha, the mid-term value outcome was saving time in construction. However,

this could only be achieved at the expense of high legal risks. Similarly, in Case

152

Epsilon, the mid-term value outcome was secure a loan more quickly and successfully,

even if it meant taking on potential legal risks. In Case Delta, the mid-term value

outcome was saving construction cost, but at the expense of high operational and

maintenance cost in the future. These conflicts between mid-term and long-term value

outcomes are not uncommon, and a singular focus on mid-term efficiency can lead to

criticisms in academia (Morris, 2013). Critics argue that such a focus can neglect

important environmental, social and governance considerations necessary for long-

term sustainability (He et al., 2019). Additionally, prioritising efficiency over long-

term value can result in inadequate investment in maintenance and upkeep, leading to

deteriorating infrastructure and decreased value over time. An overemphasis on

efficiency can also stifle innovation and flexibility, limiting a project’s ability to adapt

to changing circumstances and deliver long-term value (Sanz-Llopis & Ostermann,

2020).

The respondents in the cases chose to compromise mid-term value for sustainable

long-term benefits, and credited the success of the projects to this decision. In PPP

projects, compromising between mid-term and long-term value is crucial to ensure

sustainability and long-term success. Focusing solely on mid-term value outcomes,

such as cost savings or efficiency, can lead to a project design that neglects the long-

term needs of stakeholders. Conversely, prioritising long-term value outcomes, such as

sustainability or social impact, may not generate enough mid-term value to justify the

investment and support required for project success. Striking a balance between mid-

term and long-term value outcomes can produce a sustainable outcome that benefits all

stakeholders, including the public, private partners and the environment. This approach

ensures the project meets current needs without compromising the needs of future

generations, ultimately leading to project success.

However, it is true that some stakeholders may prioritise immediate values over long-

term ones, particularly if they are not involved in the project for a significant period.

To address this issue, it is recommended that PPP projects engage in stakeholder

153

management and communication to ensure all stakeholders understand the importance

of balancing mid-term and long-term value outcomes. This can involve explaining the

potential long-term benefits of the project, as well as engaging with stakeholders to

understand their priorities and concerns (Vuorinen & Martinsuo, 2019).

Stakeholder management and communication is a critical aspect of PPP projects, as it

helps to ensure that all stakeholders are informed and engaged in the project decision-

making process (Van Du et al., 2021). This involves identifying and prioritising

stakeholders based on their level of interest, power and influence in the project, as well

as their potential impact on the project’s success (Xue et al., 2020).

Once stakeholders are identified, it is important to engage with them throughout the

project lifecycle, using a variety of communication channels and strategies, including

meetings, workshops, surveys and social media. This allows stakeholders to provide

feedback and input on project plans and activities, and helps to build trust and

understanding between the public and private partners.

In addition to stakeholder engagement, it is also important for PPP projects to be

transparent and accountable in their decision making and reporting (Ramaswamy,

2011). This can involve publishing regular progress reports, financial statements, and

environmental and social impact assessments, as well as engaging in open dialogue

with stakeholders on key project issues and concerns. By actively involving

stakeholders in the project decision-making process, PPP projects can better align mid-

term and long-term value outcomes with stakeholder interests and values, leading to

greater project success and sustainability.

To sum up, while mid-term value outcomes are important for the success of PPP

projects, they should be considered in the broader context of the project’s long-term

sustainability and value creation. An overemphasis on mid-term gains can lead to a

neglect of important considerations and ultimately undermine the success and value of

the project over time. On the contrary, talking about ideals could hinder project

154

implemeantability. In this situation, compromise between the mid-term and long-term

value outcomes is encouraged.

4.2.1.3 Mid-term value outcomes are conducive to long-term value

outcomes

Typically, the achievement of mid-term value outcomes lays the foundation for the

realisation of long-term value outcomes. As demonstrated in all the cases, experts

concurred that mid-term value outcomes not only have intrinsic value but also facilitate

the creation of other values, including both mid-term and long-term ones. Thus, mid-

term value outcomes can act as a catalyst towards the attainment of long-term value.

On the one hand, it is evident that visible value outcomes are instrumental in achieving

long-term value outcomes in PPP projects. This can be achieved through stakeholder

efforts to improve their competencies and foster innovation. By continuously seeking

to improve and innovate, stakeholders can identify and address potential risks and

opportunities for value creation. One way to do this is by using sensor technology,

which can provide stakeholders with real-time data and insights to facilitate better

decision making, enhance efficiency, and minimise risks. For instance, in Case Beta,

the project manager recognised that traditional technology required periodic emptying

of the water tank to replace wastewater treatment components, leading to increased

costs and time wastage. Consequently, he proposed a new technology that could

replace the components in the water, which was driven by the anticipation of future

operational risks and led to significant lifecycle cost savings.

Visible value outcomes are defined as value outcomes that are highly useful, easily

observable, and provide evidence of success. They can build confidence among project

stakeholders, increase cooperation, improve communication, and promote a shared

commitment to the project’s long-term success. The contract manager in Case Gamma

emphasised the importance of achieving visible success in the mid-term as a means of

155

gaining confidence and enthusiasm for the project’s long-term potential. This can

sustain engagement and commitment over time, and provide momentum and

motivation to the project parties. In addition, visible value outcomes can be a useful

source of feedback for enhancing the project’s long-term performance. They indicate

where the project has been successful and where it has not met expectations. Through

analysis and reflection, stakeholders can identify opportunities for improvement and

adapt their approach to better meet the project’s requirements.

In Case Epsilon, the private party used feedback on the number of elderly individuals

receiving care, satisfaction levels among care recipients and their families, and cost

savings achieved through the PPP arrangement to identify areas for improvement in

elder home care services. This included expanding service offerings, enhancing the

speed and quality of healthcare, and identifying opportunities for cost savings through

efficient resource use and changes to service delivery. One noteworthy improvement

was the public party allocating the medical expense of elderly care home patients in the

hospital to the private party income and allowing patients to use national medical

insurance in the elderly care home. This not only reduced expenses for hospitalised

elderly individuals but also motivated the private party to offer better services while

earning higher profits. The example mentioned here illustrates how visible value

outcomes can also play a vital role in building public trust and support for a project. By

showcasing the positive impact of the project on the elderly and their families, visible

value outcomes can create a sense of confidence and trust among the public, leading to

increased investment in the project and its long-term success.

On the other hand, potential value outcomes can act as a catalyst for achieving visible

value outcomes, thereby contributing to long-term success. Trust is a crucial factor for

successful PPP projects, as it creates an environment of cooperation and collaboration

between public and private sector partners. Improved trust between partners can help

to mitigate risks by fostering a more transparent and accountable relationship, where

risks and challenges are openly discussed and addressed. Respondents in Cases Beta,

156

Gamma and Epsilon all reported the importance of trust in their collaboration. In Case

Gamma, the project faced significant risks related to financing, construction and

operational issues. To mitigate these risks, the partners established a risk-sharing

framework that included provisions for sharing revenue and losses. The partners were

able to establish a high level of trust, which helped them to work together effectively

and resolve issues quickly. As a result, the construction of the undersea tunnel is

expected to be completed on time and within budget, and once it starts operating, it is

expected to relieve traffic pressure, optimise city function, and promote urban

integration. The establishment of trust not only contributes to the project’s success in

the short term but also lays the foundation for a more sustainable and fruitful

partnership in the long term.

The relationship between potential value and visible value is interdependent and

cyclical, with visible value acting as a foundation for potential value creation, which in

turn contributes to the creation of more visible value. The creation of visible value

outcomes can provide feedback that helps to identify areas for potential value creation,

which can then be used to generate more visible value.

The recognition of the dynamic and cyclical relationship between visible value and

potential value highlights the significance of the facilitation strategy in this scenario.

Rather than a simple linear relationship, VCC is an ongoing, reinforcing process in

which each type of value contributes to the other. The participants in the cases studied

demonstrated an understanding of this relationship and effectively used it to maximise

the long-term value of PPP projects. For instance, in Case Epsilon, the completion of

the construction phase of the new hospital and elder care home represents a visible

value outcome. This outcome can provide feedback to identify potential areas for

improvement in the operations of the hospital and elder care home, such as more

efficient patient flow, better management of medical equipment, improved medical

treatment processes, or enhanced staff training. These potential value opportunities can

then be harnessed to create more visible value, such as increased patient satisfaction,

157

improved health outcomes, or higher staff productivity. Another example can be seen

in Case Alpha where stakeholders focused on creating visible value through improved

communication channels that can also lead to potential value creation. The public and

private parties established regular meetings and progress reports during the process.

Thus they can identify potential areas for improvement in the project. These areas

included streamlining processes, reducing costs, and enhancing the quality of service

delivery. By addressing these areas, the parties created more visible value, such as

improved project outcomes and higher levels of stakeholder satisfaction.

Based on the data analysed, the following key points can be identified for stakeholders

to implement a facilitation strategy in PPP projects as a way to co-create value:

Establish clear communication channels: It is essential to establish clear and open

channels of communication between the public and private parties involved in the

project. This can include regular meetings or progress reports, as well as the use of

technology to facilitate remote communication.

Identify and address potential conflicts: Early identification and resolution of

potential conflicts or disagreements between the public and private parties can

prevent them from becoming significant issues later on. This could involve the use

of a neutral third-party mediator or the establishment of a dispute resolution

process that all parties agree to follow.

Develop a risk-sharing framework: A risk-sharing framework that outlines how the

public and private parties will share risks and rewards throughout the project is

critical. This can include provisions for sharing revenue and losses, as well as

contingency plans in case of unexpected events or changes in the project scope.

Provide training and support: Providing training and support to local communities

and stakeholders can help them understand and participate in the project. This can

include workshops or training sessions on project management or technical skills,

as well as community engagement activities such as town hall meetings or public

158

forums.

Use feedback to identify areas for improvement: Feedback from stakeholders can

be valuable in identifying areas for potential value creation. Surveys or focus

groups can gather feedback, and data analytics can identify trends and patterns in

stakeholder experiences. The feedback can then be used to inform process

improvements, staff training programs, or other initiatives aimed at improving the

quality of service delivery.

By implementing these key points, stakeholders can facilitate the co-creation of value in PPP

projects, leading to improved project outcomes, higher levels of stakeholder

satisfaction, and increased long-term value.

The VCC practices supporting the transitions from mid-term value outcomes to long- term ones

are illustrated in the next chapter. However, based on the above identification of mid-

term and long-term value outcomes and discussion on their relationships, the following

proposition is developed:

Proposition 4. The mid-term value outcomes could eventually

transform into the long-term value outcomes in the form of

replication, compromise and facilitation through different

VCC practices.

4.2.2 The Assessment of Value in PPP Projects

According to Martinsuo (2020), the term “value” has two distinct meanings. The first refers to a

belief or perception of what is important or valuable, while the second meaning refers

to the amount of worth or value assigned to something. In the context of PPP projects,

the categories of value that are pursued and obtained by stakeholders over the medium

and long term are determined by their beliefs and perceptions of what is valuable.

However, this focus on the categories of value only represents a portion of

159

the overall assessment of value, as it does not address the amount of value created.

Therefore, it is necessary to consider both the categories of value and the amount of

value created when evaluating PPP projects.

Chapter 2 established that value is a quotient that reflects the discrepancy between

benefits and costs (Lepak et al., 2007), or the difference between expectations and

experiences (Bowman & Ambrosini, 2000). In light of the subjectivity inherent in the

concept of value discussed earlier, the latter definition of value, which focuses on the

contrast between expectations and experiences, is more suitable. This perspective is

supported by empirical evidence, for example, a government officer from Case Gamma

said:

“If you ask me about how much to pay is the most cost efficient, I

may not have the exact answer. However, I do have an expectation

of the cost and the quality. Such expectation comes from previous

experience of EPC project.”

Merely identifying the categories of value achieved is insufficient to evaluate the

overall value of a PPP project. It is equally important to assess the amount of value that

has been created. This notion is reinforced by the statement of a government official in

Case Beta who emphasised the importance of considering all the efforts, such as

financial, temporal and human resources invested, when assessing the final value of a

PPP project. The official also noted that while the benefits of the project should be

taken into account, the most crucial factor to consider is its social impact.

The traditional project assessment approach, known as the “iron triangle”, has been

heavily criticised in project research for its overemphasis on cost management (Morris,

2013). In contrast, VM also emphasises cost savings, but only if all necessary functions

are met (Thiry, 2013). This means that cost management should not be blamed if all

stakeholders’ expectations are fulfilled. This viewpoint is supported by a government

officer from Case Epsilon, who stated that the private party’s cost is not the primary

160

concern, as long as they [the private party] meet the performance indicators without

opportunism. The government is willing to assist the private party in saving costs

through optimising performance indicators. This highlights the importance of

considering various values and sacrifices in achieving them when assessing the project

value. In other words, scholarly criticism is not directed towards cost management

itself, but towards the lack of stakeholder consideration (subjectivity) and lifecycle

perspective (dynamics). Consequently, this research defines value as the degree to

which a PPP project’s outcome satisfies all stakeholders’ expectations, given the

resources invested throughout the project’s lifecycle.

Figure 4-6 Project value assessment framework

This definition includes the subjective and dynamic nature of value considering all

stakeholders’ value perceptions during the whole lifecycle while attending to the cost

incurred by the benefits. In order to assess the value of a PPP project according to this

definition, a framework (as shown in Figure 4-6) is proposed to take into account the

expectations of all stakeholders throughout the project’s lifecycle and balance the

benefits against the costs.

According to Bowman and Ambrosini (2000), value is determined by the quotient of

expectations and experiences. In the context of PPP projects, experiences are

determined by stakeholders’ needs and temporal duration. Stakeholders’ needs reflect

the subjective nature of value, and it is essential to identify all the stakeholders

161

involved in the PPP project, including the public sector, private sector, and any other

stakeholders, such as local communities, NGOs and other interest groups. Once

identified, a stakeholder analysis should be conducted to determine the expectations

and values of each stakeholder group, aiding in the understanding of what each group

hopes to achieve from the PPP project.

Temporal duration refers to the duration for which the obtained value can be sustained.

As PPP projects are typically long-term projects, it is crucial to identify the various

phases of the PPP project, from planning to implementation and operation.

Stakeholders’ perceptions may vary throughout these periods, making it crucial to

consider how to sustain the value during the entire lifecycle.

On the other hand, the concept of expectation in the context of PPP projects is

influenced by the resources invested and past experiences. Resource investment refers

to the tangible and intangible inputs that stakeholders put into the project, which affect

their expectations of the outcomes. The higher the investment, the greater the expected

return. Similarly, the higher the expected benefits, the more stakeholders are willing to

invest in the project. Past experience also plays a crucial role in shaping expectations.

If a stakeholder has achieved similar benefits with the same level of investment in the

past, they are likely to have the same expectations for future value creation.

In summary, the value of a PPP project should be assessed through weighing

experiences and expectations. It is necessary to identify all stakeholders involved in the

project, and to identify the expectations and values of each stakeholder group, which

will help to understand what each group hopes to achieve from the PPP project. The

resources invested, both tangible and intangible, should also be considered as they

determine the expectations of stakeholders. Similarly, previous experiences with the

same investment will influence stakeholder expectations for the next value creation.

Furthermore, temporal duration should be taken into account, as the sustained value of

a PPP project is critical over its lifecycle. This structured approach allows for the

162

consideration of all stakeholders’ expectations and experiences during the various

phases of the PPP project, from planning to implementation and operation, while

balancing the benefits against the costs. However, what is worth mentioning is that

there is no one-to-one correspondence between cost and benefits, so it is important to

assess the value in a holistic way.

The assessment framework of value proposed in this section is conceptual in nature. In

this research, the framework was used to assess stakeholders’ opinions on their projects

based on their subjective rating. During the study, preliminary research was conducted

to develop a conceptual value assessment index. How to develop a practical

assessment index is also discussed in the future research section in Chapter 6. For this

conceptual value assessment framework, the proposition is:

Proposition 5. Project value should be assessed from the

relationship between the satisfaction of stakeholders’

expectation in terms of mid-term and long-term value outcomes

and the resources invested for the outcomes.

4.2.3 Neglect of Value Thinking

An important finding to emerge from the analysis is that both public and private parties

are not paying enough attention to project value. In other words, the primary

stakeholders more or less lack a systematic value thinking. This claim can be shown in

the data from two aspects: the subjective aspect and the temporal aspect.

The subjective nature of project value requires the consideration of the entire group of

project stakeholders. It is pivotal for the project manager to address multiple

perceptions of stakeholders in a precise and inclusive way. Unfortunately, some

opposing situations were observed in empirical cases. Taking Case Epsilon as an

example to illustrate how this happens, two findings regarding the lack of subjective

163

consideration were identified. The first one is that both parties’ value perception is not

well documented in the meeting records. Case Epsilon undertook a long period of

negotiating on the contract terms and many meetings were organised for both of the

parties to reach an alignment. A review of seven meeting records showed there were

only vague notes of both parties’ value appeals. For example, the second record states:

“The government requires high quality of the hospital service”. This is very vague for

the private party to understand. Second, the project consultant from the third party

revealed that the government party did not take full account of the private party’s

interest and insisted on asking for a large amount of security deposit. “This was

unnecessary, and I wouldn’t suggest the government do so now,” said the project

consultant, “however, back then, we were not very confident about the private party’s

financial capability. This agreement took a long time to be reached and I need to admit

that the private party sacrificed a lot. Most importantly, this almost caused the failure

of the second negotiation.” The above evidence highlights the importance of

documenting and considering the diverse value perceptions of project stakeholders to

ensure successful project outcomes. It also underscores the potential negative

consequences when such considerations are lacking.

For a temporal aspect, data suggests that long-term value has not been fully considered

as a need. The operation manager from Case Alpha stated: “Previously the sewage

treatment plant was operated in the form of BOT, and later on we expanded the plant

and constructed the ancillary pipe network in the form of a PPP. However, I didn’t feel

much difference between the two modes. I need to admit I still put a strong focus on

short-term benefits in terms of time schedule and cost saving.” The government officer

in Case Alpha also felt that they did not put enough emphasis on the long-term value

and he explained:

“The newly constructed pipe network did not have sufficient

coverage area, which limited the scale of local investment that could

164

be attracted. As a result, we had to initiate a new project to expand

the pipe network. Fortunately, we were better prepared this time

around, and the two networks were able to be seamlessly connected.”

It is worth noting that there were stakeholder challenges to the value of interaction

experience (which is the potential value of mid-term value outcomes) in the interviews.

