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Towards a Comprehensive Understanding of Public Private Partnerships for Infrastructure Development
Abstract
P ublic Private Partnerships (PPPs) have emerged as one of the major approaches for delivering infrastructure projects in recent years. If properly formulated and managed, a PPP can provide a number of benefits to the public sector such as: alleviating the financial bur-den on the public sector due to rising infrastructure development costs; allowing risks to be transferred from the public to the private sector; and increasing the "value for money" spent for infrastructure services by providing more efficient, lower cost, and reliable services. 1 However, the experience of the public sector with PPPs has not always been positive. Many PPP projects are either held up or terminated due to: wide gaps between public and private sector expectations; lack of clear government objectives and commitment; complex decision making; poorly defined sector policies; inadequate legal/regulatory frameworks; poor risk management; low credibility of government policies; inadequate domestic capital markets; lack of mechanisms to attract long-term finance from private sources at affordable rates; poor transparency; and lack of competition. 2 Despite numerous negative experiences, 3 many governments (e.g., the UK and Australia) continue to view PPPs as one of the key strategies for deliver-ing public services and infrastructure. Therefore, understanding and enhancing knowledge of PPPs continue to be a matter of significance and importance. Dur-ing the past decades, researchers have conducted studies that cover a wide range of topics, such as how to select an appropriate concessionaire, what are the criti-cal factors for the success or failure of PPP projects, what roles the government should play in PPP projects, and more.
... This feature, however, triggers concerns about various possessions in the project that are approached by the concept of contractual arrangements, e.g., Build-Operate-Transfer (BOT), Build-Operate-Own (BOO), etc. [11]. The schemes associated with the contractual arrangements not only outline the degree of contributions of the involving parties pertaining to the major stream of activities within the project life cycle, i.e., design, finance, construction, facility operation, maintenance, etc., but more importantly they also address the ownership issues [12]. ...
... Concurrently with the U.S., and even earlier, this approach was initiated in Europe for infrastructure development projects in France where the most prominent instance is the Paris water supply, as well as other types of projects such as canals, bridges, and so forth [11,16]. The contemporary application of PPP was reformed after the 1970s, and various nations and entities commenced to enrich PPP with more legal frameworks, e.g., European Commission, Canadian Council for Public-Private Partnership, Efficiency Unit of Hong Kong, etc. [12,17]. The United Kingdom (UK), as one of the European leaders in this regard, initiated the concept of Private Finance Initiative (PFI) in 1992 and primarily sought to maintain the public financial reservoirs as well as to keep the infrastructure development investments off the government's balance sheet [18]. ...
... The United Kingdom (UK), as one of the European leaders in this regard, initiated the concept of Private Finance Initiative (PFI) in 1992 and primarily sought to maintain the public financial reservoirs as well as to keep the infrastructure development investments off the government's balance sheet [18]. Although PFI is broadly argued equivalent to PPP [12,19], there is a debate that the latter emphasizes the role of the private sector beyond sponsorship. Thus, Her Majesty's (HM) Treasury initiated Private Finance 2 in 2012, known as PF2, in order to magnify the collaborative role of the involved parties rather than being a distinct financial or administerial service provider [20]. ...
Decisions regarding contractual arrangements and selecting a procurement method are two major aspects of Public-Private Partnership (PPP). Given project ownership as one of the core elements of contractual arrangements, this study employs Binary Logistic Regression (BLR) method to statistically investigate any potential link between project ownership and project size. BLR is a beneficial approach to examine type and significance of the connection between a dependent variable (project ownership) and a set of independent variables (investment size and contract duration). Utilizing a list of PPP projects in Norway, the results indicate that project ownership bears no connection with contract duration. However, the growth of investment size increases the probability of private ownership, except for road construction projects which are public-owned projects with large capital costs. Further studies regarding the implications of project ownership, e.g., risk, sustainability, are highlighted as the future directions in this context.
... Both PPP-centric journals and multi-disciplinary outlets represent this variety. The research in the field emerged from a few disciplines like Construction Management and Economics (CME), Economics (EC), and Public Administration and Management (PAM) (Hodge & Greve, 2007;Ke et al., 2009;Kwak et al., 2009;Wang et al., 2018). ...
... The sum of all author weights in a multiple-author paper is equal to 1. For a single-author paper, the author receives a score of 1. PPP as a field of study is multi-disciplinary (Hodge & Greve, 2017;Kwak et al., 2009) and its research interests stem from multiple disciplines, among which the following constitute its body of knowledge: CME, EC, PAM, TR, and Healthcare Management (HCM) disciplines (Ke et al., 2009;Kwak et al., 2009;Wang et al., 2018;Narbaev et al., 2020). Therefore, the category primary disciplinary focus was used to reveal the distribution of the purposes and methods used in the collected literature across these 5 disciplines. ...
... The sum of all author weights in a multiple-author paper is equal to 1. For a single-author paper, the author receives a score of 1. PPP as a field of study is multi-disciplinary (Hodge & Greve, 2017;Kwak et al., 2009) and its research interests stem from multiple disciplines, among which the following constitute its body of knowledge: CME, EC, PAM, TR, and Healthcare Management (HCM) disciplines (Ke et al., 2009;Kwak et al., 2009;Wang et al., 2018;Narbaev et al., 2020). Therefore, the category primary disciplinary focus was used to reveal the distribution of the purposes and methods used in the collected literature across these 5 disciplines. ...
