Faculty of Business Administration Seminar Announcement
Date:23 September, 2016 Friday
Place:Faculty of Business Administration, Umit Berkman Seminar Room
“The role of management control systems and trust in operationalizing UK government’s policy in roads Private Finance Initiative contracts”
By Istemi Demirag
This paper analyzes the Private Finance Initiative (PFI) in the UK’s transport sector of roads, with a particular focus on how the central government’s policy objectives in PFI are operationalized through localized practices. It considers the role of management control systems (MCS) and inter-party trust as mediating instruments and facilitators for operationalizing government policy objectives. Drawing upon a road case study PFI project under the UK’s Highways Agency (HA), the findings suggest that government objectives are locally interpreted as performance indicators, which are pursued through complex (and bureaucratic) outcome control regimes. Bureaucratic arrangements for monitoring and incentivizing the private sector contractors resulted in accounting becoming less enabling as it failed to offer adequate incentives for the consortium and created tensions with the HA. Moreover, based upon the evidence from the case study, it appears that UK government objectives may not be achieved solely through power-based relationships exercised through contractual MCS. Instead, MCS may negatively influence performance and inter-party relationships if their deployment is perceived by the private sector as unfair. In these instances, inter-party trust can be drawn upon through processes of constructing shared meanings and goal congruence, as an enabler for developing effective control .