For example, a project manager from Case Alpha said: “we did have lots of

interactions with the public party and the experience was good. However, compared

with the interaction experience, I preferred they can offer us more payment.” The same

viewpoint was found in the interview with the government officer from Case Delta:

“Compared to our previous relationship with contractors in EPC

projects, we’ve put ourselves in a lower position within the PPP

relationship. We’ve provided the private party with all possible

conveniences to support their process, but I don’t think these

reciprocal interactions will be appreciated as much as a tax

reduction. In other words, they’re still more focused on cost than on

the attitude and support we provide.”

On the contrary, there were interviewees who acknowledged the importance of

potential value. The project manager from Case Beta attached much importance to

interaction experience with the government. And because he received the benefits from

good interaction with the government, he would like to maintain such close and

efficient interaction. Such evidence shows that there is not a consensus on the

importance of the interaction experience.

Despite the neglect of systematic value thinking observed in the cases, key VCC

practices were also identified from the data showing that all the five cases are

relatively successful in terms of VCC. This is also supported by the fact that all the

interviewees are satisfied with the project (progress). There are six key VCC practices

identified from the data, discussed further in the next chapter.

165

4.3 Chapter Summary

This chapter described the findings reported in the data regarding value outcomes in a

PPP project. It answered the first research question “what does value mean to different

stakeholders involved in a PPP project?” by revealing the dynamic and subjective

nature of value in the PPP project. The dynamic nature of value in a PPP project is

largely because it can change over time and be influenced by various factors such as

changes in political priorities, economic conditions, social expectations and

environmental concerns. As a result, stakeholders may have different views and

expectations of what constitutes value, and these views may evolve throughout the

project’s lifecycle. Moreover, the subjective nature of value in a PPP project implies

that different stakeholders may assign different weights or importance to different

aspects of value. For instance, while the private sector may prioritise financial returns

and profitability, the public sector may prioritise service quality, affordability and

accessibility. Therefore, the identification and assessment of value in a PPP project

requires a comprehensive and inclusive approach that considers the perspectives and

priorities of all stakeholders. Understanding the dynamic and subjective nature of value

in a PPP project is crucial for achieving project success and maximising the benefits

for all stakeholders involved.

Two additional research questions emerged from the analysis: “what is the relationship

between different value outcomes?” and “how to assess the value of a PPP project?”

By demonstrating the three types of relationship between mid-term value outcomes

and long-term value outcomes, corresponding strategies to transform mid-term value

outcomes to long-term ones are introduced. Replication strategy refers to that process

where stakeholders are encouraged to duplicate what has been done right when the

mid-term value outcomes comply with long-term value outcomes. Compromise

strategy refers to the contrasting situation when the mid-term value outcomes conflict

with long-term value outcomes. In this situation, it is important to make a trade-off

166

between the two and find the balance that can facilitate the feasibility of the project

while sustaining long-term benefits in the future. Facilitation strategy refers to most

situations when mid-term value outcomes would lead to long-term value outcomes. In

this situation the stakeholders are encouraged to conduct in-depth analysis and adopt

proper VCC practices.

Based on the detailed discussion of project value and its constituting elements,

considering the benefits as well as the cost, this research proposed a value assessment

approach for PPP projects that has important theoretical and practical implications.

Although the data reported a general neglect of value thinking among PPP project

stakeholders, plenty of VCC activities were identified in the cases that can reveal how

different stakeholders co-create value with and for each other.

167

Chapter 5 Findings and Discussion – Value Co-creation

Process and Contextual Antecedents

This chapter addresses two key research questions:

1. How is project value co-created during the project lifecycle?

2. What contextual factors enable and facilitate project VCC activities and how?

Drawing on the data analysed, several VCC activities are identified and grouped into

two aggregated dimensions: resource management practices and relationship

management practices. Each of these dimensions comprises three different approaches

(referred to as second-order themes) that encompass various relevant VCC activities

(referred to as first-order codes). This chapter also examines the contextual factors that

enable and facilitate project VCC activities. Two second-order themes of contextual

antecedents are identified: institutional motivators and organisational enablers.

Institutional motivators consist of three first-order codes that motivate stakeholders to

participate in VCC practices and engage in collaborative and interactive processes:

regulative, normative, and cognitive factors. Organisational enablers, on the other hand,

consist of three first-order codes that provide the support and initial momentum

necessary for the application of VCC practices: relationship foundation,

complementary capabilities, and transparent and fair environment. Overall, this chapter

provides valuable insights into the practices and contextual factors that facilitate

successful project VCC in PPP projects.

Section 5.1 presents the VCC practices observed in the study, categorised into first-

order codes, second-order codes, and aggregated dimensions, supported by ample

evidence. The first-order codes represent specific VCC activities observed in the cases

and contextual factors impacting them. Second-order codes, referred to as approaches,

aggregate similar activities and factors. The aggregated dimensions of VCC practice

are

summarised

resource

management

practices

and

relationship

management

168

practices, which are consistent with the literature review. The aggregated dimensions

of contextual factors are institutional motivators and organisational enablers, with the

former identified through the literature review and the latter emerging from the data

analysis. Section 5.2 discusses the results of the cross-case analysis. Section 5.2.1

illustrates the interplay between second-order codes and explains how the two

practices influence each other throughout the VCC process. Sections 5.2.2 and 5.2.3

take a further step to discuss the implications of the VCC process on mid-term and

long-term value outcomes, respectively. Section 5.2.4 discusses the implications of

contextual factors on VCC practices. Finally, Section 5.3 provides a comprehensive

summary of the chapter’s findings.

5.1 Findings – Value Co-creation Process and Contextual Antecedents

5.1.1 Resource Management Practices

Following the analysis of empirical data on resource management practices in VCC,

three second-order codes have emerged: the dialogue approach, the development

approach, and the deployment approach. These codes are comprised of several first-

order codes, which represent the observed activities of VCC in resource management

across the five cases studied (see Figure 5-1).

5.1.1.1 Dialogue approach

This approach pertains to the ways in which resources are distributed among various

stakeholders who acquire and assimilate them as sources of project value creation. The

dialogue approach implies a sense of interaction in which all involved stakeholders

have the willingness and ability to collaborate (Prahalad & Ramaswamy, 2004). From

the analysed data, four first-order codes were identified: value framing, information

sharing, invited visits, and proactive negotiations.

169

Figure 5-1 Data structure of resource management practices

Value framing. This relates to the activity that stakeholders explicate their value

perceptions and concerns to others while trying to understand those of others. This

activity happens mostly at the front-end which is a very important phase of PPP

170

projects (Burger et al., 2019; Zerjav et al., 2021). For example, a government officer

from Case Epsilon stated:

“During the market testing phase, we made sure to communicate our

expectations clearly. This not only helped us weed out potential

private parties that weren’t a good fit, but also allowed us to reflect

on whether our requirements were realistic and feasible.”

Another statement from the operation manager from Case Beta also reflects what value

framing is:

“We benefited from no preconceived assumptions – plenty of

communication was then initiated no matter how unnecessary it

seemed to be. This resulted in a comprehensive understanding

between the government and us in terms of what were the objectives

and requirements and what were the most important ones.”

It should be noted that the value framing process evolves over the lifecycle of the PPP

project, particularly during changes and renegotiations, and is initiated every new

round of negotiation.

Knowledge sharing. This relates to the activity where stakeholders communicate with

each other regarding professional knowledge, implicit information and so on. A project

manager from Case Alpha explained:

“During the negotiation process, our primary focus was on

educating the government about the potential operational risks and

the value of our technology. We believed that this would enable them

to make informed decisions regarding the selection of advanced,

albeit more expensive, technology that would ensure operational

safety and efficiency.”

171

Passive implicit information sharing also plays an important role in facilitating value

creation, as demonstrated by the example of the project manager from Case Beta. This

approach involves stakeholders sharing knowledge and information without being

prompted or explicitly requested to do so. The project manager in Case Beta stated:

“I was working closely with the government on this project,

spending three days a week in their office. One day, I overheard a

conversation about an electricity arrangement in our project area,

and I realised that we could reschedule our construction stage

accordingly to avoid any negative impact. It turned out that the

government didn’t realise the importance of this information to us,

and we wouldn’t have known about it if I hadn’t been present in

their office.”

In the realm of PPP project settings, the practice of knowledge sharing takes on

significant importance (Eriksson et al., 2017). Stakeholders actively engage in the

exchange of professional knowledge and implicit information. This sharing of insights,

as demonstrated by project managers in Cases Alpha and Beta, is instrumental in

facilitating value creation and exemplifies the dynamic learning environment nurtured

by co-creation within such project settings.

Invited visits. This relates to private parties inviting public partners to visit their

previous project cases to demonstrate their capabilities. While this activity was only

observed in Case Gamma, it represents a good practice. In this case, the government

planned to construct an undersea tunnel but was struggling to determine which

technology to use due to high costs and immature technology. During the market test

phase, one of the potential private party bidders invited the public party to visit their

successful undersea project in south China, where they explained how the technology

of an immersed tube would be the best choice. This visit helped the public party decide

the construction scheme, as expressed by a government representative:

172

“Visiting the private party’s previous project site, an immersed tube

tunnel, was a valuable learning experience for us. It greatly assisted

us in making an informed decision and ultimately selecting this

approach for our project.”

It is important to note that while this activity was observed in only one case, it

highlights the potential benefits of knowledge sharing through site visits in the PPP

context.

Proactive negotiation. This involves actively seeking mutually beneficial agreements

and compromises with stakeholders to enhance the value creation process. This activity

signifies a project environment characterised by equality, wherein each party involved

holds an equal and equitable position during negotiations. Proactive negotiation was

observed in all cases and encouraged by the governments. The government officer

from Case Epsilon explained that proactive negotiation was necessary as it created

innovative solutions, stating:

“We had a tough negotiation with the private party, and conflicts

happened, but their attitude showed that they really wanted to make

the project a success. If they didn’t care about the details and agreed

with all the terms, it would be worrying. How can we expect them to

be responsible for us if they are not responsible for themselves?”

In another example from Case Epsilon, the private party wanted franchise rights for

both the hospital and the elder care home, but conferring franchise rights on the

hospital was prohibited by local regulations. The government managed to use another

regulation and transferred a reasonable portion of the hospital’s profit to the private

party, leading to an innovative solution.

173

5.1.1.2 Development approach

This section discusses the bundling of resources as a means to develop capabilities

among stakeholders for reciprocal value creation, which is central to the service-

dominant logic perspective. As emphasised in service-dominant logic, resources can be

divided into operant resources and operand resources (Vargo & Lusch, 2018). Operand

resources could produce an effect when an operation or an act is performed on them,

while operant resources are the ones that can perform the operation or act on operand

resources (Constantin & Lusch, 1994). In other words, operand resources require an

operation or act to produce value, while operant resources can produce value directly

(Ballantyne & Varey, 2016). This demonstrates the idea emphasised by Vargo and

Lusch (2018, p. 2) regarding operant resources and operand resources: resources are

not, they become. Thus, operant resources can also produce value through producing

other resources, highlighting the importance of bundling resources for value creation.

This approach is reflected in activities such as joint decision making, joint problem

solving, joint risk management and joint performance management, which facilitate the

bundling of resources and the development of capabilities among stakeholders. The

development approach emphasises the collaborative nature of value creation, where

resources are bundled together to create reciprocal value.

Joint decision making. This refers to the activity where the main stakeholders are

engaged in making important decisions related to the project. Decisions are the result

of the conscious and irrevocable process of resource allocation aiming at achieving a

particular goal (Skinner, 1999) where information is a crucial input (Eweje et al., 2012).

Project stakeholders influence the project through their decisions, first in the front-end

by determining the strategic value of the target infrastructure (Williams & Samset,

2010), and second in the operational routines by determining the efficiency and

effectiveness. Joint decision making on important topics enables various stakeholders

contribute

their

information

and

knowledge

the

decision

process.

174

importantly, their value appeals are the most essential resources that are required in

this process, as they determine the goal. The project manager in Case Epsilon said “we

were involved in the decision-making process along the entire lifecycle from the

project front-end to the operation stage. We highly value the government's trust and

appreciate their recognition of our contributions to good decision-making” which

highlights both parties’ contributions to the joint decision-making process.

The joint decision-making process leads to the improvement of decision quality under

conditions of resource scarcity, such as time pressure and information asymmetry. For

instance, a government officer from Case Beta stated that their confidence in decision

making was boosted due to the involvement of the private party and the consultant

company. Although important decisions still had to be discussed in the government

meeting, the time period for decision making was reduced. Similarly, the project

manager from Case Delta reported that their decision quality was greatly improved

with the government’s support.

Joint problem solving. This refers to the activity that involves main stakeholders

collaborating to resolve conflicts or challenges in a reciprocal manner (Mohr &

Spekman, 1994). The data reflects a sense of close working relationships among

stakeholders, including sharing information promptly when unexpected situations arise,

providing suggestions instead of blaming or punishing when expectations are not met,

and sharing information about problems and issues instead of hiding them. Case

Gamma specifically adopted an approach of a panel of experts to assist with joint

problem solving. Both parties hired a panel of 38 experts from the fields of technology,

management, policy, finance and law. Every time a problem arose, both parties would

organise a meeting with the panel and listen to their suggestions. The operation

manager in Case Gamma said “The government sometimes didn’t trust us, but they

trusted the experts. So, this approach worked well in our project”. It should be noted

that this activity not only requires all stakeholders’ reciprocal interaction and resource

175

integration but also requires a clear and proper identification of the problems (Aarikka-

Stenroos & Jaakkola, 2012). Otherwise, it may result in a waste of time and human

resources if every problem is solved jointly, as noted by the project manager in Case

Alpha who said “We were facing tons of issues every day back then”.

The joint problem-solving activity enhances the development of various capabilities,

such as the ability to empathise, understand different perspectives, and reconcile

differences. The government officer in Case Beta acknowledged the importance of

understanding the concerns, challenges and requirements of the private party, which

allowed them to collaborate as co-solvers rather than gatekeepers. Additionally, joint

problem solving enhances the capacity of stakeholders to confront uncertainty and

manage rapid changes effectively. Moreover, the performance manager from the

consultant company in Case Delta highlighted an instance where both parties were

required to respond to a sudden request from the Ministry of Finance. In this case, both

parties collaborated and worked swiftly to provide the necessary information, resulting

in a successful outcome. This example illustrates how collaboration enabled quick

responses to unexpected requests, leading to successful outcomes.

Joint risk management. This refers to the collaborative efforts of the main stakeholders

in dealing with unforeseen and unquantifiable risks (Rahman & Kumaraswamy, 2004).

This activity involves sharing risk-related contractual arrangements, particularly when

there is uncertainty about the risks (Lo et al., 2006). It also involves adopting relational

contracting strategies to mitigate risks, as highlighted by Rahman and Kumaraswamy

(2002). For example, a project consultant in Case Gamma said:

“Both parties showed enough team spirit to reach a reasonable

contractual risk allocation despite the identification of many risks in

the beginning. As a result, when the change of use right of the sea

area occurred, the private party received compensation for

redesigning the implementation scheme from the government

176

conveniently, since the political risk was allocated to

the government.”

Relational contracting was also used in Case Delta, where the government officer

noted that they practised joint risk management with the private party instead of

transferring all risks to them. This approach benefited both parties, as the private party

was willing to raise concerns and difficulties, thus avoiding many potential problems.

"They had confidence that we would support them rather than leaving them to tackle

issues on their own," the government officer explained.

As such, the capabilities developed from joint risk management encompass a wide

range of skills. This collaborative approach encourages stakeholders to adopt a holistic

perspective when assessing risks, going beyond the traditional project-related risks

identified in risk registers to project delivery to extend to factors such as political and

environmental elements. This capability enables them to gain a more comprehensive

understanding of the potential challenges they may face and how to effectively address

them.

Moreover, joint risk management instills a proactive approach to risk monitoring and

response. Stakeholders become adept at continuously monitoring risks and adjusting

their strategies promptly to minimise potential negative impacts. This proactive stance

not only ensures that risks are managed effectively but also reduces the likelihood of

costly disruptions or project failures. In essence, joint risk management equips

stakeholders with a set of valuable skills that contribute to successful project outcomes

and long-term collaboration.

Joint performance management. This refers to the activity in which the main

stakeholders engage in performance assessment, which serves as the basis for payment

from the public to the private party. This process involves joint performance criteria

determination and joint performance appraisal. For example, in Case Epsilon, the

government and private party jointly consulted external professionals for the

177

determination of performance criteria. Additionally, the private party hired a consultant

to compile indicators for performance assessment. The performance evaluation process

in Case Epsilon involved an impartial third party that invited both parties to the site for

inspection and evaluation, within six main categories. The third party acted as the main

evaluator, while the public party shared their suggestions and opinions, and the private

party explained the challenges they faced and the efforts they invested. This joint

performance appraisal provided an opportunity for both parties to understand each

other’s expectations and difficulties and improve the quality of their relationship.

Importantly, all parties agreed on the evaluation results.

Joint performance management can help develop a range of capabilities for both public

and private parties involved in infrastructure projects. First, it can improve

communication and collaboration skills, as both parties work together to establish

performance criteria and appraise each other’s performance. Through this process, they

gain a better understanding of each other’s expectations and goals, which can help

them align their efforts towards achieving project success. Second, it enhances

negotiation and conflict resolution skills through collaborative performance assessment

and criteria determination, which often require negotiations between public and private

parties. This process not only refines their negotiation abilities but also equips them

with the capacity to effectively resolve conflicts, thereby promoting improved

cooperation and collaboration. Finally, joint performance management can also help

develop leadership and decision-making skills. The process involves making informed

decisions based on performance data, which requires both parties to analyse

information, consider various options, and make decisions in a timely and effective

manner. This can help build confidence and improve decision-making capabilities for

both parties, which can be valuable in future projects.

Joint working activities within the development approach represent a collaborative

effort among primary stakeholders with aligned goals. This collaboration fosters

178

teamwork, mutual support and a willingness to contribute resources, including finances,

human resources and technical expertise, to achieve desired project outcomes.

The development of capabilities from these joint working activities can be viewed

from two perspectives: the resources themselves and the relevant capabilities that are

derived from the activities. The joint working activities help to develop the resources

themselves by combining the public and private parties’ resources to create a more

significant pool of resources. This pool of resources is then leveraged to develop new

capabilities, such as new technology adoption, expertise or knowledge, that can be

used to improve the project’s outcomes. These joint working activities also develop

relevant capabilities that are essential for successful project implementation. For

example, joint problem-solving activities can develop capabilities such as the ability to

stand in others’ shoes, make sense of other perspectives, and reconcile differences.

Joint risk management activities can develop capabilities such as the ability to confront

uncertainty and handle rapid changes. Joint performance management activities can

develop capabilities such as the ability to assess performance criteria objectively and

improve relationship quality between the public and private parties.

