Murray, Alex; (2018) Returns on public capital investment - procurement, whole life cost and value in English schools and hospitals from 1997 - 2012. Doctoral thesis (Ph.D), UCL (University College London).

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Abstract

The UK government has for many decades assumed the role of provider for a range of public services (and the assets that underpin them) considered essential to the functioning of society. Education and healthcare in England have remained almost entirely publicly funded under the administration and management of central government departments and local authorities. The need to maintain and invest in the public service assets (PSAs) that support delivery remains, regardless of whether their ownership is public or private. The business cases for investment involve social cost benefit analysis assessed against the budgetary constraints of fiscal affordability. This thesis attempts to identify the information used, and ideally required, to make decisions to invest in building schools and hospitals. The role of procurement method is considered alongside the forms of capital work (refurbishment / new build) in recent capital programmes for schools and hospitals. Theoretical frameworks for analysis of the efficacy of capital investment are drawn from the whole life cost (WLC) literature and discourses on decision making under uncertainty, contract theory and transaction cost economics. New methodological contributions on the valuation of whole life cost returns, including those from improved outcomes in the form of educational attainment in schools, are presented in later analysis chapters. Key findings include: 1) the estimated whole life cost ratio of 1 (construction) to 0.5 (operation) to 5 (staffing) for schools over a 60 year life discounted at 3.5% and, 2) a lack of association in improved educational attainment following capital investment. Further, findings suggest that given the durable nature of PSAs, along with the long time periods over which benefits accrue, there is considerable difficulty in appraising the returns to (and value of) capital investment in PSAs. Recommendations focus on the need for better co-ordination of government data on capital programmes and projects, on-going costs of operation and the outcomes of PSA users to better inform investment appraisal and programme design.

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