The growing literature in PPP has made the field multi-disciplinary, over-differentiated, and unconsolidated. Taking a meta-analysis lens, this study investigates an unexplored identity of the field. It consolidates 61 review articles in PPP, analyses them across numerous review categories, and provides implications and suggestions for future studies. The review categories include the purpose of study, methods used, dataset details, journal and author details, primary disciplinary focus, awareness of previous review studies, and evolution of the PPP review literature. The findings reveal that the literature progressed through four evolution phases: from initiation, formation, growth, to expansion. Future review works should involve more empirical studies and examine the practical relevance of the PPP research. Promising areas are PPP governance, complexity, post-transfer phases, sustainability-related issues, and real estate development through PPP. The PPP researchers in construction engineering and management, property management, public management, and transportation will benefit from understanding the field’s identity, how it is currently being formed, promising areas, and where the literature is evolving.
... Despite the successes, failed PPPs have also been reported mainly due to unanticipated and/or poorly managed risks (Ibrahim et al., 2006;Ke et al., 2011;Kwak et al., 2009;Wang et al., 2018). For example, projects, such as the Channel Tunnel Project (1987), Toll Road Project in Mexico (1989Mexico ( -1994, Philippine Power Supply Project (2002), the Singapore Sports hub (2010)(2011)(2012)(2013)(2014) and the Bird's Nest stadium project in Beijing, Lekki toll road concession in Nigeria have struggled, mainly due to risks (Kim & Kwa, 2020;Nwangwu, 2013;Wang et al., 2020). ...
... These risks result from complex organisational structures, documentation, sub-agreements, and financing arrangements associated with PPP projects. In addition, differing project characteristics, political opportunism, poor legal and regulatory frameworks, the long duration of contractual relationships, and the involvement of many stakeholders with different interests are risks facing PPP projects (Carbonara et al., 2014;Grimsey & Lewis, 2002;Mazher et al., 2017;Shrestha et al., 2019;Zayyanu & Johar, 2017;Kwak et al., 2009;Sanda et al., 2020). Such risks have accounted for the poor performance of most PPPs in many countries, and Uganda is no exception. ...
Public-Private Partnerships (PPPs) have been adopted globally to reduce funding gaps amidst an increasing need for public infrastructure. However, they are prone to several risks. Little attention has been paid to this crucial phenomenon in Uganda, despite the rising interest in the use of the PPP model. Through a questionnaire survey with PPP experts in Uganda, 34 principal risks were identified of which the top 10 are construction completion, government corruption, construction cost overrun, land acquisition , delay in project approval and permits, high financing cost, operation cost overrun, inadequate tender competition, procurement risk, and inability to service debt risk. Most of these were found to arise from inadequate experience in PPPs, the complexity of the PPP model, high levels of corruption and the immature domestic financial market. The knowledge of these risks can guide PPP contract negotiations and potential investors in their investment decisions, especially the objective assessment of PPP projects.
... These risks derive from the contracts' flexibility and a high degree of indeterminacy, mainly since they are incomplete, long-term contracts, which makes it impossible to foresee all the circumstances that could unfold throughout the lifecycle of the contractual relationship. Similarly, PPPs may present specific institutional risks, such as those caused by the lack of agencies that specialize in public-private relations or those caused by weak control tools or defects in the mechanisms to ensure transparency and access to information [31]. The role of risk allocation to achieve a win-win balance [7]. ...
... These risks derive from the contracts' flexibility and a high degree of indeterminacy, mainly since they are incomplete, long-term contracts, which makes it impossible to foresee all the circumstances that could unfold throughout the lifecycle of the contractual relationship. Similarly, PPPs may present specific institutional risks, such as those caused by the lack of agencies that specialize in public-private relations or those caused by weak control tools or defects in the mechanisms to ensure transparency and access to information [31]. ...
The public sector is becoming increasingly appealing. In the context of declining public money to support health studies and public health interventions, public-private partnerships to entities (including government agencies and scientific research institutes) are becoming increasingly im-portant. When forming this type of cooperation, the participants highlight synergies between the private partners and the public's missions or goals. The tasks of private and public sector actors, on the other hand, frequently diverge significantly. The integrity and honesty of public officials, in-stitutions, trust, and faith in those individuals and institutions may all be jeopardized by these collaborations. In this study, we use the institutional corruption framework to highlight systemic concerns raised by PPPs affiliated with the governments of one of South Asia's countries. Overall analytical frameworks for such collaborations tend to downplay or disregard these systemic im-pacts and their ethical implications, as we argue. We offer some guidelines for public sector stakeholders that want to think about PPPs in a more systemic and analytical way. Partnership as a default paradigm for engagement with the private sector needs to be reconsidered by public sector participants. They also need to be more vocal about which goals they can and cannot fulfill, given the limitations of public financing resources.
... This research aims to develop a model to assess the impact of BIM on KPIs in PPPs and, consequently, their performance condition. Since the PPPs are known as complex systems (Kwak et al., 2009;Liu et al., 2015c;Malaeb & Hamzeh, 2022), causal analyses are one of the most proper methods for analyzing these types of systems (Ding et al., 2021;Kheirinejad et al., 2022;Yan et al., 2021). The Copula Bayesian Network (CBN) has been chosen as a powerful statistical tool to determine and simulate the causal relationship of parameters to enhance the PPPs' performance using BIM and estimate their influence. ...