5.1.1.3 Deployment approach

This relates to the configurations of shared resources and developed capabilities to

achieve efficient and effective exchange and utilisation of service. As stated before, in

service-dominant logic literature, the term service (singular) is conceptualised as

applied resources and capabilities which is the foundation of exchange for value

creation (Vargo & Lusch, 2007a). In a PPP context, there are plenty of service

exchanges between the public party and the private party during the VCC process. The

service exchanges between the public and private parties are not limited to a specific

service being exchanged for another specific service. Rather, the services are provided

through

service pool,

which

available

both

parties

and

other secondary

179

stakeholders. Thus, the deployment of these resources and capabilities is pivotal to the

value creation of the entire project lifecycle. The deployment of these resources and

capabilities involves three first-order codes identified in the data: resource mobilisation,

resource integration, and commitment coordination. These activities demonstrate how

the deployment of resources and capabilities can create value in PPP projects.

Resource mobilisation. In the context of PPPs, resource mobilisation involves the

process of gathering and leveraging resources from various stakeholders to enhance the

value creation process. The process of resource mobilisation requires collaboration and

communication among the primary stakeholders to understand the current situation and

the resources required to achieve the project objectives. For instance, in Case Beta,

when upgrading the water quality criteria was required to comply with the new

environmental regulations, the public and private parties, along with the consultant

company, organised a meeting to discuss the necessary resources and contributions

from each party. This resource mobilisation process facilitated a shared understanding

of the situation and provided a common platform for resource integration and

commitment coordination. Resource mobilisation can lead to the identification of new

resources and capabilities that can enhance the project’s value creation and lead to

better outcomes.

Another example of resource mobilisation in PPP projects is the identification of

necessary funding sources. In Case Delta, the public party identified that they did not

have enough funding to complete the project within the desired timeframe. The private

party, who had experience in securing financing, assisted in identifying potential

funding sources and helped negotiate favourable terms with lenders. This resource

mobilisation activity helped ensure that the project was completed on time and within

budget. Resource mobilisation is a key activity in the deployment approach that helps

identify, acquire and allocate the resources required to achieve the project objectives.

By involving all the primary stakeholders in the process of resource mobilisation, the

180

PPP project can leverage the collective knowledge, expertise and resources of all

stakeholders, leading to improved outcomes and value creation.

Resource integration. This activity involves combining resources and capabilities to

achieve collaborative value creation. The management literature emphasises the

importance of resource integration as resources are scarce and a source of competitive

advantage in a dynamic environment (Laud et al., 2015). In the VCC process of PPP

projects, integration becomes necessary as no single party can accomplish the huge

infrastructure project alone. First, resource matching is essential to ensure that the

resources from all stakeholders are compatible and complementary. In cases where the

resources are too different or the same, they become difficult or unnecessary to

integrate. For example, in Case Alpha, the design company and the construction

company had conflicting opinions that made integration challenging. It is important to

note that when all stakeholders have the same resources, resource integration may not

be necessary. However, this highlights the importance of the resource mobilisation

activity, which aims to identify the required resources and prevent duplication of

efforts. Thus, while resource integration is crucial in achieving collaborative value

creation, it is equally important to have a clear understanding of the required resources

and prevent duplication through effective resource mobilisation.

Second, it is important to integrate resources so they can complement each other and

generate synergistic effects. The ultimate goal is to create a synergistic effect, where

the combination of resources generates a value greater than the sum of its parts. This is

commonly referred to as the “the whole is more than the sum of its parts” result. For

instance, in Case Gamma, the private party and the local government combined their

resources to resolve the significant delay on land expropriation. Both parties

contributed their resources to achieve the objective, and this resulted in successful

resource integration. The project consultant introduced the situation:

“We faced significant delays due to land expropriation issues in two

181

areas. In one area, the stakeholders demanded more compensation,

which our private party decided to pay in full. In the other area, the

land was owned by the army and not under the authority of the local

government. However, the local government leadership actively

communicated with the army leadership to secure the land use right.”

Overall, effective resource integration requires proper resource matching and a

collaborative effort by all stakeholders to leverage their resources and capabilities to

achieve project objectives. However, it is important to note that not all resources need

to be integrated. In situations where resources from all stakeholders are similar

integration may not be necessary. In such cases, the focus should be on resource

mobilisation to ensure that all necessary resources are identified and made available for

the project. Through successful resource integration, PPP projects can realise mutual

benefits and achieve more significant value creation.

Commitment coordination. This relates to the activity involving aligning commitments

and efforts of different stakeholders to achieve synergetic value creation. This activity

has a significant emphasis on timing, as it requires timely coordination to boost

efficiency and reduce redundancy during the VCC process. Effective commitment

coordination can lead to successful outcomes, as evidenced in Case Gamma, where

stakeholders worked together to fight against COVID-19. The contract manager noted

that “COVID-19 influenced the world in a significant way, and our construction

progress was hugely threatened. However, we managed to coordinate very well by

every stakeholder trying to do what they can.” This coordination resulted in no COVID

infections among the over 3,000 workers on the construction site.

Another example from Case Gamma demonstrates long-term commitment

coordination. The project initiated an operation team at the beginning of the project,

which participated in the construction design by providing operational requirements.

The operation manager stated:

182

“We wanted to make sure that we were fully prepared for the

operational phase, so we took the initiative to visit three undersea

tunnels and many successful municipal roads. By doing so, we were

able to learn from their experiences and incorporate operational

needs into the construction process in an organic way.”

The team then integrated operational needs organically into the construction, ensuring

long-term commitment coordination. Overall, commitment coordination is a critical

activity that involves aligning the efforts and commitments of various stakeholders to

achieve synergistic value creation. This process places significant emphasis on timing

to enhance efficiency and reduce redundancy during value co-creation..

To sum up Section 5.1, a proposition is developed:

Proposition 6. Resource management practices, such as the

resource dialogue approach, resource development approach

and resource deployment approach, are crucial to the success of

the VCC process in PPP projects. The dialogue approach

involves fostering a shared understanding among stakeholders to

identify resources. The development approach centres on

bundling and procuring resources, while the deployment

approach emphasises the transfer of knowledge into capabilities

and the coordination of these capabilities. Together, these

approaches form a critical foundation for effective resource

management and collaboration among stakeholders in PPP

projects.

The findings echo previous studies that suggested the timing (Zahra & George, 2002)

and the manner (Sirmon et al., 2007) of resource deployment play important roles in

value creation. In summary, the deployment of these resources and capabilities

183

involves three first-order codes identified in the data: resource mobilisation, resource

184

integration, and commitment coordination. Resource mobilisation refers to the process

of identifying and acquiring necessary resources from both parties and secondary

stakeholders. Resource integration involves combining the resources and capabilities

of both parties and secondary stakeholders to create value in the project. Finally,

commitment coordination involves aligning the commitments and goals of all

stakeholders to ensure a successful outcome. These activities demonstrate how the

deployment of resources and capabilities can create value in PPP projects.

5.1.2 Relationship Management Practices

In project management research, it is widely acknowledged that establishing good

stakeholder relationships is crucial for the successful delivery of projects (Chang et al.,

2013). In PPP projects, the involvement of heterogeneous stakeholders requires even

more effective relationship management to ensure the success of the PPP process (Zou

et al., 2014). Smyth and Edkins (2007) define relationship management as an analysis

of relationships, an investment in relationships, and a clear understanding of the value

that can be derived from those relationships. Similarly, Zou et al. (2014, p. 266)

suggest that in the context of PPPs, relationship management refers to “a set of

comprehensive strategies and processes of partnering” that aim to maximise project

value for stakeholders by developing strong relationships. Effective relationship

management practices can help build trust among stakeholders, encourage information

sharing, and foster collaboration. These practices can also help mitigate potential

conflicts and promote the achievement of shared goals.

To effectively manage stakeholder relationships in PPP projects, it is essential to have

a nuanced understanding of these relationships at the individual level (Osborne et al.,

2015). Relational capital literature has emphasised the importance of relational

behaviours that establish and enhance both social and emotional links among

individual actors (Grönroos, 2000; Karpen et al., 2015). The participants in the PPP

185

projects reported various relational management practices that focused on collective

leadership, partnership commitment, and goal alignment (see Figure 5-2 for the data

structure). These practices are essential in developing good relationships among

stakeholders, which can maximise project value. In the following discussion, the three

approaches are further explained, and their corresponding dimensions of relational

capital are presented to draw parallels among them.

Figure 5-2 Data structure of relationship management practices

186

5.1.2.1 Goal alignment approach

This approach focuses on activities that align the goals and objectives of different

stakeholders to ensure a shared purpose and direction in the value creation process in a

PPP project (Mom et al., 2015). These activities could involve making concessions,

organising goal alignment workshops, and developing a shared vision. The goal

alignment approach corresponds to the cognitive dimension of relational capital, which

emphasises the importance of a shared cognitive framework among stakeholder

networks. Through the goal alignment process, stakeholders develop a shared

understanding of project goals, objectives and priorities, which can help to reduce

misunderstandings, conflicts and other obstacles to successful collaboration. In the

context of PPP projects, where multiple stakeholders with diverse interests and

objectives are involved, the goal alignment approach can be a critical tool for building

trust, promoting cooperation, and enhancing project performance.

Making concession. This activity refers to being flexible and willing to compromise in

order to reach mutually beneficial agreements with stakeholders. It was observed in all

the cases studied, and appears to be essential for achieving mutually agreed-upon

project goals. For instance, in Case Delta, the government officer acknowledged the

importance of striking a balance between achieving the public interest and ensuring

reasonable profit for the private party. Similarly, the project manager in the same case

emphasised the need to make concessions in response to changes in regulations, even if

it meant facing adverse effects.

As another example, in Case Beta, the public sector partner initially insisted on

including certain sustainability requirements in the project contract, such as the use of

renewable energy sources. However, the private sector partner argued that these

requirements would be too costly and ultimately harm the project’s financial viability.

After some negotiation, the public sector partner agreed to modify the sustainability

requirements to be more flexible, allowing the private sector partner to choose the most

187

cost-effective options that still met the project’s overall goals. This concession helped

ensure that the project was both sustainable and financially feasible. The ability to

make concessions requires a willingness to compromise and prioritise the overall

success of the project over individual interests. This willingness can foster trust and

facilitate cooperation among stakeholders. The ability to navigate complex stakeholder

relationships in this way can also contribute to the development of relational capital

and the success of the PPP project.

Goal alignment workshop. This activity was observed in all the cases and seems to be

necessary for goal alignment. The workshops can take various forms and involve

different participants, bringing together stakeholders to collaboratively define and align

their goals, objectives and strategies, depending on the project’s specific context and

requirements. In Case Gamma, for example, expert panels were invited to participate

in goal alignment workshops to provide impartial and professional opinions, while in

other cases, consultant companies were involved as impartial third parties to facilitate

the alignment process.

Goal alignment workshops are essential for establishing a shared cognitive framework

among stakeholder networks, as they allow participants to explore their perspectives

and negotiate their interests. Through such workshops, stakeholders can identify areas

of potential conflict and work together to resolve any differences, ultimately creating a

shared understanding of project objectives and expected outcomes. Additionally, goal

alignment workshops can help build trust among stakeholders, which is critical for the

success of PPP projects. When stakeholders understand each other’s objectives and

trust one another, they are more likely to work collaboratively and effectively towards

project success.

Establishing a shared vision. In PPP projects, this activity aims to create a shared

understanding and commitment to a compelling vision that inspires and motivates all

stakeholders to work together toward a shared goal (Jansen et al., 2009). It is important

188

for each party to contribute meaningfully to their respective roles and incentivise

collaborative efforts (Eriksson et al., 2017). The development of a shared cognitive

framework is crucial to successful VCC, as it creates a clear goal for everyone and

instills a sense of mission that motivates stakeholders.

For example, in Case Alpha, the public and private parties agreed on a shared vision of

providing clean, safe and affordable water and sanitation services to all members of the

community. This vision also included specific goals such as reducing waterborne

illnesses, increasing access to water and sanitation infrastructure, and promoting

sustainable water management practices. The project manager from Case Alpha said:

“As someone who’s both a businessman and a water professional, I feel a sense of

accomplishment and pride in seeing how everyone’s efforts have come together to

benefit the public’s water safety and convenience.” Similarly, in Case Epsilon, both the

public and private parties were able to establish a shared vision that aimed to improve

access to high quality healthcare services for all members of the community, as well as

providing high quality nursing services to the elderly. This vision encompassed

specific goals, such as reducing wait times for appointments, increasing the availability

of specialised services, and promoting preventative care measures. By agreeing on a

common goal, both parties were able to work collaboratively towards achieving the

shared vision, which ultimately resulted in a successful PPP project outcome.

Establishing a shared vision serves as a cornerstone for this process, articulating a clear

and inspiring goal that guides the collaborative effort. Through this activity, the

primary parties can work towards mutual benefits and incentives that are essential to

effective VCC.

The activities involved in the goal alignment approach play a crucial role in developing

a shared cognitive framework that enables the exchange of information and promotes

integration among stakeholders (García-Granero et al., 2018). This shared cognitive

framework comprises the expectations of the public and private parties regarding the

189

project outcomes and how these outcomes should be achieved. It is worth noting that

having diverse cognitive frames may lead to a paradoxical cognitive process that

facilitates balanced decision making (Smith & Tushman, 2005). However, such

diversity may also give rise to conflicts, disagreements and inadequate sharing of

information, especially in the context of PPPs.

In this regard, it is essential to recognise that building a shared cognitive framework is

not a one-time event but rather an ongoing process that requires constant attention and

effort. Stakeholders must be willing to engage in open communication and actively

seek common ground to ensure that the shared cognitive framework remains relevant

and up-to-date. In addition, stakeholders should embrace diverse perspectives and be

willing to engage in constructive debate to identify potential pitfalls and develop

innovative solutions that benefit all parties involved. By doing so, stakeholders can

avoid cognitive traps and leverage diverse perspectives to achieve shared goals and

objectives.

5.1.2.2 Partnership commitment approach

This approach concerns the emotional and behavioural investments of stakeholders in

the PPP project. The first-order codes under this approach are trusting, respecting and

reciprocity. These activities are aligned with the affective dimension of relational

capital, which emphasises the importance of motivation, expectations and norms

among related parties (Kang et al., 2007). Thus, the activities involved in this approach

not only reflect the affective attachments among stakeholders but also instill relational

norms that guide their behaviours.

Trusting. This activity reflects the stakeholders’ confidence in each other’s reliability,

intentions, capabilities, and favourable future actions (Mom et al., 2015). Trust is built

through cognitive transformation, and it requires mutual respect and understanding.

For example, in Case Gamma, the engineer emphasised the importance of respect and

190

trust in the cooperative relationship between the public and private parties. The

government’s respectful attitude towards the private party’s expertise and social

responsibilities helped establish trust between the parties.

Another essential factor that contributes to trust building is cautious evaluations of

each other’s capabilities. The private party mainly considers the government’s credit,

while the public party pays attention to the private party’s financial capability as well

as the capability to deliver the project successfully. Evaluating each other’s strengths

and weaknesses can help build mutual trust.

Moreover, trust is also built on previous experiences. In Case Beta, the project

manager mentioned that the previous cooperation between the public and private

parties helped establish trust in the current project. Thus, experience plays a vital role

in building trust among the stakeholders. Trust is a critical component of building

affective relational capital in PPP projects. It requires mutual respect, understanding

and cautious evaluation of each other’s capabilities. By establishing trust, stakeholders

can collaborate more effectively and achieve better outcomes.

Respecting. This activity refers to the stakeholders demonstrating a courteous and

respectful attitude towards each other during the PPP project. Although this behaviour

may seem obvious, it is critical in establishing a positive working relationship among

stakeholders. Respectful behaviour is an essential component of relational commitment

in VCC processes and can contribute to trust building between parties. The public

party in Case Epsilon emphasised the importance of respect in their collaboration with

the private party, stating that “We respect each other’s roles, responsibilities and

opinions. It helps to build mutual trust and a better working relationship.” This activity

of respecting is not limited to the relationship between the public and private party, but

it is equally important among the private consortium members as well, which includes

the design company, construction company and operation company, among others. In

fact, the level of respect and cooperation among the private consortium members can

191

greatly impact the overall success of the PPP project.

Respectful behaviour promotes a positive working environment and helps avoid

conflicts that can impede project progress. As the project manager in Case Delta noted,

“Respect is the foundation of our cooperation with the private sector. We are aware that

their expertise is critical to achieving project success, and we show them the respect

they deserve.” Respectful behaviour involves acknowledging the value that each

stakeholder brings to the project and being open to diverse perspectives. In Case Alpha,

for example, the private party was able to offer insights and innovative solutions to the

project, which were not previously considered by the public party. The public party

recognised the private party’s value and expertise and respected their input, leading to

a successful outcome. As the project manager stated, “We respected the private party’s

expertise and listened to their suggestions. This helped us develop a better project plan

that met the needs of all stakeholders.”

Respectful behaviour also involves clear communication and a willingness to listen to

and understand others’ viewpoints. In Case Beta, the public party listened to the

private party’s concerns regarding project risks and took proactive measures to address

these concerns. The private party appreciated the public party’s respectful attitude and

willingness to work collaboratively, which helped establish a positive working

relationship.

Reciprocity. This activity refers to a situation where parties are committed to returning

favours when they receive benefits from their cooperation with the other party. This

activity establishes a sense of fairness and mutual obligation among stakeholders

(Baba et al., 2021) which is crucial for ongoing supportive exchanges (Wasko & Faraj,

2005). Moreover, reciprocity fosters communication among stakeholders and helps to

obtain their value perceptions and concerns. Scholars in service-dominant logic

emphasise the importance of reciprocal value propositions based on the notion of

complementary objectives among stakeholders (Truong et al., 2012). In the context of

192

PPP, this activity boosts the role flexibility as each of the parties may initiate a value

proposition. For instance, the project manager in Case Epsilon emphasised the

importance of reciprocal value propositions by mentioning how they often assisted the

government in applying for policy-based funding. Although these tasks were outside

their responsibility, they offered to help since they were better at filling out the

documents and were familiar with the process. This behaviour demonstrated their

willingness to reciprocate and their commitment to the success of the project.

5.1.2.3 Collective leadership approach

This approach emphasises the importance of collective leadership in PPP projects,

where primary stakeholders are responsible for and involved in the tasks of project

leadership (Love et al., 2020). These activities involve distributing leadership roles and

responsibilities among multiple stakeholders, fostering collaboration, and leveraging

diverse perspectives and expertise. Engaging, empowering, and motivating are first-

order codes of this approach. The structural dimension of relational capital, which

represents the connection patterns among stakeholders, is relevant to this approach.

These patterns demonstrating the configurations of the network are depicted in the

ways of actor connectedness, participant hierarchy and centrality, and the strength of

ties (Kang et al., 2007; Matinheikki et al., 2016).

