Emnekode: BE304E Navn på kandidat: Ravi Khadka Emnekode: BE304E Navn på kandidat: Ravi Khadka Management Control in Public Private Partnership: A Comparative Case Study of Norwegian and Australian Road Projects Dato: 22.05.2018 Totalt antall sider: 98 Management Control in Public Private Partnership: A Comparative Case Study of Norwegian and Australian Road Projects Dato: 22.05.2018 Totalt antall sider: ABSTRACT Public Private Partnership (PPP) is gaining rising popularity in infrastructure development amidst financial crunches of governments and public demand for quality infrastructure. PPPs are characterized by risks associated during various phases of project life cycle and failure to handle them could lead to hazardous losses to the country. Management Control is a strategy that could tackle such risks and minimize their adverse effects. This study seeks to explain such control mechanisms used in Public Private Partnership in road agreements across two different countries, Norway and Australia. The infamous typology formulated by Malmi and Brown (2008) that regards management control system as a package is considered as the foundation framework for this research. The research design used in this study is a comparative case study. The study supports the presence of management control in the PPP model of both countries. The public partner uses a mix of management control mechanisms with varied intensity during each phase of project life cycle. Keywords: Public Private Partnership, Management Control, PPP in Norway, PPP in Australia, MCS Package i ACKNOWLEDGEMENTS This internship project has provided me with immense opportunity to learn about professionalism, work environment and skill development. The success of this project is an accumulation of many people’s endeavor. First of all, I would like to express my sincere and enormous gratitude to our highly respected Head of Department Prof. Anatoli Bourmistrov, Department of Economic Analysis and Accounting, for his valuable guidance, encouragement and constant support in the completion of this thesis. I want to express my deepest sense of appreciation and sincere thanks to my esteemed supervisor Asst. Professor Elena Dybtsyna for providing untiring guidance, encouragement and support during the period. Finally, I would also like to acknowledge my family and friends whose support and encouragement have been a key factor for my success. ii TABLE OF CONTENTS ABSTRACT ................................................................................................................... i ACKNOWLEDGEMENTS ........................................................................................ ii LIST OF TABLES ....................................................................................................... v LIST OF FIGURES .................................................................................................... vi LIST OF ABBREVIATIONS ................................................................................... vii CHAPTER 1: INTRODUCTION ............................................................................... 1 1.1 Background of the problem ................................................................................. 1 1.2 Problem Statement ............................................................................................... 3 1.3 Purpose of the study ............................................................................................. 4 1.4 Structure of the study ........................................................................................... 4 CHAPTER 2: LITERATURE REVIEW .................................................................. 6 2.1 Management Control ........................................................................................... 6 2.1.2 Management Control as a Package ............................................................... 7 2.2 Public Private Partnership .................................................................................. 13 2.2.1 PPP Models ................................................................................................. 15 2.3 Management Control in PPP .............................................................................. 24 CHAPTER 3: EMPIRICAL CONTEXT ................................................................ 27 3.1 Norwegian National Transport Plan .................................................................. 27 3.1.1 National Transport Plan 2002-2011 ............................................................ 29 3.1.2 National Transport Plan 2006-2015 ............................................................ 30 3.1.3 National Transport Plan 2010–2019 ........................................................... 31 3.1.4 National Transport Plan 2014- 2023 ........................................................... 33 3.1.5 National Transport Plan 2018-2029 ............................................................ 35 3.2 PPP in Norway ................................................................................................... 37 CHAPTER 4: RESEARCH METHODOLOGY .................................................... 38 4.1 Sampling ............................................................................................................ 38 4.2 Research Design................................................................................................. 39 4.3 Sources of Data .................................................................................................. 40 4.4 Validity and Reliability ...................................................................................... 41 4.5 Analysis.............................................................................................................. 42 i CHAPTER 5: FINDINGS ......................................................................................... 43 5.1 Case Study of Pilot Projects of Norway ............................................................ 43 5.2 Case Study of Westlink M7 of Australia ........................................................... 47 5.3 Profile Comparison of Norwegian PPP and Australian PPP ............................. 49 5.4 Management Control in Norwegian PPP Model ............................................... 50 5.4.1 Compensation and Reward ......................................................................... 50 5.4.2 Administrative Control ............................................................................... 52 5.4.3 Planning Control ......................................................................................... 54 5.4.4 Cybernetic Control ...................................................................................... 54 5.4.5 Cultural Control .......................................................................................... 55 5.5 Management Control in Australian PPP Model................................................. 56 5.5.1 Planning Control ......................................................................................... 56 5.5.2 Cybernetic Control ...................................................................................... 57 5.5.3 Compensation and Reward ......................................................................... 59 5.5.4 Cultural Control .......................................................................................... 60 5.5.5 Administrative Control ............................................................................... 61 CHAPTER 6: ANALYSIS AND DISCUSSION ..................................................... 63 6.1 Reward and compensation ................................................................................. 63 6.2 Planning ............................................................................................................. 66 6.3 Cultural Controls ................................................................................................ 69 6.4 Administrative Controls ..................................................................................... 70 6.5 Cybernetic Controls ........................................................................................... 75 CHAPTER 7: CONCLUSION.................................................................................. 80 BIBLIOGRAPHY ...................................................................................................... 84 ii LIST OF TABLES Table 1: Profile comparison of Norwegian PPP and Australian PPP .......................... 49 v LIST OF FIGURES Figure 1:MCS as a package ........................................................................................... 7 Figure 2: PPP Models with level of Participation ........................................................ 16 Figure 3: Lease / Affermage Contract ......................................................................... 20 Figure 4:Concession Model ......................................................................................... 21 Figure 5: Typical structure of BOOT project .............................................................. 23 Figure 6: Stages involved and responsibility bearing in Norwegian PPP model ........ 43 Figure 7: Location of PPP Road Projects on country map .......................................... 44 Figure 8: Payment Procedure to PPP Company .......................................................... 52 Figure 9: Structure of Norwegian PPP........................................................................