... Meanwhile, the inefficient assessment of PPPs' performance is one of the most critical reasons for their failures (Liu et al., 2015b). Generally, due to PPPs' more complicated nature, such as complex procedures, stakeholders relationships, and long concession periods, these projects contain a more complex performance management process (Kwak et al., 2009;Liu et al., 2015c). The performance of these projects is influenced by many factors directly and indirectly (Mladenovic et al., 2013); however, KPIs are one of the most accurate tools to evaluate the PPPs' performance alignment with their objectives (Hashim et al., 2017;Yuan et al., 2008). ...
Public-private partnerships (PPPs) are efficient methods for constructing infrastructures that create many opportunities, specifically in financial crises. However, the cost/time overruns have raised many problems in these projects that show their feeble performance. That said, optimizing the key performance indicators (KPIs) have been neglected as a crucial part of performance enhancement. Therefore, analyzing and proposing a Building Information Modeling (BIM) based model to improve KPIs condition have been chosen as the main objective of this research. In this research, the Copula Bayesian Network (CBN) has been selected as a robust statistical technique to determine causal structure ability and estimate the variables’ impact on each other. Unlike similar research, this study has used Python programming, Shapley Additive exPlanations (SHAP), and Extreme Gradient Boosting (XGBoost) to comprehensively analyze CBN and provide quantitative analysis to assess the BIM impact on PPPs. This research has estimated the influence of BIM on PPPs’ performance and extracted the most prominent KPIs in BIM enabling conditions, including the feasibility study, finance/cost performance, appropriate financing option, risk identification, allocation, sharing, and transfer, finance infrastructure, and compliance to the legal and regulatory framework. This study proved that BIM could improve PPPs performance by 28.9% on average. The outcome of this research helps the private sector to gain a comprehensive perspective on implementing BIM and its effects on PPP projects and gives an insight into BIM's importance and efficiency in solving critical PPP issues for future researchers.
... PPP can be defined as an arrangement between two or more parties from the public and private sectors to meet mutual objectives through sharing the four Rs: resources, risks, responsibilities, and rewards (CCPPP 2004;Kwak et al. 2009). PPPs are categorized according to the roles and responsibilities of the contributing sectors, finance sources, and property owners (Kwak et al. 2009). ...
... PPP can be defined as an arrangement between two or more parties from the public and private sectors to meet mutual objectives through sharing the four Rs: resources, risks, responsibilities, and rewards (CCPPP 2004;Kwak et al. 2009). PPPs are categorized according to the roles and responsibilities of the contributing sectors, finance sources, and property owners (Kwak et al. 2009). No involvement of private entities means the public sector bears all the responsibilities associated with delivering public services. ...
Construction projects can be delivered through various approaches; nevertheless, all practitioners and involved parties have a mutual goal, which is completing the project within the original scope, defined budget, and schedule. Reviewing the literature on public-private partnerships (PPPs) showed that many efforts have been made to cover different research areas, including policies, risks, roles and responsibilities, and finance. The existing literature lacks studies involving the comprehensive process of preparing and implementing PPP contracts associated with highway projects in the US. This research, therefore, fills this noticeable gap in the body of knowledge on the PPP delivery method. The main objective of this research was to develop a framework for PPP contracts focusing on highway projects. To meet this objective, the authors conducted a Delphi study with highway professionals to identify the major issues that they should carefully deal with during contract document preparation, contract procurement, and contract implementation phases to make PPP highway projects successful. The Delphi study consisted of two rounds, with 25 open-ended interview questions over three phases. The study found that highway agencies must fix the scope of a project before a PPP project starts. They should also choose a lump sum contract type and a design-build-finance-operate-maintenance PPP type with a 35 to 40-year concession period for highway projects. Contracts should consist of incentive and dis-incentive clauses along with availability payments as the mode of compensating concessioners for their work. Before initiating a PPP contract, agencies should make sure that their state legislation allows this type of contract. The study also found that during the contract procurement phase, owners should use the best-value selection method to choose a PPP contractor; the competition should be fair and transparent, and the owner must have expertise in order to successfully procure PPP contracts. The experts recommended setting performance standards for PPP concessioners, performing inspections using independent third parties, and handing over condition data to maintenance personnel at the end of construction. The primary contribution of this research to the body of knowledge was to highlight the fact that each country, with the help of professional expertise and key stakeholders, background, and/or lessons learned, needs to develop a framework that lists the main issues and processes to be considered in implementing PPP highway contracts. This study presents a framework that can work nationwide, something that is missing in previous research studies. This framework can guide professionals in the transportation industry toward effective contract document preparation, procurement, and implementation of PPP highway projects in addition to giving academicians better insights to understand PPP highway projects in the US.
... However, when pursuing this investment goal, developing countries often face a number of constraints, among which limited public expenditure is one of the most significant (Kumaraswamy and Zhang 2001). In response to such constraints, governments of low-income countries often seek private investment in infrastructure development through a variety of delivery methods, ranging from BOT and PPP to fully privately owned projects (Buyukyoran and Gundes 2018;Kwak 2002;Kwak et al. 2009). A trend toward infrastructure privatization encourages governments of low-income countries to view foreign investment as a tangible solution to their financing shortfalls for expanding infrastructure capacity. ...
