Factors that Impact on the Achievement of Value for Money in Public Sector Projects in the State of Kuwait

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Type of Academic Paper – Dissertation Chapter

Academic Subject – Energy Management

Word Count – 13421 words



Introduction to Research Topic

Given the prevailing conditions of developing economies, Kuwait is one of those countries where the construction industry has developed profoundly. The government of Kuwait now depends on the construction industry for the development of infrastructural projects. The projected investment that Kuwait intends to make in this sector reveals further chances of its growth. The fact that infrastructural projects play a vital role in enhancing the country’s economic and social status cannot be ignored. Still, it is also true that Kuwait has natural resources such as oil, which is the country’s biggest asset and is utilised in generating millions of revenue. According to the study conducted by Al-Kattari, Fattouh, and Segal (2011,p. 10), it was found that different projects are under process in Kuwait, such as the Al- Zour import gas terminal project, which is a huge project between Kuwait National Petroleum Company and Hyundai engineering. The project aims to enhance the supply of gas in the country, especially in urban areas.

Value for money is the basic goal in all projects. The ultimate target behind starting mega projects is to increase the value for money, specifically in those cases where foreigners are involved. Foreign investments are basically the way to increase the value of money and ensure that foreign investments are involved in improving the country’s standard (Jarkas, 2013, p. 60). However, according to a report published by KKuwait’sChamber of Commerce, it was found that Kuwait is in dire need of increasing its power capacity from 12.5 GW to 30GW by the year 2030. The revenue generated from the projects is used in making debt payments. In 2015and 2016, Kuwait has started projects worth USD 30 billion in the revenue-generating sectors, oil and gas (Helmy, 2011). PPP has also been starting many mega projects in Kuwait which are generating large revenue for the country. Different private sectors have made investments in the construction industry also by collaborating with other sectors like education. Apart from this, PPP is considered a long-term contractual relationship with public and private employment. The investments that are made by PPP are for the long term growth of the construction and infrastructure industry. However, most of the construction industry in Kuwait is controlled and monitored by the government. The government has to ensure that the revenues generated from foreign investments add value to the economy.

In the light of the study conducted by Al-Mujamed, Fifield, and Power (2013, p. 45), it was found that the changes in the Kuwait system of foreign investments and partnerships have been changing with time. All the system changes lead towards enhancing the value of money and the need for PPP to be involved in construction and infrastructural projects. Since the year 2010, Kuwait has been involved in various projects involving foreign investments for economic growth and development. Apart from the oil and gas sector, the new plans designed to enhance the value of money include public-private partnerships (PPP). Kuwait has taken this step after the oil price had dropped drastically, and the country felt the need to make investments in other sectors. The development plan seeks to increase investments for the year 2015 to 2019.  However, it is difficult for Kuwait to make arrangements in this development plan because the country’s non-oil growth is only 4%.

Compared with other countries like the UK that use PPPs for development projects in schools, hospitals, and infrastructure, PPPs operate through build-own-operate (BOP) systems in Kuwait. Kuwait has various advantages if they use PPP for their developmental projects (Al Saadi and Abdou, 2013, p. 18). The biggest advantage for Kuwait is that it shall reduce the financial stress that the country has to face due to the increased amount of government spending. Though the government finances most Kuwait projects, if they use PPP so, they will attract private funding.

Aim and Objectives

The study’s aim is to show the predicted outcomes or results that the researcher intends to achieve at the end of the study. The following study had focused on developing economies like Kuwait, which are emphasising the growth of their economy through construction and infrastructure projects like transport and energy infrastructure. Value for money is obtained from the balance of benefits and costs of ownership. Public procurement is basically the activity carried out by the government to purchase goods and render services to carry out basic operations (Dawar and Oh, 2017). The process mainly involves the use of public funds. The following study will determine the impact on the achievement of value for money in KKuwait’spublic sector projects. Hence, this study aimed to evaluate the value of money in public sector projects in Kuwait.

