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Pros And Cons Of Incomplete Contract In Private Finance Initiative (Pfi) Project

Table 3: Mode and SD score for the two rounds MD (Nur Syaimasyaza, 2017)

Code Implications 1st round 2nd round
Mode SD Mode SD
PROs
P1 IC is flexible in dealing with complexity of the environment 4 0.58 4 0.41
P2 IC is flexible in dealing with uncertainty of the environment 4 0.24 4 0.00
P3 Project welfare can be enhanced through renegotiation 4 0.71 4 0.83
P4 Project efficiency can be enhanced through renegotiation 4 0.47 4 0.55
P5 IC has lower transaction cost compared to complete contract 2 1.00 4 0.95
P6 The contracting parties’ motivation increase when IC is used as it signal trust among the parties. 4 1.00 4 0.88
P7 Changes can be cost-effective if it is managed accordingly 4 0.47 4 0.55
P8 Changes can be implemented quickly if it is managed accordingly 4 0.65 4 0.55
CONs
N1 Contracting parties are exposed to opportunistic behaviour e.g. initiates renegotiation, refuse to cooperate. 4 0.34 4 0.41
N2 IC cause dispute and conflict 4 0.00 4 0.00
N3 Time overruns due to the process of renegotiation, contract amendment, dispute resolution, variation, and etc. 4 0.24 4 0.28
N4 Cost overruns due to the process of renegotiation, contract amendment, dispute resolution, variation, and etc. 4 0.32 4 0.28
N5 Bidding distortion, i.e. underinvestment or overinvestment 4 0.78 4 0.88
N6 Renegotiation may jeopardise value for money and signify contract failure 4 1.02 4 1.09
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