Badi, SM; Pryke, S; (2014) Risk allocation and Sustainable Energy Innovation (SEI) in complex public-sector procurement: the case of the UK’s Private Finance Initiative (PFI) school projects. In: Proceedings of EURAM 2014. European Academy of Management (EURAM): Valencia, Spain.

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Abstract

The allocation of risk among project participants is an important determinant of innovation success in construction projects. This study sought to examine the capacity of risk allocation within the Private Finance Initiative (PFI) project delivery model to encourage the implementation of environmental innovation, particularly Sustainable Energy Innovation (SEI). The study attends to a significant gap in knowledge as there is a lack of conceptual and empirical work on managing innovative processes for sustainable energy in PFI projects. A four-case qualitative research methodology is adopted within the context of the UK government’s Building Schools for the Future (BSF) programme. The findings identify that SEIs are encouraged on the innovative projects by the perceived clarity, appropriateness and manageability of the risks associated with the project’s energy performance on the PFI contract. The main SEIs were largely developed in order to manage long-term energy performance risks allocated to private sector actors and safeguard their long-term commitment to the project. However, the findings indicate that excessive perceived innovation-related risks, particularly capital cost risk, may restrict further SEIs to be implemented.

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