The collective leadership approach emphasises the importance of collaboration among

stakeholders towards achieving shared goals in PPP projects. The primary stakeholders

are responsible for establishing a leadership structure that enables effective

communication, decision making, and problem solving among all parties involved.

This approach encourages stakeholders to work together towards a shared vision,

which can lead to more successful PPP projects. Effective engagement of stakeholders

in the VCC process, empowering competent stakeholders, and motivating everyone’s

involvement are key activities that help establish and maintain the appropriate structure

193

for collective leadership. By adopting this approach, PPP projects can ensure that all

stakeholders are actively involved in the decision-making process and that their voices

are heard. This can result in more effective stakeholder interaction, leading to better

project outcomes.

Engaging. This activity refers to the activities and structures used by an organisation to

involve all relevant stakeholders in the project’s operations and decision making.

Engaging stakeholders involves actively involving them in the co-creation process,

soliciting their input, and fostering a sense of ownership. This can include a range of

approaches, such as consultations, forums and feedback mechanisms. Engaging

stakeholders also involves various techniques and technologies to foster connectedness

among stakeholders. This approach enhances communication and collaboration among

stakeholders, promoting a more cohesive network. In PPP projects, technology plays a

significant role in engaging stakeholders, and many tools are used for this purpose. For

instance, the WeChat group is commonly used as a communication channel for sharing

information and coordinating tasks. In addition, proximity and close working

relationships are essential for effective engagement. In some PPP projects,

stakeholders work closely together, such as in Case Gamma, where the special purpose

vehicle (SPV), design company and construction site were located in close proximity.

Furthermore, in Case Beta, the project manager worked closely with the government

office, even having a working desk in the government office to ensure both parties

were well-engaged.

The aim of this approach is to ensure that all stakeholders have a voice in the project,

and that their views, concerns and needs are taken into account. Effective stakeholder

engagement is essential for building trust, creating a sense of ownership, and

promoting sustainable outcomes. Effective community engagement strategies help

stakeholders understand the needs, expectations and concerns of each other and build

trust and long-term relationships with each other. It requires clear communication,

194

mutual respect, and a willingness to work collaboratively with all stakeholders.

Empowering. The activity of empowering stakeholders in PPP projects involves

providing stakeholders with the resources, knowledge and authority to actively

contribute and make decisions (Alexiev et al., 2019), particularly primary stakeholders

(i.e., the public and private parties). This approach aims to strike a balance between

centralisation and delegation, and expand decision boundaries, ultimately leading to

greater stakeholder engagement. For example, in Case Epsilon, the project manager

noted that they were empowered to provide suggestions and request design changes

based on their construction situation. This level of empowerment was not possible in

traditional procurement approaches, where the government played a more active role in

project management. By shifting to a PPP model, the government can adopt a more

passive role as a governor, while private parties are empowered to manage the project.

This approach to empowerment helps to promote collaboration and establish a sense of

ownership among stakeholders, which can enhance the likelihood of project success.

The concept of stakeholder empowerment has been linked to an increased sense of

self-worth and belonging to a group, which can enhance the overall interaction

experience. In the context of service interactions, empowering refers to collaborative

efforts aimed at negotiating the power dynamics between both parties to influence the

outcome of the interaction (Neghina et al., 2014). During co-creation, empowering

involves taking responsibility for the outcome of the interaction and intervening when

necessary for the benefit of the overall goal. This sense of ownership and agency can

create value for all actors involved. By empowering stakeholders to work together

towards a shared goal, co-creation efforts can lead to more positive outcomes for

everyone involved.

In addition, empowering stakeholders in PPP projects may involve providing them

with access to relevant information, training and development opportunities, decision-

making authority, and resources to carry out their tasks effectively. For instance, in

195

Case Epsilon, the private party empowered the local community by providing them

with training on how to use the new information system of the hospital. This not only

helped improve the hospital’s operational efficiency by ensuring that the system was

being used effectively but also built trust and goodwill among the community members,

which is crucial for the long-term success of any PPP project.

Motivating. This refers to activity involving creating an environment that encourages

stakeholders’ active participation and fosters a sense of purpose and fulfilment such as

setting clear goals and incentives to encourage stakeholder participation in the VCC

process. This activity is essential for mobilising passive stakeholders and fostering

their engagement. While public parties or SPVs often employ this strategy, it can also

benefit private parties and their sub-contractors, who may not be accustomed to

making autonomous decisions and taking on corresponding responsibilities. In Case

Delta, for instance, the SPV incentivised the sub-contractor of the green belt company

to speed up and actively engage in the main road construction project. Similarly, in

Case Alpha, the government encouraged end-users and the local community to express

their expectations and foster satisfaction by demonstrating the project blueprint and

design drawing. By motivating stakeholders through clear goals and incentives, VCC

projects can create a sense of ownership and responsibility among stakeholders,

leading to more successful outcomes.

Motivating includes motivating the team and the stakeholders. Motivating the team is

crucial for achieving success in PPP projects. This involves recognising and rewarding

team members’ efforts, involving them in decision making, creating a positive work

environment, setting clear goals and expectations, providing necessary resources and

support, and offering training and development opportunities. Similarly, in the VCC

process, the motivating activity is an essential strategy for encouraging stakeholders to

actively participate in the project. Setting goals and incentives that align with the

stakeholders’

interests and priorities is an effective way to motivate passive

196

stakeholders to contribute their expertise, resources and knowledge to ensure project

success. This approach ensures that all stakeholders invest in the project’s success

which leads to better outcomes for all involved. By actively engaging stakeholders

through motivation, PPP projects and the VCC process can achieve their goals and

objectives.

To sum up Section 5.2, the proposition is developed:

Proposition 7. Relationship management practices play a crucial

role in complementing resource management practices in VCC

practices by facilitating the accumulation of relational capital.

The goal alignment approach pertains to the cognitive

dimension of relational capital, emphasising the importance of a

common cognitive framework. The partnership commitment

approach pertains to the affective dimension, promoting

relational norms among stakeholders. The collective leadership

approach pertains to the structural dimension, facilitating a

denser and closer network among stakeholders. Together, these

relationship management practices support effective

collaboration and contribute to the accumulation of relational

capital, which can enhance the VCC outcomes of PPP projects.

To sum up, two main practices were identified from the data collected in the five cases

to provide a comprehensive understanding of the VCC process in PPP projects. These

practices were observed to include three approaches each, consisting of various

activities that contribute to how value is co-created among different stakeholders.

While the classifications are based on the data and the conceptual framework from the

literature, they do not represent the only reality of the VCC process. There may be

other activities and approaches that contribute to the process but were not observed in

197

the data. Additionally, the classifications are not mutually exclusive but may overlap to

198

some extent. For example, the jointly working activities in the development approach

of resource management practice may overlap with the collective leadership approach

of relationship management practice. However, the distinction lies in their primary

emphasis: the former involves operational activities that are carried out collaboratively

with the pooling and development of resources, while the latter focuses on activities

that facilitate collective relational norms among stakeholders. Overall, these

classifications provide a useful framework for understanding the various approaches

and activities involved in the VCC process in PPP projects, but they should not be

considered definitive or exhaustive.

5.1.3 Contextual Factors

PPP projects involve multiple stakeholders, including public sector entities, private

companies, and the general public. In order to achieve successful VCC in PPP projects,

it is important to examine contextual factors that can impact the project environment.

Upon examining the empirical data, the analysis reveals two second-order themes (as

shown in Figure 5-3): institutional motivators and organisational enablers. Institutional

factors refer to formal and informal rules, norms and beliefs that govern the behaviour

of actors in a specific setting, while organisational factors refer to the structures,

processes and practices that shape the behaviour of actors within an organisation. The

stakeholders are incentivised to engage in the PPP model with a shared desire to co-

create value with other stakeholders, driven by institutional motivations that align with

the three pillars of institutional theory: regulative, normative, and cultural-cognitive

(Scott, 2014). Moreover, the success of the VCC process is contingent upon several

organisational enablers, including a strong relationship foundation among stakeholders,

a transparent environment, and complementary capabilities. These enablers serve as

key drivers that facilitate the smooth progress of the VCC process.

Overall, the findings suggest that both institutional motivators and organisational

199

enablers are crucial factors for effective implementation of PPP models to facilitate

VCC among stakeholders. These findings provide valuable insights for practitioners

and policymakers who are seeking to establish PPP models and foster collaborative

value creation among stakeholders.

Figure 5-3 Data structure of contextual factors

5.1.3.1 Institutional motivators

Institutional motivators can be categorised into regulative, normative, and cultural-

cognitive motivators, each of which plays a crucial role in encouraging stakeholders to

engage in VCC practices.

Regulative motivators refer to the incentives that emerge from regulatory constraints,

such as laws, policies and regulations. Regulations serve as a powerful tool to align

stakeholder behaviour and encourage them to engage in VCC practices. The presence

of regulatory constraints incentivises stakeholders to think more strategically and

200

innovatively in their approach to VCC. For instance, when a regulatory constraint

stipulates that private parties operating PPP projects cannot receive promised profits

from the government, stakeholders may need to adopt a more proactive approach to

ensure that the project is financially viable in the long term, leading to more effective

VCC practices. As stated by the operation manager in Case Alpha:

“We were aware of the regulations and compliance requirements,

and we understood that violating them would have serious

consequences, such as being excluded from the national PPP

database. It was crucial for us to follow the rules to ensure the

success of the project, and we knew that asking for more

compensation was not an option.”

In addition to encouraging stakeholders to adopt innovative strategies, regulatory

constraints also help to standardise behaviour across stakeholders, resulting in more

effective collaboration and VCC. This is because regulations provide a shared

understanding of expectations and boundaries, which can help to reduce conflicts and

misunderstandings between stakeholders. For example, regulations can help to clarify

the roles and responsibilities of different stakeholders in a PPP project, which can

promote better collaboration and information sharing.

Moreover, regulatory motivators can also incentivise stakeholders to engage in

sustainable practices. For instance, regulations may stipulate environmental standards

that must be met during the construction and operation of PPP projects. In Case

Gamma, these regulations could motivate the private party and the design company to

adopt sustainable practices and innovative technologies that can help reduce the

environmental impact of the project.

Normative motivators play an important role in promoting VCC practices in PPP

projects, as they are based on the norms and values that are established and upheld by

the society in which these projects operate. Normative pressures can come from a

201

range of sources, including industry standards, professional practices and social

expectations. These pressures may not necessarily be legally binding, but they have

significant influence on the behaviour of stakeholders involved in PPP projects.

One of the most important normative pressures in PPP projects is related to

sustainability. In recent years, there has been growing recognition of the need to

promote sustainable development in infrastructure projects, which has led to the

establishment of a range of normative standards and guidelines. In China, for example,

the government has introduced a number of policies and regulations that require PPP

projects to meet certain environmental and social standards. For example, the private

party in Case Gamma and Case Epsilon were motivated to engage in VCC practices

that align with these standards, in order to avoid reputational damage and potential

penalties that may arise from non-compliance.

In addition to sustainability, normative pressures may also arise from other aspects,

such as safety, quality and social responsibility. For example, in PPP projects

involving the construction of highways or bridges, safety is a top priority, and

stakeholders are motivated to engage in VCC practices that ensure the safety of both

workers and users of the infrastructure. Similarly, in projects involving the provision of

public services, such as healthcare or education, stakeholders are motivated to engage

in VCC practices that ensure the quality and accessibility of these services.

Cultural-cognitive motivators refer to the incentives that emerge from cultural and

cognitive transformation. This involves a shift in people’s beliefs and values towards

the importance of long-term over short-term goals. As stakeholders become

increasingly aware of the benefits of VCC practices, they may be motivated to engage

in them to achieve more sustainable and long-term outcomes. This cultural shift can be

observed in the empirical data, where stakeholders are shown to prioritise long-term

value creation over short-term gains. This shift includes the public’s view of their own

role in the project. For example, the government officer in Case Gamma said:

202

“As a government entity, we have shifted away from a client mindset

and instead see ourselves as a collaborator in the project. This

means actively engaging in the project by expressing our needs,

sharing our experience, and discussing proposals.”

On the other hand, this also includes the private party’s consideration on the best trade-

off as noted by the contract manager in Case Gamma:

“We faced a challenge when the owner of the factory demanded

more compensation for the demolition than we had approved funds

for. This caused a stalemate as the owner refused to relocate without

the additional compensation. We ultimately decided to pay the extra

compensation to ensure the demolition could proceed as planned,

despite the limitations imposed by the regulatory framework. We

knew that any further delays would have significant financial

consequences, including increased loan interests and deferred

payments from the government.”

Overall, institutional motivators are critical in driving stakeholders to engage in VCC

practices. By understanding and leveraging these motivators, policymakers and

practitioners can design and implement effective PPP models that encourage

collaborative value creation among stakeholders.

5.1.3.2 Organisational enablers

Organisational enablers are factors derived from the parent organisations that can

facilitate the implementation and effectiveness of VCC practices among stakeholders

in a PPP project. In the context of the thesis study, the enablers for VCC practices were

not predetermined in the literature review but were derived from the analysis of the

empirical data. Previous research has identified organisational and institutional factors

203

as important for facilitating VCC practices. However, in this study, these enablers were

divided into two second-order themes. The first reason for this was to summarise

institutional factors according to the framework proposed by Scott (2014), which

identifies regulative, normative, and cultural-cognitive pillars. While these pillars

provide a useful way of categorising institutional factors, the organisational factors

identified in this study could not be easily merged into any one of them. The second

reason for distinguishing organisational factors from institutional factors was that

organisational factors served more as a support system for VCC practices, while

institutional factors were seen more as motivators for stakeholders to engage in such

practices. For example, while institutional factors such as regulations and norms may

encourage stakeholders to participate in VCC practices, it is the organisational factors

such as relationship foundation, complementary competences, and transparent

environment that enable these practices to be implemented effectively.

The data analysis showed that the implementation of VCC practices in PPP projects

requires support from the parent organisation of all stakeholders involved. This support,

which is summarised as three organisational enablers, namely relationship foundation,

complementary competence, and transparent and fair environment, can significantly

impact the effectiveness of VCC practices and their outcomes. The three organisational

factors are derived based on the theoretical perspective of the resource-based view

(RBV) of the organisation.

The resource-based view emphasises the role of organisational resources and

capabilities in achieving competitive advantage (Barney, 1991). According to this

perspective, organisations possess unique resources, both tangible and intangible, that

can contribute to their ability to create value and outperform competitors. These

resources can include physical assets, human capital, knowledge, relationships, and

organisational structures.

In the context of VCC practices in PPP projects, the resource-based view can be

204

applied to understand how organisational resources and capabilities facilitate or hinder

the successful implementation of VCC. The three organisational enablers identified in

the data analysis (relationship foundation, complementary competence, and transparent

and fair environment) can be seen as critical resources and capabilities that influence

the effectiveness of VCC efforts.

For example, a strong relationship foundation, characterised by trust, collaboration,

and effective communication among stakeholders, can be considered an organisational

resource that enhances the coordination and cooperation necessary for successful VCC.

Complementary competence, such as specialised knowledge, skills and expertise

possessed by different stakeholders, can also be seen as an organisational resource that

contributes to VCC outcomes. Lastly, a transparent and fair environment, supported by

organisational processes, structures and governance mechanisms, can be viewed as an

organisational capability that fosters equitable participation, decision making, and

resource allocation in VCC activities.

By drawing on the resource-based view, the study analyses how these organisational

factors (relationship foundation, complementary competence, and transparent and fair

environment) serve as valuable resources and capabilities that influence the

implementation and outcomes of VCC practices in PPP projects. Therefore, the

resource-based view provides a theoretical lens to understand how organisations

strategically leverage their resources and capabilities to facilitate effective VCC and

gain a competitive advantage in the PPP context.

Relationship foundation refers to the existing bonds among stakeholders involved in

PPP projects. The analysis of the data revealed that only in Case Beta did previous

relational foundations exist before the project. This finding is significant because it

shows that the quality of the procurement procedure and contract negotiation in Case

Beta was more effective than in other cases. As the project manager in Case Beta has

explained, a private company had assisted the government in operating a BOT sewage

205

treatment plant. The successful cooperation between the two parties resulted in a high

level of trust in the company’s capability and expertise. Furthermore, the private

company gained valuable insights into the government’s working style and feasibility

capabilities, which facilitated a smooth negotiation regarding the project value framing

and subsequent implementation. Notably, the company has introduced innovative raw

materials for sewage treatment, which has optimised the process. Additionally, there

has been a seamless exchange of information between both sides, allowing necessary

information to be acquired. This finding suggests that having a relational foundation

among stakeholders could lead to better project outcomes via effective VCC practices.

Relationship foundation also lies in the reciprocal attitude among all stakeholders. This

refers to the willingness of all parties to collaborate with each other, without taking

advantage of the other parties, with the aim of completing the project to a high

standard. In contrast, failed PPP projects often result from a lack of such reciprocal

attitudes, where the public party seeks to transfer risks to the private party without

considering their capabilities.

In the five cases examined in this study, a reciprocal attitude is well manifested, as

articulated by the government officer from Case Beta: “We can feel each other’s

reciprocal attitude and, to some extent, believe that the other party is willing to

collaborate instead of taking advantage using information asymmetry.” This quote

highlights the importance of mutual trust and respect in fostering a positive

relationship between public and private parties. In addition, the ability to balance risks

and rewards, as well as open communication and transparency, are crucial components

in building a strong foundation for a successful PPP project. By promoting a reciprocal

attitude among all stakeholders, PPP projects can benefit from enhanced cooperation,

greater trust, and ultimately, better outcomes.

Complementary competence is another important enabler that ensures all stakeholders

involved cooperate with each other effectively. This enabler refers to the combination

206

of diverse skills, knowledge and resources across different stakeholders involved in

VCC. Each participant brings unique expertise and capabilities to the co-creation

process, which, when integrated, can lead to innovative and value-added outcomes.

Organisations that recognise and leverage complementary competence can harness the

collective intelligence and expertise of stakeholders. By actively seeking input and

collaboration from diverse perspectives, they can generate new ideas, develop

comprehensive solutions, and create differentiated value offerings. This collaborative

approach enhances the effectiveness of VCC practices and allows organisations to

address complex challenges more effectively. When stakeholders possess

complementary competence, they can leverage each other’s strengths and mitigate their

weaknesses, which can lead to more effective project outcomes. This can be shown by

both parties in Case Gamma in the following quotes:

“The public party has a greater depth of experience in city planning,

legal procedures, and the local market, owing to their prior

involvement as developers prior to the widespread adoption of PPPs.

The government’s accumulated knowledge of urban construction

projects further strengthens their expertise in this domain.”