Following are the set of objectives designed for this study:

  • To understand the concept behind value for money.
  • To determine the factors that affect the value of money in public sector projects in Kuwait.
  • To determine the impact of inflation on value for money.
  • To determine the impact of interest rate on value for money.
  • To determine the impact of economic growth on value for money.
  • To propose a framework for estimation of the factors which potentially affect the implementation of the VFM concept in PPP projects;
  • To determine what factors significantly influence the implementation of the VFM concept in PPP infrastructure projects in Kuwait’s State.
  • To provide recommendations for Kuwait’s public sector projects to enhance value for money.

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The rationale is the most significant part of the study as it provides logical reasoning or a statement for conducting the research. The following study was conducted to fill in the research gap for identifying the factors that affect the value of money. The study has identified inflation, economic growth, and interest rate as the factors that influence the value of money; therefore, PPP projects in Kuwait are conducted based on these factors. The construction industry and specifically the infrastructural projects are the basis on which economic growth is dependent (Ahsan and Gunawan, 2010, p. 70). The national government ensures that infrastructural projects are under the pipeline so that foreign investors can be attracted. The value of money is determined through the factors and how PPP uses them in Kuwait’s construction industry.

Moreover, the study has also focused on infrastructure complexity because Kuwait is mostly dependent on the oil and gas industry for generating revenue. Therefore, the country has to take critical steps to ensure that they generate revenues from other means. To understand this concept, the case of Qatar is taken into consideration.  The country has successfully implemented its procurement plans and development project designs for the next five years. According to Kuwaiti Times (2017), Qatar has decided to invest around $100 billion in infrastructure projects by 2030. Since the price of petroleum had dropped and the railway system collapsed, Qatar had declared to spend $20 million up to 2015 to invest in developmental projects of roads and railways. Qatar’s economic environment can be compared with Kuwait to understand how PPPs control the construction industry.

Proposed Methodology

To achieve the study’s aims and objectives, the researcher has designed a structured methodology to be adopted for determining the impact of factors of the value of money in public sector projects in Kuwait.

Research Approach

There are two types of research approaches; deductive and inductive. The deductive method is defined as how the researcher develops hypotheses and conducts a quantitative study, whereas the inductive method is used in a qualitative study (Ritchie et al., 2013). The research has used the deductive approach because it is quantitative in nature. This research aimed to evaluate the achievement of the value of money in Kuwait’s public sector projects.

Research Design

Research design is the classification of qualitative and quantitative studies. The qualitative study uses existing information, such as reports and case studies (Collins and Hussey, 2013). It is used to gain insights into the opinions of people. In contrast, quantitative studies are those in which statistical methods and techniques are used to achieve the study’s objectives with the help of numeric data.

Therefore, the following study has used a quantitative method of research design to extract data of factors affecting Kuwait’s value of money. The data were obtained from the companies in the construction industry in Kuwait.

Data Collection Methods

There are two categories of data collection methods primary and secondary. The primary method is the first-hand data collected to find a solution to the research problem, whereas a secondary data collection method is the existing data (Harwell, 2011, p. 147). For the following research, a secondary method of data collection is used. The researcher has gathered information about construction companies, and the data was further used for analysis.

Sampling Method and Technique

There are various types of sampling methods that are used by researchers. However, it depends on the study’s requirement in which the sampling method has to be selected. There are two types of sampling methods; probability and non-probability. The probability method is used when the researcher intends to give an equal chance of selection. In the non-probability method, the selection is made based on attributes and characteristics.

For the following study, the researcher had selected 5construction companies in Kuwait, and the information was obtained from the year 2011 to 2015.

Data Analysis Technique

The data analysis technique to be used was correlation and regression. The researcher will use the information obtained from Kuwait’s 5 construction companies, and tests will be applied. With the help of correlation and regression, the researcher analysed the impact of factors of the value of money on public-private partnership projects in Kuwait. The information will be used from the year 2011 to 2015.