... Previous studies of infrastructure investment have focused primarily on its impacts on economic growth (Perkins et al. 2005;Sahoo and Dash 2012;Sutherland et al. 2009). With increased interest in infrastructure privatization since the turn of the 21st century, many studies have investigated the optimization and regulation of private practices for providing infrastructures (Buyukyoran and Gundes 2018;Cui et al. 2018;Kwak et al. 2009). Some studies have discussed the lack of appropriate infrastructure services in some countries, suggesting that more infrastructure financing is needed to improve their economies (Bhattacharyay 2010;Eberhard et al. 2011;Ridley et al. 2006). ...
... The construction, financing, and delivery of public infrastructure and services have increasingly been entrusted to the private sector by governments in Europe and other parts of the world (Roehrich et al., 2014). Their advocates argue that encouraging greater provision diversity and contestability, such "partner-ships" secure better-quality infrastructure and services at "optimal" cost and risk allocation (Kwak et al., 2009). Although conceptually a public-private partnership (PPP) can be defined relatively simply, as "a long-term contract between a private party and a government agency, for providing a public asset or service, in which the private party bears significant risk and management responsibility" (World Bank Institute and PPIAF, 2012), there are several ideas regarding the definition of PPP. ...
This paper aims to explain the administrative and the Environmental, Social and Governance (ESG) of the Indonesian Spaceport Project in Biak, Papua, Indonesia, under the Public-Private Partnerships (PPP) scheme, particularly from the protest to fear of environmental damage and traditional rights. This paper analyzes the factors that cause the local society’s reluctance to accept the development of Indonesia’s very first commercial spaceport. This paper uses a doctrinal methodology, which examines changes in the trend of ESG in implementing PPP projects. The method used is a qualitative systematic review of national and international studies. This paper finds that the lack of legal certainty for administrative and ESG as the main factor contributing to the pitfall of the PPP project in Biak Papua. No clear Government Contracting Agency (GCA), plus the fact that the Indonesian government puts too much weight on business consideration in PPP while Papuan people need more ESG, especially considering the historical conflict in the region, has been the epicenter of the problem. Given the ESG-PPP regulatory failure of spaceport development in Biak, more focused studies using comparative study methodology are needed to propose a more robust and customized ESG in PPP regulations in a politically and historically sensitive area. The authors forward a regulatory reform to balance administration, ESG, and business considerations in PPP projects for a spaceport.
... On the other hand, public-sector organizations are more likely to seek partnerships with for-profit organizations when there are infrastructure quality issues, pecuniary concerns, or high levels of risk associated with a project (Kwak et al., 2009). The predominant line of thinking is that for-profit organizations enter traditionally public service spaces because of perceived government failure (Calabrese, 1993), which is often due to government inflexibility and inability. ...
... The experiences of developing PPP projects were not always positive. Many PPP projects suffered either hold-up or termination for various reasons, causing numerous waste of public resources (Kwak et al. 2009). These negative experiences aroused the interest of PPP researchers, who have made great efforts to explore the key factors related to the success of PPPs. ...
... Public-Private Partnership (PPP) is broadly defined, by [1], as "a cooperative arrangement between the public and private sectors that involves the sharing of resources, risks, responsibilities, and rewards with others for the achievement of joint objectives" (p. 52). ...
Stakeholder opposition is reported as a central aspect of public-private partnership (PPP) failure; however, it has not gained much attention in either tourism or general PPP studies. Therefore, this study seeks to explore stakeholder opposition and develop a measurements scale of opposition in tourism PPP projects. An exploratory-sequential mixed methods approach is employed to holistically understand the subject. The results confirmed that lack of perceived value, relational strength, stakeholder management approach, and a conflict (and power) management mechanism, in addition to inadequate capabilities of stakeholders and poor experience outcomes, are antecedents of opposition to tourism PPP projects. Other notable results and their implications for theory and practice are included in the article.
... In PPP projects, the private sector usually undertakes works, such as design, construction, financing, and operation and gains profits by providing services during the operation stage (Amadi et al., 2020). The public sector is responsible for supervising the quality and price of the services provided by the private sector to ensure public interest (Kwak et al., 2009). In recent years, PPP has been widely used in infrastructure construction and public services provision in many countries because it can relieve the public sector's financial pressure and improve the supply efficiency of public goods (Oliveros-Romero and Aibinu, 2019; Song et al., 2020;Liu et al., 2021). ...
Effective supervision is one of the important ways to ensure the smooth implementation of Public-Private Partnership (PPP) projects. To understand the characteristics of the decision-making behavior of the public and private sectors in the supervision of PPP projects and the influencing mechanisms of some factors, we combine prospect theory and mental accounting theory into the evolutionary game analysis. First, we use prospect theory to reflect the behavioral characteristics of game players when making decisions and classify the value function into a valence account and a cost account according to the mental accounting theory. Accordingly, we construct a payoff matrix based on prospect theory and mental accounting theory, and the system’s equilibrium state is analyzed. Then, based on numerical simulations, the influence of different parameters on the behavior of the public and private sectors is analyzed, and management suggestions for practical reference are put forward based on the simulation results. The results show that the greater the perceived cost of active behavior for the public and private sectors, the less likely they will take active behavior. Secondly, there is insufficient incentive for the private sector to fulfill contracts when the penalties for its opportunistic behavior are minor. Thirdly, increasing the cost reference points and decreasing the valence reference points will promote the public and private sectors to adopt active behavior. Fourth, the public sector and the private sector are more inclined to take active behavior when they need to bear more significant risk losses. This study provides new ideas for the analysis of the game players’ decision-making behaviors in the supervision of PPP projects and delivers a decision-making reference for reasonable supervision.
