The Non-Incremental Road to Disaster? A Comparative Policy Analysis of Agency Problems in the Commissioning of Infrastructure Projects in the UK and Italy

Theoretical research on public-private partnerships has emphasised their ability to address agency problems in infrastructure projects. Despite this, there is a substantial body of empirical research which documents the tendency of such projects to create budgetary problems for the state authorities involved. This article seeks to explore how and why these problems occur through case studies of PPP hospital projects in England and Italy. It shows how features of the PPP approach encourage and facilitate strategic behaviour by state employees during financial appraisals, and provides evidence that this has undermined the quality of investment decisions and given rise to contractual structures which have failed to minimise the long-run costs to the government. It hypothesises that the PPP approach encourages the commissioning of unaffordable projects, and suggests that future research should focus on the financial appraisal process to identify the political and organisational pressures that are particularly salient in this process and to further evaluate the outcomes.