The scope of the study describes the parameters of research that are to be explored by the researcher. With this study’s help, the researcher has covered factors like interest, economic growth, and inflation to understand how they affect the value of money. However, the researcher has limited the study to Kuwait. Therefore, excessive data cannot be obtained. The following study was beneficial for analyzing the trends and developments in Kuwait’s construction industry, specifically in infrastructure. The researcher has used the quantitative method of research design and a secondary data collection method to obtain insights about the construction companies used for analysis. Furthermore, the study’s objectives are associated with determining the impact of each factor on value for money and finding the impact. Therefore, the study’s overall scope reveals that it covers the major developments made by PPP’s in Kuwait’s construction industry to enhance economic growth, which ultimately leads towards the value of money.


H0:  Factors affecting value for money significantly impact public-private sector projects in Kuwait.

H1:  Factors affecting value for money insignificantly impact public-private sector projects in Kuwait

Dissertation Structure

The dissertation is broken into five major chapters, mainly the introduction, literature review, methodology, findings, conclusion, and recommendations. The first chapter of the study focuses on the study’s background, research questions, and objectives. The chapter also discusses the proposed methodology, hypothesis, and limitations of the study.

Following the chapter of the introduction is the literature review. The literature review has covered a detailed discussion on the value of money and projects executed in public-private partnerships. It also includes a conceptual and theoretical framework for showing the topics’ theoretical importance and the relationship between variables. The major variables that are to be discussed in this chapter are infrastructure, procurement systems, different types of public-private partnerships, the impact of factors on the value of money for public-private partnerships in Kuwait, and the relationship between the factors of the value of money with private-public partnerships in Kuwait.

The third chapter of the study was a methodology in which the researcher discusses the data collection methods and techniques used for analyzing the data. The chapter includes research design, the approach used, sampling methods used for gathering data, and the data analysis technique used in the following chapters.

The fourth chapter of the study was the findings and analysis. In this chapter, the researcher analyses the data using qualitative, quantitative or both methods. It consists of a detailed description of the findings and its analysis by referring to the literature findings.

The last chapter of the study was concluded, and recommendations. The researcher provides a conclusion of the entire study, ensures that the objectives of the study are achieved, and provides a set of recommendations for future purposes.

Limitation of Research

Following are the set of limitations faced by the researcher:

  • The time duration for gathering the data was limited.
  • The budget for accessing credit-based journals and articles were less due to which all activities could not be carried out easily.
  • The region of the study was too specific; therefore, all journals could not be accessed.
  • The secondary data was not easily accessible because limited data was available regarding construction companies of Kuwait.
  • Many journals and articles could not be opened without subscription or credit.


Ahsan, K., and Gunawan, I., 2010. Analysis of cost and schedule performance of international development projects. International Journal of Project Management28(1), pp.68-78.

Al Saadi, R., and Abdou, A., 2013. The use of public-private partnerships in infrastructure development in gulf cooperation council countries. In Proceedings of International Conference on PPP Body of Knowledge (P3BooK) (pp. 18-20). Preston: Westleigh Conference Centre.

Almujamed, H.I., Fifield, S., and Power, D., 2013. An investigation of the role of technical analysis in Kuwait. Qualitative research in financial markets5(1), pp.43-64.

Collis, J., and Hussey, R., 2013. Business research: A practical guide for undergraduate and postgraduate students. Palgrave Macmillan.

Dawar, K. and Oh, S.C., 2017. The role of public procurement policy in driving industrial development.

El-Katiri, L., Fattouh, B., and Segal, P., 2011. Anatomy of an oil-based welfare state: Rent distribution in Kuwait. p. 10

Harwell, M.R., 2011. Research Design in Qualitative/Quantitative. The Sage handbook for education research: Pursuing ideas as the keystone of exemplary inquiry, p.147.

Helmy, M.A., 2011. Investigating the critical success factors for PPP projects in Kuwait.

Jarkas, A.M., 2013. Primary factors influencing bid mark-up size decisions of general contractors in Kuwait. Journal of Financial Management of Property and Construction18(1), pp.53-75.

Kuwaiti Times, 2017, data retrieved from http://news.kuwaittimes.net/qatar-spend-100-billion-roads-railways-projects/ accessed on 27/12/2017

Ritchie, J., Lewis, J., Nicholls, C.M., and Ormston, R. eds., 2013. Qualitative research practises A guide for social science students and researchers. Sage.

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