... During 2013 and 2030 infrastructure needs worth $50 trillion and a funding gap of $1.5 trillion per annum (OECD 2015), while the World Economic Forum (WEF) estimated an investment gap of $1 trillion in infrastructure worldwide (Gupta and Sharma 2022). Governments responded to this challenge by developing the public-private partnership (PPP) method, in which two or more parties from the public and private sectors share resources, risks, responsibilities, and rewards to meet mutual objectives (Kwak et al. 2009;Li et al. 2017). The level of the private sector's involvement and responsibilities defines PPP types, which is not the focus of this research. ...
Among various project delivery methods, there is a growing tendency to deliver transportation infrastructure projects, particularly highway projects, through public-private partnerships (PPPs). This necessitates further investigations on PPP arrangements. Despite previous research efforts, a question remains unanswered: What are the contributing criteria for selecting projects that fit the PPP method, and of these, which factors play key roles? This study aims to address such a question through a Delphi study approach. To meet this objective, experts at state DOTs participated in interviews and questionnaire surveys during two rounds of a Delphi study. After achieving a consensus among responses, this study identified factors: the PPP project's screening factors and characteristics, requirements for an evaluation panel to assess a potential project, common risks, risks needed to provide appropriate incentives to private parties, requirements for involved staff, special-izations required in PPP units to facilitate project phases, roles of the public sector or federal government or state, associated factors to enabling legislation, economic analysis, and suitable project size. Some of the major findings are that PPPs are suitable for large projects, the value of money should be a mandatory study, an economic analysis must be performed by comparing different delivery methods, and it should be determined whether PPPs are legal (and allowed) in the state. The primary contribution of this research to the body of knowledge is to focus academicians' and industry professionals' attention on PPP highway project selection criteria and the factors that are required to maximize project performance and benefits.
... It is widely accepted that project success and the efficient allocation and use of limited resources relies heavily on identifying critical success factors (CSFs) (Kwak et al. 2009). Several researchers have developed a list of required success factors for PPP projects. ...
A recent growing delivery method used in highway projects is public-private partnerships (PPPs). PPPs are when public agencies collaborate with private parties for private financing at risk or operating services, which makes PPPs significantly different from other delivery methods used by public agencies-for example, design-bid-build, construction management at risk, and design-build. Despite the efforts of previous studies, questions remain unanswered: What are the contributing critical success factors that fit PPP highway projects? What are the risk factors that play key roles in PPP highway projects? This study aimed to address these questions through a Delphi study approach with the help of experienced professionals at state departments of transportation. Participants participated in interviews in the first round and completed a survey questionnaire in the second round of a Delphi study. After achieving an acceptable level of consensus from the first round of responses, the study identified and ranked the top critical success and risk factors for PPP highway projects. The study found that the top three critical success factors were (1) proper risk assessment and allocation to private parties; (2) realistic assessment of project estimates, risks, and revenues; and (3) avoidance of ambiguous language in contracts. In addition, the top risk factors identified were (1) revenue stream projections; (2) construction risks; and (3) design risks. The primary contribution of this research to the body of knowledge is to draw the attention of professionals in both industry and academia to the PPP highway industry, critical factors for PPP success and risks, and the successful completion of future PPP projects.
... However, there is no common definition, and this concept sometimes creates a confusion in regard with what this partnership involves. Generally, PPPs are based on a mutual commitment to working towards shared objectives through sharing the risks and the responsibilities between public and private entities (Hoon et al. 2009). However, in another definition, the partnership involves at least one private for-profit organization working with at least one not-for-profit organization (NGO) aiming particularly to help a disadvantaged population (Reich 2000). ...
In the last decades, Albania has started the implementation of a new practice which is
partnership with the private sector, named public–private partnership (PPP), due to the inabilities of the public sector to fulfill all its public needs. This represents a crucial ratio related to economic development and the struggle for a fair and transparent implementation process. Critical success factors (CSF) are the significant elements in the partnership which, if properly identified, provide success in implementation. For this reason, the purpose of this study is to highlight the factors which increase the chances of a successful implementation of PPPs in Albania and the items which contribute to each factor. The data used for the analysis were gained through 175 surveys conducted with people working in private and public institutions engaged in PPP. Of the main CSFs, the identification of the right project is ranked most critical to the success of PPP followed by financial capacity, trust, openness and fairness between parties, negotiation and defined revenue stream. The study findings further suggest that the accountability mechanism should be enforced in order for the public sector to act in accordance with the public interest. It is concluded that the findings of the study will guide the PPP stakeholders on the CSFs of PPPs in Albania.
... It should be noted that this variety of forms makes it difficult to understand the full meaning of the concept of PPP because it is used by scientists (Grimseya and Lewis 2002;Alexander et al. 2007;Patrinos et al. 2009;Kwak et al. 2009;Andonova 2010;Eckerberg et al. 2015;Hellowell 2019;Nduhura et al. 2020;Brugière 2020;Wang and Ma 2021) from different fields, and their focus is on completely different research questions. ...