(Private party engineer, Case Gamma)

“The private party was selected due to their exceptional

professionalism and extensive experience in the construction of

immersed tube tunnels, which is demonstrated by their previous

successful projects. Additionally, their reliable financial capacity

makes them a suitable investor for such a major undertaking.”

(Government officer, Case Gamma)

A transparent and fair environment is an enabler that serves as the foundation of

communication, interaction and value exchange among stakeholders. Transparency

207

ensures that information is shared openly, enabling all stakeholders to have a clear

understanding of the co-creation process, goals and outcomes. Fairness ensures that

stakeholders are treated equitably, with their contributions acknowledged and rewarded

appropriately. In a transparent and fair environment, stakeholders feel confident in

actively participating in VCC activities. They are more willing to share their

knowledge, ideas and resources, as they trust that their contributions will be recognised

and valued. This leads to increased engagement, collaboration and commitment, which

positively impacts the outcomes of VCC practices. However, the analysis suggests that

creating such an environment is not easy, as it depends on the culture of the parent

organisation. Therefore, creating a culture of transparency and fairness is crucial to

ensure effective communication and collaboration among stakeholders.

Ensuring equity for all private parties and promoting public interest is critical in any

PPP project. To this end, several measures are implemented to achieve transparency

and fairness. For instance, in Case Delta, performance bonds were replaced with

performance guarantees to create a more equitable solution, enabling qualified private

enterprises to compete on a level playing field with state-owned enterprises. As

affirmed by the performance manager in Case Delta, this approach has significantly

reduced the burden on private enterprises.

In addition, the government takes several steps to foster a fair and transparent

procurement process. As articulated by a government officer in Case Beta, a

comprehensive list of project risks is compiled based on prior experience and

communicated to potential bidders during the pre-tender meeting. This method ensures

that the most suitable and qualified partner is selected, rather than simply opting for the

most optimistic one. These measures promote competition, mitigate risks, and foster

transparency, leading to a successful PPP project.

In summary, the three enablers identified in this study can facilitate the implementation

and effectiveness of VCC practices in PPP projects. These enablers are interconnected

208

and interdependent. The findings suggest that investing in building relational

foundations, ensuring complementary competence, and creating a transparent and fair

environment could lead to more effective project outcomes in PPP projects. Moreover,

understanding both the institutional and organisational factors that influence VCC

practices is critical for promoting their success. The institutional factors provide the

broader context for VCC practices and help create a culture that supports them, while

the organisational factors provide the necessary resources and infrastructure to

implement these practices effectively. By considering both types of factors,

organisations can create a supportive environment that encourages stakeholders to

engage in VCC practices and facilitates their effective implementation. Hence, the

proposition is developed:

Proposition 8. The VCC practices in PPP projects are influenced

by contextual antecedents, which can be categorised into

institutional motivators and organisational enablers.

Institutional motivators consist of regulative, normative, and

cognitive factors that motivate stakeholders to participate in

VCC practices and engage in collaborative and interactive

processes. Organisational enablers, on the other hand, provide

support and the initial momentum necessary for the

application of VCC practices. Together, these factors facilitate

the implementation of VCC practices in PPP projects,

contributing to the success of VCC efforts.

5.2 Discussion – Value Co-creation Process and Contextual Antecedents

5.2.1 Interplay of VCC Practices

209

The previous section reported on the two aggregated practices identified in VCC

210

process which are resource management practices and relationship management

practices. The interplay of these VCC practices is discussed in this section.

The comprehensive analysis of the five cases highlights two preliminary findings about

the characteristics of the VCC process. First, resource management and relationship

management practices that characterise the VCC process are mostly applied throughout

the entire project lifecycle although there may be an uneven emphasis on their

respective approaches. Second, a good combination of resource management practices

and relationship management practices is the key factor to maximise value creation for

project stakeholders as they facilitate each other well in continuous improvement.

5.1.3.1 Theoretical relations among each practice

To better illustrate theoretical relationships among different approaches, the focus of

this section begins with those within each practice. As previously mentioned, each

practice includes three approaches that contribute to effective resource and relationship

management. These approaches assume distinct roles while also exhibiting some

degree of overlap.

Relations among resource management practices. As shown in Figure 5-4, dark blue

rectangles represent the dialogue, development and deployment approaches. Notably,

the dialogue approach plays a pivotal role in enhancing the effectiveness of the other

two approaches. This fundamental role of dialogue is not only revealed in academic

literature, but also observed in practice. Scholars in both marketing and project

management interested in VCC all put dialogue as a basic element that underpins VCC.

For example, in the DART model constituting co-creating value experience practices

developed by Prahalad and Ramaswamy (2004), dialogue is the first element. Similarly,

Martinsuo, Vuorinen, et al. (2019) also emphasised the significance of dialogue in

shaping the value perspective at the project’s outset and throughout its entire lifecycle.

Dialogue implies an interactivity between stakeholders. It can be a set of conversations

211

(Prahalad & Ramaswamy, 2004), but more about an interactive learning process

among stakeholders (Ballantyne, 2004). The previous chapter defined dialogue in this

research as “the ways resources flow among various stakeholders who acquire and

assimilate such resources as the source of project value creation”. The resources here

mainly refer to the operant resources comprised of knowledge and information. This

flow of knowledge and information among stakeholders with the consequence of

interactive learning provides the foundation of resource development and resource

deployment as shown in Figure 5-4. This process of learning together generates

common meaning for all stakeholders who could then move from interaction to the

participation that facilitates deeper resource management.

Figure 5-4 Interplay among approaches

The resources development approach refers to the bundling of resources to develop

capabilities among stakeholders for reciprocal value creation. Through combining and

using pertinent information and knowledge, this approach enables different

stakeholders as well as the SPV to develop relevant skills and capabilities. In practice,

such resources development is accomplished through joint working among

stakeholders such as joint decision making, joint problem solving, joint risk

management, joint performance management and so on. It is the shared understanding

212

or collective knowledge base every stakeholder accessed through continuous dialogue

that allows the possibility for such form of joint working and corresponding favourable

consequences. Resource deployment is a further step to value creation among

stakeholders, involving the utilisation of configurations of knowledge and skills.. An

appropriate configuration of operant resources relies on a comprehensive resources

pool that complements each party’s resources on one hand, and on a shared

understanding of and expectation on the objectives of the configuration on the other

hand. In other words, the quality of the dialogue approach and the development

approach would determine the quality of the deployment. However, resource

deployment, in turn, shapes resource development. It configures knowledge and skills

effectively, thereby influencing the development of capabilities.

As the VCC process goes on, this mutual influence becomes apparent. To be specific,

both the public and private parties would initiate a more focused dialogue on main

disputes and develop the most imperative capabilities on the hardest difficulties. That

is to say, as the shared understanding is reached and primary capabilities are developed,

the deployment approach in turn provides the direction and objectives to the other

approaches. This reverse influence is indicated in the dotted line in Figure 5-4.

All together, these three approaches deal with resources, especially the operant

resources, in an evolving cycle from resource identification to resource development

and finally to resource utilisation. They complement and facilitate each other as a

whole practice that operates organically in the VCC process.

Relations among relationship management practices. The light blue rectangles in

Figure 5-4 represent the three approaches: goal alignment, partnership commitment,

and collective leadership, identified within the domain of relationship management

practices. Among others, goal alignment is the fundamental prerequisite condition that

underpins a good relationship among stakeholders. Empirical evidence shows that

stakeholders in PPP projects put a lot of effort into aligning with each other such as

213

adopting goal alignment workshops with an impartial and professional third party in

the front-end of the project. This demonstrates that practitioners recognise the

importance of alignment and need this alignment to push the progress. As a positive

consequence of the alignment, partnership commitment occurs and accumulates in the

VCC process. This approach includes relation norms that have been developed

spontaneously in a bottom-up way guiding everyone’s behaviour.

The collective leadership approach thus becomes possible and effective based on the

function of the other two approaches. Collective leadership addresses relationships

among stakeholders from the structure perspective, that is, building a closer and denser

relationship network that fosters service exchange. This objective could be achieved

through engaging and empowering stakeholders as well as motivating their creativities

based on the empirical evidence.

This section has established connections between the three approaches within

relationship management practices and the three dimensions of relational capital.

Scholars suggest that there is an interplay among these three dimensions: cognitive,

reflective, and structural (Inkpen & Tsang, 2005; Tsai & Ghoshal, 1998). This implies

that changes in one dimension can affect the others, and they mutually influence each

other. However, in the PPP context that was observed in the cases, the implications of

the cognitive and reflective dimensions on the structural dimension were more obvious.

For example, the project manager in Case Alpha said:

“We hadn’t been fully empowered for autonomous decisions on

technology issues until the late procurement phase when we had

demonstrated our ability to the government and their consultant. We

were empowered when the public party finally trusted us.”

Similar evidence from the government officer in Case Epsilon shows that:

“We shared the project information to the local community through

214

the network and bulletin boards. We also collect people’s opinions

regarding this project preliminarily before we launched a hearing.

This was because I need to make sure the secondary stakeholders

were well informed and reached a certain shared understanding

with the government before formally engaging them in the decision

process. Otherwise, it would just be a waste of time.”

5.1.3.2 Theoretical relations between two practices

As shown in Figure 5-4, the VCC process begins with the dialogue approach and

progresses towards the deployment approach, with resource management practices

serving as both its foundation and ultimate objective.

The dialogue approach not only serves as the foundation for resource development and

deployment, but also supports goal alignment and partnership commitment. In

particular, behaviours like information exchange hold significant potential for

enhancing the quality of project relationships (Zheng et al., 2018). To delve deeper, the

value framing activities within the dialogue approach create a platform for dialogical

conversations, allowing stakeholders to clarify their value perceptions and eliminate

misunderstandings. These value framing discussions frequently occur during goal

alignment workshops, and the effectiveness of these workshops hinges on the quality

of value framing. Furthermore, partnership commitment could be accumulated through

dialogue forming the base of trust. It is important to note that dialogue differs from

discussions or communications that often revolve around debates and persuasion

(Ballantyne, 2004). Rather, it prioritises mutual understanding. Stakeholders engaged

in dialogue are less concerned with being right or wrong and are more focused on

whether their choices will benefit the project positively. They recognise that criteria for

right and wrong are akin to subjective and evolving value perceptions. Thus, this

dialogical interaction contributes to the development of relational norms such as

215

reciprocity.

On the other hand, the goal alignment approach and partnership commitment approach

also have an impact on the dialogue approach. Similar to the mutual influence

discussed in the development approach and the deployment approach, the dialogue

approach gets feedback on effective goal alignment and partnership commitment as the

VCC process goes on. This feedback loop is based in the iterative characteristic of the

VCC process. Given the subjectivity and dynamism of stakeholders’ value perceptions,

coupled with contingent changes that arise during the project lifecycle, disputes can

emerge, requiring a resolution. It is at this juncture that the dialogue approach comes

into play. Normally, based on the trust accumulated and the relation norms developed,

as well as a shared cognitive understanding, more effective dialogue could be

envisioned. This is also supported by the project consultant in Case Beta: “In the late

construction period, the environmental protection agency suddenly issued a new

regulation which enforced stricter reclaimed water criteria. This led the private party to

re-construct some of the plant. This was a huge re-negotiation. However, it was smooth

without wasting too much time, mostly because both parties were in a very good

relationship and had the sense of team spirit.”

The collective leadership approach serves as another interface between two practices.

Unlike the other two approaches within relationship management practices, collective

leadership provides feedback to the dialogue approach, and demonstrates its influence

on the development and deployment approaches, despite representing a higher level

within the relationship management practices hierarchy. By fostering a closer and

denser relationship network, the collective leadership approach creates favourable

conditions for stakeholder dialogues. For example, proximity among stakeholders,

especially working in the same location, ensures exchanging the information in a

timely manner. In addition, by empowering subordinate parties and placing everyone

on an equal position, the collective leadership approach encourages dialogue, as

216

highlighted by (Prahalad & Ramaswamy, 2004). Furthermore, active dialogue is one of

the objectives motivating stakeholders in the collective leadership approach.

Collective leadership also has a direct implication on resource development. To clarify

the relationship between these two approaches, it is important to distinguish between

them. Although they may initially appear to overlap, as discussed in Section 5.1.2.3,

they have distinct foci. Collective leadership centres on the operational activities that

are conducted jointly with resource bundling and development, while the latter one

emphasises the activities that facilitate a collective relational norm among stakeholders.

The rationale for their connection becomes evident when considering that the

development of collective relational norms, a consequence of the collective leadership

approach (Manz & Sims, 1993), enhances the efficiency and effectiveness of joint

working activities. Scholars have raised doubts about the effectiveness of vertical

leadership in harnessing operant resources especially project teams’ expertise and

creativity to ensure positive outcomes (Müller et al., 2018; Wu et al., 2018). Collective

leadership, when used in conjunction with other forms of leadership, offers a better

solution to the problem through letting project team members collectively exert

leadership influence.

This mutual influence is crucial, given the PPP project team members come from

different organisations, each representing different institutional logics. Through this

mutual influence among stakeholders, one party can mobilise or integrate the other

party’s resources to either develop value propositions together or to transform value

propositions into their own value creation. At the same time, this mutual influence

resulting from the effective collective leadership approach would also enhance every

stakeholder’s willingness to commit and promotes greater coordination. In this way,

the collective leadership approach influences the resource deployment approach.

As previously explained, these artificial classifications of VCC practices are by no

means the only perspective to understand the process of VCC in PPP projects. While

217

efforts were made to ensure the six approaches are conceptually distinct from each

other, there are inevitably some conceptual overlaps. This is mostly because the two

practice dimensions, resource management and relationship management, are

inextricably linked (Dyer & Singh, 1998). This interconnection can be clearly observed

in Figure 5-4 and the discussion in this section illustrates the possible logic in the PPP

context.

To sum up Section 5.3, the proposition is developed:

Proposition 9. There are six approaches that constitute the PPP

VCC process: dialogue, development, deployment, goal

alignment, partnership commitment, and collective leadership.

These approaches overlap with each other to some extent and

closely interact with each other as well. The VCC process

reflects an iterative and interactive configuration of these

practices.

5.2.2 Implications of VCC Practices on Value Outcomes

5.2.2.1 VCC practices and mid-term value outcomes

After discussing the theoretical relations among the six approaches in the VCC process,

this section delves into how these approaches would influence the value creation of

PPP projects. To begin, it enables a focus on the mid-term value outcomes. As

previously outlined in Chapter 4, mid-term value outcomes include visible value and

potential value including first-order codes such as effective procedure, risk mitigation,

innovated solution, team solidarity, trust improvement, mutual commitment, and so on.

Because of the dynamism of value and the extended lifespan of PPP projects, the value

outcomes can generally be categorised as mid-term unless they prove to be sustainable

218

over time. Thus, the VCC process generates mid-term value outcomes first before they

219

become the long-term ones.

Visible value outcomes represent the ultimate goals of PPP projects and the

stakeholders involved. These kind of value outcomes are mostly obtained from

successful resource management practices. For instance, consider the value outcome of

risk mitigation, which is one of the primary objectives of PPPs that can be significantly

realised through resource management skills. Given the large scale, lengthy duration,

and complex stakeholder involvement in PPP projects, they often face various risks.

The dialogue approach helps mitigate certain risks related to misalignment and

uncertainties during the initial stages of the project. By engaging in active and

transparent communication, stakeholders gain a better understanding of the project’s

requirements and agreements. Most of the government officers highlighted the

significance of the marketing test phase as it allows both parties to get familiar with

each other’s requirements and capabilities helping the public party to select the right

partner. Operational risks such as late design changes, finance availability and land

acquisition can also be minimised when stakeholders share information effectively and

integrate resources seamlessly.

Resource management practices also contribute to the establishment of effective

procedures. Dialogical interactions between the two parties take a leading role in

ensuring a streamlined procurement process. Once the contract is signed, additional

efforts are needed for resource motivation, mobilisation, integration and coordination,

all of which are essential for a smooth construction procedure. The public partner plays

an important role in preparing various permits and making the site available for the

private party. These tasks underscore the importance of resource management practices

in the overall project success.

Potential value outcomes are closely tied to the quality of the relationships among

stakeholders and primarily stem from effective relationship management practices.

These outcomes encompass elements like heightened trust, solidarity, and a sense of

220

belonging, which significantly contribute to a positive working environment, even if

they may not always be explicitly acknowledged by stakeholders. It was clear that

potential value outcomes are challenging to precisely measure, but they are the

accumulated relational capitals that would foster the VCC process. Through close

contacts and deep engagement with each other, stakeholders with different institutional

logics could gain mutual ex-post trust (Yan & Zhang, 2020) both in terms of affectivity,

integrity and competence (Pinto et al., 2009). Similarly, the goal alignment approach

fosters a shared cognitive framework among stakeholders, encouraging greater

commitment to the project. Likewise, the collective leadership approach establishes an

interaction platform for all stakeholders that enhances solidarity and a sense of

teamwork.

The service-dominant logic places a strong emphasis on the role of interaction in the

VCC process. This emphasis is rooted in the inherently subjective and dynamic nature

of value. Thus, the quality of interaction experience becomes a vital aspect of project

value within the scope of this research. Equivalently, visible value, the experience of

function of exchanged service, reflecting different stakeholders’ perceptions also seeks

attention.

5.2.2.2 VCC practices and long-term value outcomes

While mid-term value outcomes arise from the positive consequences of different VCC

practices, achieving long-term value outcomes requires a more deliberate and

intentional approach. In other words, long-term value outcomes can only be achieved

when the project team actively aims to achieve them. This is because long-term value

outcomes require two key factors. First, they must be sustainable over an extended

period, which demands ongoing commitment and strategic resource allocation from the

project team. Second, long-term value outcomes must take into account the diverse

expectations and experiences of project value held by different stakeholders. From this

221

perspective, long-term value outcomes serve as guiding objectives that steer VCC

practices throughout the entire project lifecycle.

As depicted in Figure 5-5, practical observations reveal two paths by which mid-term

value outcomes evolve into long-term ones. These paths vary in their focus on the

application of VCC practices. The transformation of mid-term value outcomes into

long-term ones is influenced by the nature of the value. Visible value typically requires

a replication or compromise procedure, which places a greater reliance on relationship

management practices. On the other hand, potential value requires a facilitation

procedure, which leans more heavily on resource management practices. Both visible

value and potential value are the source of economic and social value achieved through

the co-creation process among stakeholders.