This article examines the application of one of the forms of modern public management—public-private partnership (PPP)—in the forestry sector. This contributes to the search for new forms and methods that uphold the principles of sustainable development, decentralization, liberalization and capitalization of natural resources. The purpose of this study is to determine the characteristic features and advantages of PPP as a special partnership between the state and business-entrepreneurial structures, as well as to analyze the prospects and justify the feasibility of using PPP tools to ensure effective forestry. The research methodology was based on the critical analysis of the scholarly literature. Strategic documents, political reports and programs relevant to the forestry sector were also examined. In summary, it can be said that PPP models are a significant addition to other types of cooperation, such as more formal, top-down initiatives. PPP forestry projects can enable the accomplishment of otherwise impossible tasks.
... Many academics are actively researching the performance of publicprivate partnerships (PPPs) as a mechanism for delivering infrastructure projects. However, there are varying definitions of PPPs advanced in the literature, with one common defining criterion being the inclusion of financing in the delivery model (Kwak et al. 2009). Some literature may even exclude PPPs from the list of project delivery systems because within a PPP arrangement, a delivery method (e.g., DBB or DB) must still be chosen to arrange design and construction services (Ramsey and Asmar 2020). ...
... The P3 options are complex nontraditional project delivery methods that allow for higher participation from private parties in government projects. Some of the most common P3s include Design Build Operate (DBO), Design Build Finance (DBF), Design Build Finance Operate (DBFO), and Design Build Finance Operate Maintain (DBFOM) (Kwak et al. 2009). So, conducting the VfM assessments is a complex task that requires comparing drastically different project delivery methods and selecting the most suitable one. ...
Tinnitus is the perception of sound in the absence of corresponding external
stimulus. Commonly described as a buzzing, whistling, or ringing sound, it
often results from a damaged ear sending random and spontaneous signals
to the brain. As described below, it often confers significant psychological
distress, especially if the tinnitus has not been habituated to. Furthermore,
there is no cure for the condition – though several psychological
interventions are discussed below. Specific working and leisure
environments contribute disproportionately to development of tinnitus in
employees. Furthermore, it is now clear that COVID-19 can cause and
exacerbate the condition. We present a three-fold recommendation within
the remit of the built environment to ameliorate risk of onset and support
management of tinnitus. First, reduction of workplace noise. Second,
incorporation of online psychological mitigation tools to promote
acceptance of tinnitus in work and leisure spaces. Third, provision of
suitable home and workplace environments. The important of
multidisciplinary action is discussed.
Due to the capacity deficits of the healthcare sector, governments faced many difficulties when responding to the burden caused by the COVID-19 pandemic. Private sector involvement in healthcare facilities delivery enabled through public-private partnerships (PPPs) can play a crucial role in overcoming these capacity deficits. Although PPP projects can help to overcome infrastructure deficiencies, some are criticized due to the low value created for stakeholders. These include not only society in general, which uses the healthcare facilities, but also the project participants. Value generation for the latter is also an essential objective of PPP healthcare projects in a generic view, which is often neglected. This study aims to understand value creation in healthcare PPPs by developing a framework based on concepts related to the project value and eventually proposing a business model to maximize the generated value at the organizational level for all stakeholders. In order to achieve the study objective, insights are obtained from a literature survey, semistructured interviews, and focus group discussions. A value-creation model consisting of components and subcomponents of value generation and the relationship between these is proposed. The model demonstrates that the process component plays a central role in value creation, requiring sufficient assets of the parties engaged in and the appropriate governance of PPP projects. The value-creation model proposed here further highlights the driving role of a well-balanced legal framework and organizational learning. All the identified subcomponents are found to be interrelated, highlighting the importance of the proposed business model design in value creation. Overall, given the lack of healthcare facility capacity in many countries and the need to create value in healthcare PPP attempts, the proposed value-creation model is expected to help project participants develop a more value-centric way of managing, controlling, and operating these projects.
As noted in Chap. 1, this book aims to formulate recommendations for city-regional integration in the context of China’s reorientation toward developing city-regions as a locus of economic development. Specifically, this book critically investigates the extent of the economic and institutional integrations of city-regions and reveals how the governance structure reshuffles itself to enable economic integration.
This chapter aims to lay a theoretical foundation and build analytical perspectives on city-regionalism by reviewing extant literature on (1) economic integration, (2) institutional integration, and (3) governance structure reshuffling. By doing so, the chapter shows how city-regionalism in China can be analyzed. Economy and institution are the primary factors that drive and facilitate city-regionalism. Thus, this chapter lays a theoretical foundation and analytical framework for a broad understanding of the economic and institutional integration of the city-region. This chapter also explores how the literature interprets, conceptualizes, and theorizes the pathways in which governance structure is reshuffled in response to socioeconomic reconstruction.
The planning process in the UK is a highly complex system, developed over many decades, and is in the process of rapid transitions into digital planning. Among these transformations is a desire to move from an outputs-based assessment to an outcomes-based assessment process. This is challenging, and in this paper, the authors explore the variety of factors that make outcomes assessment challenging. The authors first studied the literature to understand how outcomes are complex, ranging across different sectors and practices, identifying 359 indicators related to outcomes. The authors then conducted a knowledge mapping exercise to understand the characteristics of the indicators in multiple themes. The authors also invited practitioners for an interview on their perspectives of outcomes assessment, definitions of outcomes, barriers to outcomes, the benefits of outcomes assessment, and how practitioners envision a world with outcomes assessment. The authors conclude the paper with future directions of research.
Purpose of the study: The aim of this study is to demonstrate why metagovernance is not effective in increasing the democratic legitimacy of networks; to this end, an articulated map will be presented to describe how interactions occur within metagoverned environments. Methodology/approach: To construct the macro-model of analysis, the methodology of Quivy and Campenhoudt (2005) was used. To consolidate the knowledge involved in the theoretical approach, the Knowledge Development Process-Constructivist (Proknow-C) method by Ensslin, Dutra and Ensslin (2000)was used. Such a proposal allowed a multidisciplinary perspective, capturing important concepts from economics and organizational theory to apply them to the meta-governed environment. Originality/Relevance: Metagovernance systems suggest some ability to provide democratic plurality to a social environment, in that we need to understand "if" and "how" this applies; metagovernance is recent in academia and is under discussion; we need to understand its impact in countries with developing institutional environments. Key findings: Metagoverned systems involve multiple players; difficulty of reconciliation raises transaction costs, both ex-ante - to achieve consensus in the network - and ex-post - when creating mechanisms to deal with disgruntled actors. Such a scenario leads key players to effect coalitions to 'narrow the road' to their own interests, and practice corporate political activity seeking to influence decision making. Actions will focus on impacting the public agent designated as metagovernor, in order to influence possible changes in the environment (regulation). Theoretical/methodological contributions: An articulated map has been proposed, presenting the cycle of interactions within a metagoverned environment. It shows that sometimes the decisions taken are not the most democratic ones, but those of interest to coalitions. Social contributions / to management: From a legitimacy perspective, it is necessary to understand how the outcome of networked decision-making can become more democratic, and how metagoverned environments can become less susceptible to harmful corporate political activity, especially in developing democracies.
Boundary spanners are pivotal in developing effective public–private collaboration in public infrastructure projects. As boundary spanners have to account for different interests, perspectives, and ways of working in public–private collaborations, engaging in boundary‐spanning activities often comes with role stress, which can negatively impact their job performance. However, despite the significant levels of role stress associated with boundary spanning, there is a dearth of empirical studies on the role stress of boundary spanning public managers and how it can be reduced. In this study, we empirically investigate the reciprocal relationship between role stressors and boundary spanning and test if supporting organizational conditions can alleviate role stressors. The findings show that especially role conflict is detrimental for boundary‐spanning activities. We further find that top‐management support can diminish both role conflict and role ambiguity and that co‐worker support can help in reducing the role ambiguity of boundary spanning public managers.
Purpose
The purpose of this study is to investigate the structure and dynamics of academic articles relating to public procurement (PP) in the period 1984–2022 (up to May). The researchers also intend to analyse how this knowledge domain has grown since 1984.
Design/methodology/approach
A bibliometric analysis was carried out to examine the existing state of PP research. Based on 640 journal articles indexed in the Scopus database and written by 1,247 authors over nearly four decades, a bibliometric analysis was conducted to reveal the intellectual structure of academic works pertaining to PP.
Findings
Findings reveal that PP research from Scopus has significantly increased in the past decade. Major journals publishing PP research are International Journal of Procurement Management , Journal of Cleaner Production , Journal of Purchasing and Supply Management and Public Money and Management . Results also indicate that authors’ cooperation network is fragmented, showing limited collaboration among PP researchers. In addition, results suggest that the institutional collaboration network in PP research mirrors what is commonly referred to as the North–South divide, signifying insufficient research collaboration between developed and developing countries’ institutions. According to the co-occurrence keyword network and topic modelling, PP revolves around five main themes, including innovation, corruption, sustainable and green PP, PP contracts and small and medium enterprises. Based on these results, several directions for future research are suggested.
Social implications
This paper provides an increased understanding of the entire PP field and the potential research directions.
Originality/value
To the best of the authors’ knowledge, this study is the first-ever application of bibliometric techniques and topic modelling to examine the development of PP research since 1984 based on scholarly publications extracted from the Scopus database.
Saudi Arabia recently established public–private partnerships (PPPs) in order to increase the private sector’s involvement in financing and providing affordable housing. However, the successful implementation of the PPP for affordable housing in Makkah necessitates careful consideration of possible barriers. As a result, the purpose of this study is to assess the critical success factor of the PPP and to introduce a housing affordable model for the low-income community. The survey method was used in the study to determine the critical success factors of PPP for affordable housing provision, with participants from both the private and public sectors. Using a five-point Likert scale, respondents were asked to rate the degree of influence of prospective critical success factors of PPP. The data gathered was analyzed using statistical tools. The study’s findings describe the critical success factors of public–private partnerships for affordable housing and establish the critical success factors of the PPP model for affordable housing in Makkah. As a result, determining the critical success factors and suggesting a way forward for the government to effectively provide affordable housing for low-income groups, as has been successful in other parts of countries such as the United Kingdom, Australia, and India, among others.