Figure 5-5 Implications of VCC practices on long-term value outcomes

In Figure 5-5 the first path begins with visible value which, as identified by this

research, is value that is apparent to everyone involved. This visibility has two

characteristics: first, visible value can be clearly experienced and measured by all

stakeholders; and second, it aligns with the mainstream values pursued by most

stakeholders. Evidence from the cases reveals that improper utilisation of these two

characteristics

can lead to tensions among stakeholders and

lead to negative

222

consequences. On one hand, the use of measurable indicators for visible value

introduces a rigorous assessment system. On the other hand, the clearly measured

value, co-created by all stakeholders, inevitably faces the capture dilemma – where

everyone desires a larger share of the benefits. This explicit value becomes enticing to

all stakeholders, potentially triggering greed and competition for a larger portion of the

rewards. Such dynamics can have a detrimental impact on stakeholder relationships,

especially when every party believes they deserve a larger share and seeks ways to

capture more value.

The pursuit of visible value, such as cost effectiveness, high value for money and

effective procedures, should not be viewed negatively. Instead, this research advocates

for the sustainable pursuit of visible value by achieving value outcomes replication

through relationship management. Through relationship management practices,

stakeholders involved in the PPP project can gain a shared perception and aspiration of

project success. This shifts stakeholders’ focus from the created visible value to the

envisioned project blueprint allowing each participating party to get more visible value

by expanding the overall benefits. As discussed in the last section, these visible value

outcomes mainly derive from successful resource management practices. However,

effective resource sharing, practical development and full integration among

stakeholders can only occur when relationships among stakeholders are strong. In

contrast, relational norms such as reciprocity in the partnership commitment approach

would facilitate an effective resource management practice. Additionally, as discussed

earlier, the collective leadership approach has a positive impact on resource

management practices. For example, the project managers in private parties shared

their previous experience about how their innovative solutions were turned down due

to a lack of trust and the absence of explicit contractual incentives as the public

partners did not see any benefits for themselves from the solution. In summary,

relationship management practices play a crucial role in realising the replication of

mid-term value outcomes by positively influencing resource management practices.

223

Resource management practices are the primary drivers underlying the formation of

mid-term value outcomes.

The second path addresses potential value, which often does not receive as much

recognition as visible value in PPP projects. Despite the extended lifespan and

prolonged lifecycle of PPP projects, values such as maintaining good relationships

among stakeholders are sometimes not taken as seriously. In this research, potential

value is defined as the value of good relationships among stakeholders. It reflects the

positive experiences that one party has when interacting with others. It is referred to as

“potential” value because it is not the ultimate goal of stakeholders although it plays a

valuable role in achieving ultimate goals. For example, the project manager in Case

Alpha said that a “good relationship is preferred, but we are more in favour of more

substantial benefits as we need to keep the business running”. Thus, the transformation

path from potential value to long-term value requires more effective resource

management practices. These practices can turn potential value into a tangible asset in

achieving the project’s and stakeholders’ ultimate goals. In addition, the potential

value in this path serves as a driving force, unlike visible value, which serves as an

input to the process.

Potential value primarily results from the effective application of relationship

management practices. These practices create a shared cognitive framework for all

stakeholders, encourage reciprocal relation norms and thus formulate the network

structure that is in favour of effective resources management. Competence

development is one of the most common forms of potential value observed in the cases.

Both the private and public parties in the five cases acknowledged their organisation’s

competence improved through the PPP project. For example, the government officer in

Case Beta said: “We have been facing difficulties in terms of local finance for a long

period, and we are very glad to see this PPP project energised our local finance to some

degree”. As a functional department of public service provision, the officer in the

224

Bureau of Municipal Construction in Case Gamma said: “collaborating with the

private party on this PPP project helped us on function transformation, and now we

have mastered the governance capability as well as an enhanced service capability.”

This transformation reflects the changing role of the public partner in PPP projects in

China. Instead of simply being a client that hires a construction company, they now

have a dual role as both a governing body and a service provider. It is important to note

that good relationships not only nurture well-performed resource management

practices but also create a positive feedback loop. As more visible value outcomes,

often referred to as “substantial benefits”, are created and replicated for different

stakeholders, relationships improve, leading to increased trust, solidarity and a sense of

belonging among stakeholders. In summary, the impact of VCC practices on value

outcomes follows a two-step process. Mid-term value outcomes are achieved first,

followed by the realisation of long-term value outcomes. These long-term outcomes

can be achieved through two distinct paths, each emphasising either resource

management or relationship management practices. Thus, the proposition is developed:

Proposition 10. The VCC process should be designed based on

the integrated application of resource management and

relationship management practices that facilitate both mid-

term value outcomes and long-term value outcomes.

5.2.3 Implications of Contextual Factors on VCC Practices

The PPP model was introduced to China from Western countries like the UK to

provide infrastructure. However, the development of the PPP model in China has

evolved significantly due to institutional and organisational factors. These factors

became increasingly important as the PPP model matured. In the early stages, there

was a lack of relevant legislation and regulations, and both the government and private

225

entities lacked a comprehensive system to govern PPP projects. As the PPP model in

226

China matured, corresponding institutional and organisational factors gradually

developed and became recognised by stakeholders. The impact of these factors on

VCC practices in PPP projects was evident in the five cases studied. These factors

played an important role in shaping the VCC practices employed in PPP projects.

Therefore, understanding the institutional and organisational factors that influence the

development of PPP projects in China is crucial for the effective implementation and

success of these projects. Implications of contextual factors on VCC practices are

summarised in Figure 5-6 and then discussed in detail.

Figure 5-6 Implications of contextual factors on VCC practices

5.2.3.1 Institutional motivators and VCC practices

Regulative factors have a significant impact on stakeholders’ behaviour in PPP projects

in China. While they may appear as constraints, they also serve as incentives for

227

stakeholders to innovate within established boundaries. The regulative factors have

evolved in tandem with the growth and maturity of the PPP model in China. For

instance, the Ministry of Finance introduced the Implementation Opinions in March

2019 to promote the standardised development of public–private capital cooperation.

This policy specified six standard conditions and three requirements for PPP projects,

clarified the positive and negative lists, and encouraged the participation of private and

foreign investment, among other elements. These measures have set the parameters for

governing PPP projects thus strengthening the management of PPP projects, and

enhancing information disclosure. As a result, they have standardised the behaviour of

various stakeholders when collaborating on PPP projects. These reinforced regulatory

constraints establish a legal foundation for the future development of PPP projects,

fostering a more transparent and standardised PPP industry.

The regulatory framework surrounding PPP projects in China has grown progressively

stringent, as seen in the cases examined. Paradoxically, this regulatory complexity has

led participants to become more engaged in resource management. Specifically, due to

the complexity of rules and regulations, partners must frequently meet to clarify their

own information and concerns, which enhances the dialogue approach. This process

often involves a large number of third-party consulting firms, necessitating closer

cooperation in terms of both time and space, ultimately boosting the development

approach through joint working. In this process, the capabilities of all parties are

further improved, ultimately increasing the synergy of all parties involved in

configuring accessible resources in a way that maximises the value of the project

which is referred to as the deployment approach.

The increased regulatory constraints in Chinese PPP projects have had both positive

and negative impacts. On the positive side, they have standardised the behaviour of

stakeholders, potentially leading to more efficient project outcomes. However, these

regulations have also imposed some limitations on project schedules and selections,

which could constrain the project’s potential value. Striking a balance between these

228

constraints and the potential for VCC through resource management practices is

essential.

Normative motivators are an important factor in promoting VCC practices in PPP

projects. Normative motivators, such as sustainability and social responsibility, have

become increasingly important in recent years in promoting VCC practices in PPP

projects. Sustainability, in particular, has gained significant attention from stakeholders

due to the growing concern about the negative impact of economic activities on the

environment. Therefore, private parties involved in PPP projects are expected to

integrate environmental considerations into their operations, such as reducing carbon

emissions and promoting renewable energy use.

Moreover, stakeholders are also motivated by social responsibility, which emphasises

the importance of contributing to the social wellbeing of the communities in which

they operate. In the examined cases, it is evident that normative motivators play a

crucial role in driving stakeholders to engage in resource management practices to co-

create value. This is similar to the role played by regulative motivators, which also

incentivise stakeholders to innovate and consider the entire lifecycle cost upfront.

However, normative motivators are distinct in that they focus on adhering to

established norms and values rather than mere compliance with regulations. These

pressures often arise from societal expectations for sustainable and socially responsible

business practices, which can incentivise private parties to align their goals with those

of the broader community.

In addition to resource management practices, normative motivators also facilitate the

goal alignment approach in relationship management practices. This is because the

norms and values inherent in PPP projects require both parties to compromise and

work together to achieve common goals. For example, in social responsibility, private

sector entities may need to make concessions to support community development,

while the government may need to provide support and incentives to encourage private

229

sector investment. When stakeholders align their goals with established norms and

values, they can enhance their cooperation and collaboration within PPP projects,

ultimately fostering more effective VCC practices.

Cultural-cognitive motivators are distinct from the previous two motivators because

they focus on cognitive transformation rather than constraints. These motivators

encourage stakeholders to engage in VCC practices by shifting their cognitive

perspectives. With the increasing implementation of PPP projects, both parties are

becoming increasingly convinced that collaboration is essential for achieving better

project benefits. They understand that adopting a long-term perspective benefits all

parties involved. This shift in cognitive perspective is also evident in the evolving

relationship dynamics between public and private entities in PPP projects.

There are two noteworthy developments stemming from this cognitive shift. First, the

government is undergoing a functional transformation, transitioning from being a mere

customer in PPP projects to an active participant. In this new role, the government

actively supports and collaborates with private parties to enhance project outcomes.

This change has fostered a more open and cooperative approach to PPP projects.

Second, private companies are becoming increasingly transparent, which has led to

greater trust from government entities. This shift in cognition and the evolving

relationships between the public and private sectors are contributing to more effective

resource management practices. Indeed, these cultural-cognitive motivators, driven by

shifts in stakeholders’ thinking, have a positive impact on relationship management

practices in PPP projects. A key element in successful PPP ventures is the alignment of

goals between both parties involved. This alignment closely ties to the cognitive

dimension of relational capital. As stakeholders undergo cognitive transformations,

they become increasingly aware of the advantages of collaboration and are more

inclined to work together toward shared objectives. This, in turn, enhances goal

alignment practices, contributing to more successful PPP projects.

230

The concept of partnership commitment is considered vital in PPP projects,

particularly in the realm of affective relational capital. Private parties must invest in

and ensure the success of the project. Cultural-cognitive motivators play a significant

role in influencing stakeholders to invest more in the project and commit to achieving

common goals. This heightened commitment fosters a sense of ownership and

accountability, ultimately leading to more effective partnership commitment. By

fostering a shared understanding of the project’s objectives, cultural-cognitive

motivators can strengthen the relationship between the parties involved and promote a

long-term perspective that prioritises the project’s success. This can lead to a more

sustainable and mutually beneficial partnership that benefits all stakeholders involved

in the PPP project.

5.2.3.2 Organisational enablers and VCC practices

Organisational enablers play a critical role in promoting VCC practices in PPP projects.

These enablers include relationship foundation, complementary capabilities, and a

transparent and fair environment. Leadership roles within PPP projects are often filled

by individuals from diverse government departments and private sector organisations.

Prior to the initiation of a PPP project, the government collaborates with the private

partners to form a SPV to co-lead the project. While the SPV operates as an

organisation for the duration of the project, which is typically less than 20 years, it is

short-lived. Therefore, the behaviour of project team members is significantly

influenced by the constraints of their respective parent companies, as they continue to

represent and act on behalf of their organisations within the project team.

Relationship foundation refers to the pre-existing relationship bonds among

stakeholders involved in PPP projects. The relationship foundation also lies in the

reciprocal attitude among all stakeholders. This involves mutual willingness to

collaborate with each other without exploiting the other party, with the common goal

231

of completing the project to a high standard. According to interviewees, an emotional

connection plays a significant role in the cooperation between the two sides in PPP

projects. This emotional bond does not necessarily have to exist before the project

begins, as it can also develop during the initial interactions between the parties. The

first impression and initial feelings towards each other can set the tone for the entire

collaboration, highlighting the importance of building a positive relationship

foundation from the beginning.

Relationship foundation is a critical factor that impacts VCC in PPP projects through

relationship management practices among stakeholders. A good relationship

foundation promotes goal alignment activities and facilitates active partnership

commitment as trust, respect and reciprocity are more easily cultivated. This can lead to

increased accountability and a sense of ownership, which can ultimately result in more

effective collaboration. Furthermore, it fosters collective leadership in a PPP project,

as it is easier for stakeholders to engage and for the public party to empower the

private party, as well as the main private party to empower other partners in the

consortium. This can lead to a more engaged and empowered public party, which can

then empower the private party and other partners in the consortium. This collective

leadership approach can lead to better decision making and more effective resource

management practices, ultimately resulting in better project outcomes. Thus, a solid

relationship foundation can have a significant impact on the success of VCC practices

in PPP projects.

In addition, a strong relationship foundation is a significant enabler in facilitating

effective dialogue among stakeholders in resource management practices. When the

relationship foundation is robust, stakeholders are more willing to communicate and

interact with one another without hesitation, which results in the effectiveness of the

dialogue. Such a foundation can help to build trust and respect among stakeholders,

promoting a more open and transparent dialogue. As a result, the stakeholders can

232

understand each other’s perspectives and interests more clearly, leading to better

decision making and more effective resource management practices. Additionally,

effective dialogue aids in early detection and proactive resolution of potential conflicts,

thereby minimising the risk of disruptions to the project’s progress.

Complementary capabilities refers to the ability of stakeholders to complement each

other’s skills, knowledge and experience, and leverage each other’s strengths to

achieve project success. This factor is critical to the success of PPP projects, as it can

greatly influence the effectiveness of VCC practices through resource allocation and

utilisation. Complementary capabilities are determined at the procurement stage, where

stakeholders are selected based on their ability to complement each other’s capabilities.

However, it is still an organisational factor, as the ability of each party is influenced by

its organisational structure and resources. This factor can have a significant impact on

the resource allocation arrangements of the two parties, which include the bundling

and configuration of resources.

Bundling resources, also referred to as the development approach in resource

management practice (see Section 5.1.1), involves combining the resources of both

parties to create a more comprehensive and effective solution. This can include

combining financial resources, technical expertise and operational resources to achieve

project success. On the other hand, resource configuration, also termed the deployment

approach in resource management practices (see Section 5.1.1), involves allocating

shared resources and developed capabilities to achieve efficient and effective exchange

and utilisation of service. This can result in an optimal resource arrangement to be

aligned with the project’s objectives. By leveraging each other’s strengths and

expertise, stakeholders can create more effective and efficient solutions, and ensure

that project goals are met. Therefore, it is important for PPP project teams to consider

complementary capabilities when selecting stakeholders, and to foster an environment

that encourages collaboration and knowledge sharing.

233

A transparent and fair environment is a crucial enabler that forms the foundation of

communication, interaction and value exchange among stakeholders in a PPP project.

This factor ensures that all stakeholders have access to the same information and

resources and are treated equitably, thereby promoting a more successful project

outcome. While prior PPP research has recognised the importance of this factor, it has

not been categorised as an organisational factor, underscoring its distinctiveness and

indicating how the parent organisations can influence this aspect.

Transparency and fairness are two crucial components of this factor. Transparency

involves ensuring that all necessary information is readily available and easily

understood, while fairness focuses on how the involved stakeholders perceive their

treatment. Both of these dimensions derive from the parent organisation and have a

crucial role in relationship management and maintenance among stakeholders. While

prior studies have primarily concentrated on transparency in the tendering process

(Simon et al., 2020), it is important to note that transparency should extend throughout

the entire lifecycle of the PPP project. This requires ongoing and open communication

among parties and external stakeholders. Additionally, both the public and private

sectors should be transparent and open to external stakeholders or users, making

project-related information and reports accessible to the public. Addressing any doubts

or rumours within the public domain concerning the delivery of PPP projects is also

important, as negative public perception could affect successful project implementation.

In addition to transparency, fairness is a pivotal aspect of a successful PPP project.

Perceived fairness refers to the idea that stakeholders believe they are being treated

equitably and justly in the project. This encompasses fair sharing of benefits and costs,

impartial decision-making procedures, and equitable treatment of all involved parties.

When stakeholders perceive the project as fair, it can mitigate potential conflicts and

disputes while bolstering the legitimacy of organisational procedures.

Moreover, perceived fairness has demonstrated that perceived fairness positively

234

impacts employees’ cooperative behaviours and a firm’s operational efficiency. When

employees believe they are being treated fairly, they are more inclined to collaborate

with other stakeholders and strive towards achieving the project’s objectives. This

heightened cooperation can facilitate improved dialogue, resulting in a more efficient

project delivery. Furthermore, when stakeholders trust each other and perceive the

project as fair, joint-contract functions, such as risk sharing and performance

monitoring, are more likely to lead to improved project outcomes.

5.2.4 A Holistic Framework of VCC in PPP Projects

After a thorough examination of the previous discussion and analysis, a holistic

framework of VCC in PPP projects is proposed in Figure 5-7. This framework includes

all the essential components required for the VCC mechanism in PPP projects. The

ultimate purpose and value of a project depend on its long-term value, which

encompasses economic and social value. It is crucial to change the mindset of

stakeholders and create a fundamental ideological guarantee for them to work together

towards delivering value. Stakeholders must clearly understand the importance of

long-term value and be conscious of its implications. They should not only clarify their

own value propositions but also understand the value propositions of the other parties

involved.

235

Figure 5-7 A holistic framework of VCC in PPP projects

The co-creation section of the framework consists of three main components. Drawing

from the conceptual model generated by the previous literature review, interaction

stands out as the central concept of VCC. The three components of this section

emphasise the interaction environment, interaction practices, and interaction

performance.

It is important to note that both the theoretical model and the final model proposed in

the study have similar connotations and underlying logic. They both emphasise that

value creation is a gradual process and that value is accumulated over time in the

medium term. This point is further supported by the findings from the interview

process, as several respondents highlighted the importance of mid-term values in

achieving long-term goals.

In the initial framework proposed in Section 2.7, interaction performance was

considered as a component that created value in the short term. However, on

examining the data from the PPP projects, it was clear that the value created by

interaction performance extended beyond the short term and into the medium term.

Specifically, the interactions between the public and private partners in the PPP project

236

not only generated immediate benefits but also laid the foundation for further value

creation. For instance, effective communication between the partners led to a better

understanding of each other’s needs, which facilitated the identification of new

opportunities for value creation in the medium term. Furthermore, it was observed that

the benefits of interaction performance were not limited to the immediate partners

involved in the PPP project. Rather, the positive outcomes of these interactions had a

ripple effect on other stakeholders and sectors, resulting in wider economic and social

benefits.

In light of these findings, interaction performance was relabelled as “mid-term value”

in the final framework. This adjustment better captures the broader, longer-term

benefits generated by effective interactions between public and private partners in a

PPP project and emphasises the importance of considering beyond short-term gains

when evaluating the overall success of such projects.

The reconceptualisation of interaction performance as mid-term value in the final

model reflects a deeper understanding of the value that interactions can generate. The

earlier concept of interaction performance only focused on the outcomes that

interactions could produce, without delving deeper into their underlying value. On the

other hand, the concept of mid-term value highlights that the outcomes of interactions

themselves have inherent value, and can generate further long-term value. Moreover,

mid-term value is also linked to interaction practices and the interaction environment,

creating a feedback loop that contributes to ongoing value creation.

The study identified two key aggregated dimensions of VCC practices in PPP projects:

resource management and relationship management. While these dimensions are not

new in management literature, they are still relevant and applicable in the context of

VCC in PPP projects. The components of these dimensions were derived from a

combination of the characteristics of PPP projects and VCC.

237

The resource management dimension encompasses three sub-dimensions: the dialogue

approach, the development approach, and the deployment approach. The dialogue

approach refers to the distribution of resources among various stakeholders, who

acquire and assimilate them as sources of project value creation. This approach

emphasises the importance of collaboration and interaction among stakeholders, as

identified through first-order codes such as value framing, information sharing, invited

visits, and proactive negotiations. The development approach refers to the bundling of

resources to develop capabilities among stakeholders for reciprocal value creation, as

emphasised by the service-dominant logic perspective. Joint-working activities are

crucial for developing capabilities from the resources themselves and creating a more

significant pool of resources that can be leveraged to improve project outcomes. The

development approach highlights the collaborative nature of VCC, where resources are

bundled together to create reciprocal value. The deployment approach focuses on the

configurations of shared resources and developed capabilities to achieve efficient and

effective exchange and utilisation of services. Three first-order codes identified in the

data relate to resource mobilisation, resource integration, and commitment

coordination.

It is widely recognised in project management research that establishing positive

stakeholder relationships is essential for project success. Relationship management

practices, including collective leadership, partnership commitment, and goal alignment,

are vital for achieving this.

The goal alignment approach focuses on activities that enhance alignment among

stakeholders in PPP projects. These activities may include making concessions,

holding goal alignment workshops, and creating a shared project vision. This approach

corresponds to the cognitive dimension of relational capital, emphasising the

importance of a shared cognitive framework among stakeholder networks that can be

developed through the goal alignment process.

238

The partnership commitment approach involves the emotional and behavioural

investment of stakeholders in PPP projects, with trusting, respecting and reciprocity

being the first-order codes under this approach. These activities reflect the affective

dimension of relational capital, which highlights the importance of motivation,

expectations and norms among related parties. These activities not only show the

emotional bonds among stakeholders but also establish norms that guide their actions.

Collective leadership emphasises the significance of shared leadership in PPP projects,

where primary stakeholders are responsible for and involved in the tasks of project

leadership. Engaging, empowering and motivating are first-order codes of this

approach. The structural dimension of relational capital, which represents the

connection patterns among stakeholders, is relevant to this approach. These patterns

demonstrate the configurations of the network depicted in ways of actor connectedness,

participant hierarchy and centrality, and the strength of ties.

As previously discussed, the relationships and interplay among the various approaches

and practices involved in the PPP VCC process are complex. The three resource-

related approaches involve an evolving cycle of resource identification, development,

and utilisation, with a focus on operant resources. They complement and facilitate each

other, operating organically to support the overall VCC process. The three relationship-

related approaches also support each other, emphasising effective communication,

collaboration and partnership commitment as crucial factors in achieving successful

project outcomes. The six approaches, namely dialogue, development, deployment,

goal alignment, partnership commitment, and collective leadership, form the core of

the PPP VCC process. While these approaches overlap to some extent, they also

closely interact with one another, reflecting an iterative and interactive configuration of

practices in the VCC process.

Successful VCC in PPP projects hinges on contextual factors. These factors fall into

two categories: institutional motivators and organisational enablers. Institutional

motivators can be further divided into regulative, normative, and cultural-cognitive

239

motivators, each of which plays a pivotal role in encouraging stakeholders to engage in

VCC practices. Therefore, policymakers and practitioners need to understand and

capitalise on these motivators when designing and implementing PPP models that

foster collaborative value creation among stakeholders. On the other hand, the

successful implementation of VCC practices in PPP projects is heavily reliant on the

parent organisation’s support for all stakeholders involved. This support can be

characterised by three organisational enablers: relationship foundation, complementary

competence, and transparent and fair environment. The presence of these enablers can

significantly impact the effectiveness of VCC practices and their outcomes.

Balancing regulative, normative and cultural-cognitive factors in PPP projects in China

is crucial. These factors have both positive and negative impacts, as it is essential to

strike a balance between them to ensure the successful implementation of PPP projects.

Building and maintaining trust between the public and private parties involved is

crucial to the success of PPP projects, and regulative, normative, and cultural-cognitive

factors all play a role in achieving this goal. On the other hand, one key point to

consider is that the success of PPP projects often depends on the effectiveness of

collaboration and communication between the different stakeholders involved. This is

where organisational enablers such as relationship foundation, complementary

capabilities, and a transparent and fair environment come into play. Organisational

enablers play a critical role in promoting VCC practices in PPP projects, and it is

important for project teams to prioritise building and maintaining positive relationships

among stakeholders, considering complementary capabilities when selecting

stakeholders, and fostering a transparent and fair environment for effective

communication and collaboration.

240

5.3 Chapter Summary

The primary focus of this chapter was on the two main practices that define the PPP

VCC process: resource management and relationship management practices. The

chapter also discussed in detail how these practices are enabled or motivated by

various contextual factors. The approaches that enable effective resource management

and relationship building among stakeholders were discussed in great detail, with an

emphasis on how these practices contribute to the co-creation of value for the project

and all parties involved.

The chapter also provided an overview of the first-order codes, second-order themes,

and aggregated dimensions for each VCC approach and contextual factors. It also

presented a conceptual framework for VCC in PPP projects that includes clearly

defined constructs. The interplay between these VCC practices was also discussed,

including the relationships between different approaches within each practice and

between the two practices themselves.

Furthermore, the chapter explored the implications of these VCC practices on value

outcomes, drawing on the findings from the previous chapter to develop a set of

propositions. Finally, the chapter provided a comprehensive understanding of the

contextual antecedents, i.e., institutional factors and organisational enablers, of the

VCC process, contributing to the final framework of the PPP VCC mechanism. By

providing an in-depth discussion of these practices and contextual factors, this chapter

serves as a valuable guide for researchers and practitioners interested in improving the

success of PPP projects through VCC.

The following chapter concludes with several key aspects, including a review of

research questions, an exploration of theoretical contributions, an analysis of practical

implications, and a discussion on limitations and recommendations for future research.

241

Chapter 6

Conclusion, Limitations and Recommendations

6.1 Review of Research Questions

This chapter outlines the significant contributions of this research to both theory and

practice. The study addressed three research questions:

RQ 1: What is the meaning of value to different stakeholders involved in a PPP project

throughout its entire lifecycle?

RQ 2: How is value co-created in a PPP project during its lifecycle, and what are the

mechanisms of VCC in PPP projects?

RQ 3: Which contextual factors enable and facilitate project VCC activities in PPP

projects, and how do they influence VCC practice?

This study has investigated several critical research issues regarding the creation of

value in PPP projects (see Table 6-1). The first one is to boost value creation for all

stakeholders involved in a PPP project. However, due to the intricate nature of projects

and project-based businesses, several challenges and unresolved issues remain. Thus,

there is a need for further research to address these challenges and issues, and to gain a

deeper understanding of value in project-based contexts. Additionally, the value

creation process is often conflated with the value creation content, which hinders

analytical discussion. Many existing studies do not make a clear distinction between

the two, leading to a general discussion of value creation. The second issue is to

explore how value can be managed and co-created during the process. While VCC and

VM approaches have been increasingly applied in various business contexts, their

application in the PPP project context has been limited. The VCC and VM approaches

aim to create value for all stakeholders, including those in the marketing and

engineering areas. However, there is a need for a deeper understanding of how to

effectively apply these approaches in PPP projects where multiple stakeholders with

242

diverse interests and objectives are involved. The third research issue is to investigate

the influence of institutional and organisational antecedents on VCC practice in the

PPP project context. Despite the acknowledged importance of institutional and

organisational antecedents in shaping the practices of VCC in PPP projects, little

research has been conducted on this aspect. The existing studies have mainly focused

on the role of institutions in the formation of PPP projects, with less emphasis on how

institutional and organisational factors influence the VCC practices of PPP projects.

Moreover, the existing studies have tended to focus on the incomplete institutional

frameworks that only contain legal and regulatory frameworks, rather than on a holistic

approach that contains norms and beliefs, that shape the behaviour of actors in the PPP

project context. As a result, little is known about how informal institutions interact

with formal institutions and how they shape the behaviour of actors in PPP projects.

There is also a lack of research on how organisational factors, such as the governance

environment, culture and capability of the public and private partners, influence the

practices of VCC in PPP projects.

Table 6-1 Critical research issues and research status

Number Key research issues Status of research issue in extant

literature

1 Boosting value creation for all

stakeholders involved in a PPP

project

There is a lack of consensus on PPP

project value in the extant literature,

which has hindered the development of

a comprehensive understanding of how

value can be created.

2 Exploring how value can be

managed and co-created during

the process

The VCC and VM approach to value

creation in PPP projects has not been

thoroughly explored, as this approach

has not been fully integrated into the

PPP context.

3 Investigating the influence of

institutional and organisational

antecedents on VCC practice in

the PPP project context

The influence of institutional and

organisational antecedents on VCC

practice in the PPP project context has

been under-investigated

243

6.2 Theoretical Contributions

The findings presented in Chapters 4 and 5 provide a comprehensive theoretical

understanding of project value in the context of PPPs. This research makes a

significant contribution to the growing body of knowledge on VCC in PPP projects.

The findings reveal the subjective and dynamic nature of value when evaluating the

value of PPP projects. Furthermore, specific VCC activities are identified from the

cases and summarised into two dimensions derived from the literature. The contextual

factors are outlined to illustrate how these VCC practices can be fully used to

maximise project value. Based on the findings and the above discussion, this study

makes four specific contributions to the research on VCC in projects and PPP project

VM, summarised in Tables 6-2, 6-3 and 6-4.

6.2.1 Comprehensive Understanding of Value in PPP Projects

This study makes a significant contribution to the literature by providing a

comprehensive understanding of project value in PPP projects. Analysis of the five

case studies identified that value in PPP projects is subjective and dynamic, and its

assessment requires a multifaceted approach that considers both tangible and intangible

aspects. The contributions are summarised in Table 6-2 based on RQ 1 and the detailed

analysis is shown below.

244

Table 6-2 Contribution 1: Boosting value creation for all stakeholders

Related to the

research issues

#1 Boosting value creation for all stakeholders involved in a

PPP project

Related to the

research questions

#1 What is the meaning of value to different stakeholders

involved in a PPP project throughout its entire lifecycle?

Key contributions Proposition 1. PPP project value shows its dynamic nature by

being comprised of mid-term and long-term value outcomes.

Proposition 2. Project value is a subjective feature given by

various stakeholders involved in the project. Long-term value

outcomes include economic value and social value which

require coordination in management and realisation.

Proposition 3. Mid-term value outcomes include visible value

and potential value according to how the beneficiaries

experience the function of the service and the interaction

when the service is exchanged.

Proposition 4. The mid-term value outcomes could eventually

transform into the long-term value outcomes in the form of

replication, compromise and facilitation through different

VCC practices.

Proposition 5. Project value should be assessed from the

relationship between the satisfaction of stakeholders’

expectation in terms of mid-term and long-term value

outcomes and the resources invested for the outcomes.

Intricate classifications and precise understanding

The identification of refined value elements that occur during the entire lifecycle

enhance our understanding of value in the PPP context. From within-case analysis, this

research identified two categories of project value from the dynamism perspective

which are the mid-term value outcomes and long-term value outcomes. Further, long-

term value outcomes are classified into economic value and social value according to

the subjectivity perspective. From the process view of value creation in PPP projects,

mid-term value outcomes are classified into visible value and potential value based on

how stakeholders experience the function of the service and the interaction of service

245

provision. These refined classifications not only bring the two defining natures

(dynamism and subjectivity) of value to the fore, but also delineate a concrete map of

how these two features are manifested in a PPP project.

The whole series of value classifications proposed in this research contribute to

literature by providing a holistic perspective on evaluating a PPP project. Prior studies

that have noted the complexity of value (Laursen & Svejvig, 2016; Normann &

Ramírez, 1993; Zeithaml et al., 2020) and scholars have made efforts to interpret value

from different perspectives and in a more detailed way. For example, Petrick (2002)

developed a scale for measuring the perceived value of service based on service

experience. Harrison and Wicks (2015) argued value has been overly simplified and

suggested an assessing framework including and extending beyond the economic value.

Kristensen and Remmen (2019) proposed a framework for sustainable value

propositions including economic, social and environment dimensions by recognising a

broader group of stakeholders.

Environmental value is an important dimension in project value assessment studies

(Kayaga & Zhe, 2007; Koppenjan & Enserink, 2009) especially regarding

sustainability topics. However, in this research, little evidence suggests stakeholders

prioritize environmental value compared to other social values. This could be due to

the limited environmental impact of the cases studied, such as road and building

construction projects or sewage treatment plants with advanced technology.

Environmental value often gets merged into social value, alongside factors like

organizational reputation and regional development. Vuorinen and Martinsuo (2019)

also combined environmental value into social ones. Previous studies also paid

attention to the dynamism of value. For example, Liu, Love, Davis, et al. (2015)

proposed a conceptual performance measurement framework of PPP projects

considering all stages in the entire lifecycle. However, few studies managed to

combine both features of value in the PPP context to provide a holistic perspective on

PPP project evaluation.

246

The transformation paths of mid-term value to the long-term ones

VCC in PPP projects represents an attempt to set value-in-use instead of value-in-

exchange as the rationale of value creation and a way to encourage stakeholders’

interaction for the sake of value maximisation. These emphasise the two aspects of

value, that are the experience of function and the experience of interaction. Mid-term

value outcomes are divided accordingly into visible value and potential value. These

mid-term value outcomes would eventually transform into the long-term ones.

One finding from the cross-tabulation of cases reveals that the value dynamism

indicates that project value evolves over the entire PPP lifecycle guided by the long-

term value goals, and eventually realises the long-term value outcomes through the

replication, actualisation and comprises mid-term value outcomes. The originality of

this claim supplements the extant research on the value transformation path and

provides a concrete foundation for further investigation of transformation mechanisms.

By proposing the three transformation paths of mid-term value outcomes to the long-

term ones, this chapter focuses on the black box of the VCC mechanism in PPP

projects. To be specific, to treat mid-term value outcomes when they contradict with

the long-term ones implies a trade-off guided by the project strategy. In addition, the

replication of visible value and the actualisation of potential value implies the iterative

procedure of VCC which manifests the dynamics of value and the learning process

among all stakeholders.

An assessment framework of PPP project value

Another finding from cross-case analysis shows that project value assessment should

take account of all stakeholders’ expectations in terms of mid-term and long-term

value outcomes, as well as the resources invested for the outcomes. This finding put

emphasis on both the category and the amount of value when assessing a project. As to

the category dimension of value assessment, scholars in the field advise the inclusive

247

consideration of multiple stakeholders which is also supported by the findings of this

research (for detailed discussion, see Section 4.2.1). This section discusses the amount

of value which derives from the main research stream of VM (Thiry, 2013).

What differentiates value from similar concepts such as performance and benefits is

that value is embedded within considerations of cost. Although performance indicators

also consider “cost performance” (Yuan et al., 2009), that does not convey the

integrated message as value does. This is important because when cost performance is

set as an indicator, there is a tendency to put the objective of “save money” as more

important neglecting truly important objectives such as end-use satisfaction. In other

words, value thinking does not put cost as an objective but considers it as a way to

improve efficiency and thus improve experience. This is actually in line with the soft

paradigm of project management (Pollack, 2007; Yeo, 1991). The traditional

assessment of a project always sets prescribed “time, cost and quality” criteria which

has been widely criticised (Cruz Villazón et al., 2020; Kivilä et al., 2017). However,

the value thinking promoted in this research encourages the project manager to think in

a strategic way – that is, all the stakeholders’ value orientations are the first

consideration, followed by an efficient way to realise them. Just like in the VM

procedure, function analysis comes before searching for the solution (Thiry, 2013).

6.2.2 VCC Practices in PPP Projects

This contribution relates to the second research issues and questions as summarised in

Table 6-3. Detailed discussion follows.

Table 6-3 Contribution 2: Exploring how value can be managed and co-created

Related to the

research

issues

#2 Exploring how value can be managed and co-created during the

process

Related to the

research

#2 How is value co-created in a PPP project during its lifecycle, and

what are the mechanisms of VCC in PPP projects?

248

questions

Key

contributions

Proposition 6. Resource management practices, such as the resource

dialogue approach, resource development approach and resource

deployment approach, are crucial to the success of the VCC process in

PPP projects. The dialogue approach involves fostering a shared

understanding among stakeholders to identify resources. The

development approach centres on bundling and procuring resources,

while the deployment approach emphasises the transfer of knowledge

into capabilities and the coordination of these capabilities. Together,

these approaches form a critical foundation for effective resource

management and collaboration among stakeholders in PPP projects.

Proposition 7. Relationship management practices play a crucial role in

complementing resource management practices in VCC practices by

facilitating the accumulation of relational capital. The goal alignment

approach pertains to the cognitive dimension of relational capital,

emphasising the importance of a common cognitive framework. The

partnership commitment approach pertains to the affective dimension,

promoting relational norms among stakeholders. The collective

leadership approach pertains to the structural dimension, facilitating a

denser and closer network among stakeholders. Together, these

relationship management practices support effective collaboration and

contribute to the accumulation of relational capital, which can enhance

the VCC outcomes of PPP projects.

Proposition 9. There are six approaches that constitute the PPP VCC

process: dialogue, development, deployment, goal alignment,

partnership commitment, and collective leadership. These approaches

overlap with each other to some extent and closely interact with each

other as well. The VCC process reflects an iterative and interactive

configuration of these practices.

Proposition 10. The VCC process should be designed based on the

integrated application of resource management and relationship

management practices that facilitate both mid-term value outcomes and

long-term value outcomes.

The identification and grouping of VCC activities into two aggregated dimensions of

resource management practices and relationship management practices provides a

theoretical contribution to the existing knowledge on PPP projects.

The identified resource management practices contribute to the theoretical

understanding of VCC in PPP projects by providing a framework for effective resource

249

250

management. The resource dialogue approach contributes to the cognitive dimension

of VCC, emphasising the importance of a shared understanding among stakeholders.

The resource development approach contributes to the structural dimension,

highlighting the importance of bundling and procuring resources to maximise their

value. Finally, the resource deployment approach contributes to the behavioural

dimension, emphasising the importance of transferring knowledge into capabilities and

coordinating these capabilities. Together, these approaches provide a comprehensive

framework for effective resource management in PPP projects.

The identified relationship management practices contribute to the theoretical

understanding of VCC in PPP projects by providing a framework for effective

collaboration among stakeholders. The goal alignment approach contributes to the

cognitive dimension of VCC, emphasising the importance of aligning stakeholders’

goals towards a common objective. The partnership commitment approach contributes

to the affective dimension, emphasising the importance of building relational norms

among stakeholders. Finally, the collective leadership approach contributes to the

structural dimension, emphasising the importance of creating a denser and closer

network among stakeholders. Together, these relationship management practices

provide a comprehensive framework for effective collaboration among stakeholders in

PPP projects.

Overall, the identified VCC activities and their categorisation into resource

management and relationship management practices provide a comprehensive and

theoretical understanding of VCC in PPP projects. This theoretical contribution can

guide future research on PPP projects, enhancing the knowledge and understanding of

VCC in this context. The findings also have practical implications for project managers,

helping them to design and implement effective VCC practices to maximise the value

of their PPP projects.

251

6.2.3 The Implication of Contextual Factors on VCC Practices

This contribution relates to the second research issues and questions as summarised in

Table 6-4. Detailed discussion follows.

Table 6-4 Contribution 3: Investigating the influence of antecedents

Related to the

research issues

#3 Investigating the influence of institutional and

organisational antecedents on VCC practice in the PPP

project context

Related to the

research questions

#3 Which contextual factors enable and facilitate project

VCC activities in PPP projects, and how do they influence

VCC practice?

Key contributions Proposition 8. The VCC practices in PPP projects are

influenced by contextual antecedents, which can be

categorised into institutional motivators and organisational

enablers. Institutional motivators consist of regulative,

normative, and cognitive factors that motivate stakeholders

to participate in VCC practices and engage in collaborative

and interactive processes. Organisational enablers, on the

other hand, provide support and the initial momentum

necessary for the application of VCC practices. Together,

these factors facilitate the implementation of VCC practices

in PPP projects, contributing to the success of VCC efforts.

The identification of institutional motivators and organisational enablers as contextual

antecedents of VCC practices in PPP projects contributes to the theoretical

understanding of VCC in the context of PPP. By examining these contextual factors,

this study expands the existing knowledge on the contextual factors that influence

VCC in PPP projects. The identification of institutional motivators, such as regulative,

normative and cognitive factors, contributes to the institutional theory by highlighting

the role of institutional pressures in promoting collaboration and interactive processes

among stakeholders. This study also contributes to the organisational enablers

literature by providing insight into the initial momentum required for the application of

VCC practices.

Moreover, the identification of these contextual factors expands the understanding of

252

how VCC practices can be effectively implemented in PPP projects. By understanding

the influence of institutional motivators and organisational enablers, managers can

design and implement VCC practices that take into account the contextual factors that

influence VCC. This understanding can be translated into practical implications for

managers, such as the need to create a collaborative culture and provide the necessary

support for VCC practices.

6.2.4 The Holistic Framework of VCC Mechanism in PPP Projects

The holistic framework of VCC in PPP projects proposed in this study offers a

comprehensive and systematic understanding of the key components and practices

involved in the VCC process. The framework not only synthesises and integrates

existing literature on VCC and PPP projects but also presents an original contribution

to the field. The proposed framework provides a valuable tool for practitioners and

researchers to understand and manage the complexities of PPP projects and the VCC

process. One of the key theoretical contributions of this study is the

reconceptualisation of interaction performance as mid-term value. This

reconceptualisation offers a deeper understanding of the value that interactions can

generate and highlights the importance of ongoing value creation. The identification of

two key aggregated dimensions of VCC practices, namely resource management and

relationship management, is another significant contribution of this study. These

dimensions provide a framework for practitioners to understand the practices necessary

for effective VCC in PPP projects. The study’s identification of institutional motivators

and organisational enablers as contextual factors that impact the project environment is

also a significant contribution to the field. The proposed framework’s iterative and

interactive configuration of practices in the VCC process offers a more nuanced

understanding of the VCC process, emphasising the importance of ongoing

collaboration, communication and partnership commitment. Overall, this study offers

253

valuable insights into the complexities of VCC in PPP projects and provides a

framework for practitioners and researchers to manage these complexities effectively.

6.3 Practical Implications

The practical implications of adopting a value-based approach to project management

in the context of PPP projects extend beyond mere procedural changes; they

encompass a fundamental shift in the way stakeholders engage, collaborate, and

ultimately derive value from project endeavours. By embracing this approach,

practitioners stand to unlock a myriad of benefits that integrates each stakeholder

group involved in PPP projects.

For government entities, embracing a value-based approach to project management in

PPP projects presents an opportunity to strategically allocate resources and maximise

societal benefits in various ways. Firstly, the identified value outcomes in Chapter 4

serve as a basis for the public party to prioritise values that align with public interests

and policy objectives, government stakeholders can ensure that PPP projects address

pressing societal needs and contribute to long-term socio-economic development. For

example, a government embarking on a PPP project for the construction of a new

transportation infrastructure system may prioritise outcomes such as reduced traffic

congestion, improved accessibility, and enhanced mobility for citizens, aligning with

broader urban development goals.

Furthermore, adopting a value-based approach rooted in resource integration and

relationship management allows government entities to leverage PPP projects as

catalysts for infrastructure enhancement and service delivery improvement. For

instance, a government partnering with private entities to develop a new healthcare

facility through a PPP arrangement may prioritise outcomes such as increased access to

quality healthcare services, improved health outcomes for citizens, and enhanced

healthcare infrastructure resilience. By focusing on these value-driven outcomes,

254

government stakeholders can maximise the impact of PPP investments and address

critical infrastructure gaps more effectively.

Moreover, rigorous stakeholder engagement and needs assessment play a pivotal role

in fostering broader support and buy-in for PPP initiatives among various stakeholders,

including citizens, community organisations, and other governmental agencies. This is

a specific reflection of the interaction between resource management practices and

relationship management practices. For instance, a government seeking to implement a

PPP project for the redevelopment of a public park may conduct extensive

consultations with local residents, environmental groups, and urban planners to

identify key priorities and concerns. By incorporating stakeholder feedback into the

project design and decision-making processes, government entities can enhance project

legitimacy, build trust, and foster a sense of ownership and shared responsibility

among stakeholders.

Additionally, by embracing a value-based approach, government stakeholders can

enhance transparency, accountability, and governance mechanisms in PPP projects,

thereby mitigating potential risks and ensuring the efficient and effective delivery of

public services. For example, implementing robust monitoring and evaluation

frameworks, establishing clear performance metrics, and engaging in regular

stakeholder consultations can help government entities track project progress, identify

potential challenges, and address emerging issues in a timely manner. This proactive

approach to project management not only enhances project outcomes but also

strengthens public trust and confidence in the efficacy of public-private collaboration

as a means of achieving societal goals and priorities.

Private sector partners can also derive numerous benefits from the adoption of a value-

based approach to project management in PPP projects, which extend beyond

conventional project management practices. Firstly, by prioritising value creation that

aligns with both public and private interests, private sector stakeholders can navigate

255

the inherent complexities and uncertainties associated with PPP projects more

effectively. This transformation can only take place when the relationship management

practices are well conducted in a PPP collaboration. As shown in Figure 5-4, VCC

practices start from and are targeted for relationship management practices. For

instance, in a PPP project involving the construction of a renewable energy

infrastructure, private sector partners may prioritise outcomes such as environmental

sustainability, cost-effectiveness, and energy efficiency to align with broader societal

goals while simultaneously enhancing project viability and attractiveness to investors.

Moreover, embracing a value-based approach enables private sector partners to

mitigate project risks and uncertainties proactively, thereby enhancing investor

confidence and facilitating smoother project implementation. For example, in a PPP

project for the development of a new urban transportation system, private sector

partners may adopt innovative risk-sharing mechanisms, such as performance-based

contracting or revenue-sharing arrangements, to align incentives and mitigate financial

risks. By leveraging their expertise and resources to address project risks, private

sector partners can attract investment, secure financing, and ensure project success.

Additionally, by aligning project objectives with broader societal goals, private sector

partners can enhance their corporate reputation, brand equity, and social license to

operate, thereby paving the way for sustained business growth and market

differentiation. Again, the identified value outcomes, especially the two perspectives of

viewing value would be helpful for practitioners to value smarter. For instance, in a

PPP project focused on affordable housing development, private sector partners may

prioritise outcomes such as community engagement, inclusivity, and social impact to

demonstrate their commitment to corporate social responsibility and sustainable

development. By delivering tangible benefits to local communities and stakeholders,

private sector partners can build trust, foster goodwill, and enhance their reputation as

responsible

corporate

citizens,

thereby

gaining

competitive

advantage

the

marketplace.

256

Furthermore, embracing a value-based approach allows private sector partners to

capitalise on emerging market opportunities and drive innovation in PPP projects. For

example, in a PPP project for the digitisation of public services, private sector partners

may leverage advanced technologies, such as blockchain or artificial intelligence, to

enhance service delivery, improve efficiency, and streamline operations. By embracing

cutting-edge solutions and best practices, private sector partners can differentiate

themselves from competitors, create new revenue streams, and position themselves as

industry leaders in the rapidly evolving PPP landscape.

For the public, the adoption of a value-based approach in PPP projects holds the

promise of tangible improvements in service delivery, quality of life, and overall

public welfare. By prioritising outcomes that directly address pressing societal needs

and challenges, PPP projects have the potential to significantly enhance public well-

being and promote social inclusion.

One practical challenge faced by public stakeholders in PPP projects is ensuring

equitable access to essential services and infrastructure. For instance, in a PPP project

aimed at improving healthcare services in underserved communities, public

stakeholders may face challenges related to affordability, accessibility, and quality of

care. By prioritising value-based outcomes such as affordability, accessibility, and

quality of care, public stakeholders can ensure that healthcare services are accessible to

all citizens, regardless of their socio-economic status or geographic location. This may

involve implementing innovative financing mechanisms, expanding healthcare

facilities, and improving healthcare delivery systems to reach marginalised populations

effectively.

Moreover, fostering transparency, accountability, and citizen engagement throughout

the project lifecycle is essential for ensuring that PPP projects are responsive to

community needs and preferences. For example, in a PPP project for the

redevelopment of a public park, public stakeholders may face challenges related to

257

community engagement, environmental sustainability, and cultural preservation. By

prioritising value-based outcomes such as community engagement, environmental

sustainability, and cultural preservation, public stakeholders can ensure that the park

redevelopment project reflects the aspirations and values of local residents. This may

involve conducting public consultations, incorporating green design principles, and

preserving historical landmarks to enhance the overall quality of the park and promote

community well-being.

Furthermore, promoting social cohesion and democratic governance is essential for

ensuring the success and sustainability of PPP projects. For instance, in a PPP project

for the development of affordable housing, public stakeholders may face challenges

related to social inequality, housing affordability, and urban regeneration. By

prioritising value-based outcomes such as social inclusion, housing affordability, and

urban revitalisation, public stakeholders can address these challenges and create

inclusive, communities that benefit all residents. This may involve implementing

inclusive housing policies, revitalising blighted neighbourhoods, and promoting

mixed-income housing developments to foster social cohesion and promote economic

opportunity for all citizens.

At last, the adoption of a value-based approach in PPP projects has far-reaching

implications for various stakeholders beyond government entities and private sector

partners. These stakeholders include project financiers, regulatory bodies, civil society

organisations, and local communities, each of whom plays a critical role in the success

and sustainability of PPP initiatives.

For project financiers, embracing a value-based approach entails aligning investment

decisions with outcomes that maximise value creation and long-term financial viability.

However, a practical challenge often faced by project financiers is balancing financial

returns with social and environmental considerations. For example, in a PPP project for

renewable energy infrastructure development, project financiers may face challenges

258

related to assessing the financial risks and returns associated with green investments.

By prioritising outcomes that promote environmental sustainability, energy efficiency,

and social impact, project financiers can attract sustainable investment capital and

contribute to the transition towards a low-carbon economy.

Regulatory bodies play a crucial role in ensuring compliance with laws, regulations,

and standards governing PPP projects. However, a practical challenge faced by

regulatory bodies is ensuring effective oversight and enforcement mechanisms to

safeguard public interests and promote accountability. For example, in a PPP project

for public infrastructure development, regulatory bodies may face challenges related to

monitoring project performance, ensuring contract compliance, and addressing

potential conflicts of interest. By prioritising outcomes that promote transparency,

accountability, and good governance, regulatory bodies can strengthen regulatory

frameworks, enhance oversight mechanisms, and mitigate risks associated with PPP

projects.

Local communities are directly impacted by PPP projects and have a vested interest in

their outcomes. However, a practical challenge faced by local communities is ensuring

meaningful participation and representation in decision-making processes. For

example, in a PPP project for urban redevelopment, local communities may face

challenges related to access to information, language barriers, and power imbalances.

By prioritising outcomes that promote community engagement, social inclusion, and

participatory governance, local communities can assert their rights, voice their

concerns, and influence project outcomes to better meet their needs and aspirations.

In conclusion, the practical implications of adopting a value-based approach to project

management in PPP projects are multifaceted, offering tangible benefits for all

stakeholders involved. By prioritising outcomes that maximise value creation,

practitioners can foster stakeholder alignment, drive collaboration, and enhance project

outcomes, ultimately contributing to the realisation of broader societal goals.

259

6.4 Limitations and Further Research Recommendations

6.4.1 Research Limitations

One limitation of this research is that it only proposes propositions without subjecting

them to quantitative testing. While these propositions are grounded in extensive

literature review, expert opinions, and the findings of my case analysis, their validity

and reliability in broader contexts may benefit from empirical testing. Without

quantitative validation, it is challenging to determine the extent to which these

propositions hold true in the real world.

Another limitation is the use of cause-and-effect statements, which, although based on

evidence from the five case studies, can sometimes be vague and challenging to

validate. While the proposed propositions attempt to identify causal relationships

between different variables, it's important to acknowledge that these statements may

still require further research to empirically test and establish their validity.

Another limitation of this multiple-case study is related to the selection of the

infrastructure type, cases and their context. While this study only focuses on transport,

sewage treatment and healthcare infrastructure, the findings may have implications for

other types of infrastructure projects. The study deliberately chose commonly

identified but distinct infrastructure projects, and their specific conditions were

described to contribute to their generalisability. Additionally, the study only analysed

infrastructure projects in several provinces that are in poorer areas in China, which

may limit the applicability of the results to areas with more extensive experience in

infrastructure implementation.

6.4.2 Future Recommendations

The identification of contextual factors that facilitate VCC in PPP projects has

important implications for both theory and practice. From a theoretical standpoint, this

260

research expands the understanding of VCC in the context of PPP projects by

identifying institutional motivators and organisational enablers that are crucial to

successful VCC outcomes. These findings have implications for future research as they

suggest possible avenues for investigating the role of institutional pressures and

organisational enablers in promoting VCC practices in PPP projects.

The identification of contextual factors in promoting VCC practices suggests several

possible avenues for future research. One of the areas that future studies could explore

is the role of institutional pressures in promoting VCC practices in PPP projects. As

demonstrated in the current study, institutional pressures can be a significant driver of

VCC practices in PPP projects. For instance, Sankaran et al. (2023) provide valuable

insights into how institutional factors can drive innovation in projects within project-

oriented organisations. However, there is a need for more research to understand how

these pressures can be effectively managed to promote successful VCC outcomes.

Another area that could benefit from further research is the design and implementation

of organisational enablers that facilitate the application of VCC practices in PPP

projects. The study has identified several organisational enablers, such as effective

communication, collaboration and trust, that can facilitate the application of VCC

practices in PPP projects. Future research can examine how these enablers can be

designed and implemented in different organisational contexts to promote VCC

outcomes.

In addition to the dimensions previously mentioned, future research could explore the

governance mechanisms involved in the VCC process within PPPs, particularly

focusing on the role of leadership. Investigating how leadership approaches influence

the governance of VCC in PPPs can provide valuable insights into the dynamics

between public and private sector actors, and how they collaborate to achieve mutually

beneficial outcomes. This line of research could examine different leadership styles

and behaviours that contribute to effective VCC, considering factors such as vision

261

setting, relationship building, decision-making processes, and conflict resolution

strategies. By exploring the role of leadership in guiding and aligning the interests of

diverse stakeholders, researchers can shed light on the mechanisms that foster

successful VCC within PPPs. Furthermore, comparative studies across various PPP

projects and sectors can identify commonalities and differences in leadership

approaches and their impact on VCC outcomes. Understanding the governance

dimensions of VCC in PPPs from a leadership perspective can help policymakers,

practitioners and stakeholders develop strategies and frameworks that enhance

collaboration, trust and accountability, ultimately leading to more effective and

sustainable PPP initiatives.

Future research can also investigate how the identified contextual factors, such as the

type of infrastructure project and the geographical location, may impact the application

of VCC practices in PPP projects. For instance, the study focused on transport, sewage

treatment, and healthcare infrastructure projects in a specific region in China. Future

research can explore how the findings may apply to other types of infrastructure

projects, and in different geographical locations, to achieve a more comprehensive

understanding of the phenomena under investigation.

Given this research has some limitations in using propositions without conducting

quantitative tests that affect the extent to which the findings can be generalised, further

empirical testing is needed to determine the validity and reliability of these

propositions. Second, the use of cause-and-effect statements, while based on evidence

from the case studies, can sometimes be vague and challenging to validate

quantitatively. Future research should aim to identify quantitative evidence to support

these causal relationships.

In addition, future research could explore additional dimensions of small, medium and

large PPPs to examine potential variations across different timeframes and lifecycles in

relation to the value they aim to co-create and the outcomes they expect to achieve.

This exploration could investigate how the characteristics and dynamics of PPPs

evolve over time, considering factors such as project scale, complexity, stakeholder

involvement, and resource allocation. By conducting longitudinal studies or

comparative analyses, researchers could gain insights into the changing nature of PPPs

and the potential impact of these variations on the value generated and outcomes

achieved. Furthermore, examining the specific challenges and opportunities associated

with each size category of PPPs could help identify best practices, inform policy

making, and enhance the effectiveness of future PPP initiatives. By considering these

additional dimensions and their temporal and lifecycle variations, this line of research

can contribute to a more comprehensive understanding of PPPs and their potential for

facilitating successful collaborations between the public and private sectors.

A Framework for Value Co-Creation in China's PPP Projects Antecedents, Interactions, and Results

Students also viewed