Infrastructure public–private partnership (PPP) projects across the world have suffered early termination, premature change of ownership, cost and time overruns, among others, often resulting from a number of issues some of which are related to poorly managed dispute. Despite this, literature revealed that no process-centric attempt had been made to highlight the critical issues affecting dispute resolution (DR) in infrastructure PPPs. Through event sequence analysis (ESA) of 158 data sources (including 63 journal articles), this study examined the critical issues affecting infrastructure PPP DR practice, with the motivation of unveiling areas of potential improvement to the DR practice. Among other findings, the multiple roles of the public partner in the DR process were found to result in ambiguity on who was responsible for overseeing their actions. Relatedly, the effectiveness of dispute boards was on some occasions undermined when they were assigned multiple functions. Besides this study adding to the theoretical body of knowledge through application of ESA in infrastructure PPP DR research, it clarified the critical issues affecting current infrastructure PPP DR practice, thereby enhancing infrastructure PPP practitioners’ understanding of potential barriers to successful infrastructure PPP DR. Although the researchers acknowledge the plausibility of an in-depth investigation into ways in which the critical issues in DR practice can be addressed, the main focus of this study was to provide clarity on the critical issues affecting DR in infrastructure PPPs. A separate study focusing on improvements to DR in infrastructure PPPs is recommended.
We conduct a theory-guided review of the literatures on public-private partnerships and Grand Challenges (GCs). We adopt an organization design approach to review and identify constructs in public-private collaborations (PPCs) that address societal challenges. Our review identifies the complexities of organizing to tackle GCs, highlights the plurality of organizational forms in PPCs, and explores organizational design considerations in these partnerships. Given the elevated role of private actors in these collaborations, our review provides a new understanding of how they can shape a private-public interface that is robust to the scale and scope of global problems. This leads to a rich research agenda on when, why, and how public and private collaborations matter, and their implications for addressing societal challenges.
Urbanization is recognized as one of the megatrends of our society, leading to substantial efforts to create effective and smart cities. The scale of this effort is unsuitable for a single player, instead necessitating joint efforts from multiple stakeholders. The global expansion of smart cities has subsequently led to increased research efforts toward building effective smart cities. In theory and practice, collaboration is pivotal for effective urban development, most often seen through the establishment of public-private partnership (PPP). Past research has explored these partnerships in smart city projects. Although PPP is considered to be an effective means to facilitate smart city development, the concept of smart cities remains rather vague and ideological. PPP for smart cities has been substantiated in several case studies; however, a thorough review is lacking. Therefore, to synthesize the existing literature, we carried out an in-depth integrative literature review. From this basis, we executed a content analysis and four key themes emerged: localness, stakeholder complexity, tension, and trust-building. These four themes form the basis of our proposed model and describe the key elements influencing PPP formation in smart city projects. We argue that the partnerships involved in smart city projects need further refinement to allow for transparency and involvement in various contexts. This paper provides timely contributions to smart city research by synthesizing the extant literature as well as laying the foundation for a future research agenda. Critical perspectives are also offered for future practitioners.
Purpose
Sustainable economic growth in both developed and developing countries requires the restructuring and expansion of road transportation infrastructures (RTIs). However, RTIs are always subject to high costs and delays, especially in developing countries with fewer resources than developed ones. Cost overruns and inaccurate forecasts usually lead to project failures. In this regard, some governments in developing countries have adopted public–private partnerships (PPPs) to deliver RTI projects with very positive outcomes. However, academic research has not yet studied the most recurring barriers and associated solutions to adopting PPPs in RTIs particularly for developing countries. This paper aims to fill up this knowledge gap in the existing literature.
Design/methodology/approach
A Delphi survey method involving 103 experts in RTIs based in Iran was implemented. Results indicated that the most perceived barriers to applying PPPs in RTIs in developing countries are linked to political, legal and economic factors. Ten other experts also participated in semistructured interviews, which were thematically analyzed to provide practical effective solutions for overcoming those identified barriers.
Findings
The findings indicated that all the presented barriers achieved above-average scores and could be considered severe obstacles of applying PPPs in RTIs for developing countries. In terms of barriers and solutions reported, these seem to converge on three profound elements: political stability, legal framework and conjoint management.
Originality/value
To the best of the authors’ knowledge, this is the first-ever research study regarding the barriers to adopting PPPs in delivering RTI projects for developing countries. Practical recommendations for overcoming these perceived barriers and achieving better implementation of PPPs in RTIs for developing countries were advocated. This work has contributed to the extant PPP theory as the management of coproduction in delivering RTI projects.
This study aims at investigating the public and private perspectives on both the critical success factors (CSFs) and risk factors (RFs) in large Public-Private Partnership (PPP) projects. It aims at analyzing how risk allocation occurs and its implications. A case-based research approach was applied, combining qualitative and quantitative analysis strategies. This research in-depth examines four large PPP projects in the Brazilian metro-rail sector. Dyadic archival and interview data were collected from public-private parties, including 34 interviews, and archival sources, such as contracts and reports. The results identify the critical success factors and risk factors in PPP projects in the transport sector. The analysis shows that public and private sectors pursue different critical success factors but converge on the risk factors. The most stressed risk factor is “corruption and bribery,” which reveal the corrupted context spanning in the studied projects. Finally, the conflict in perceptions shows an explanation of context-dependent aspects explored in the qualitative analysis.
The infrastructure sector is undergoing a significant process of change, as part of which the state is reducing its direct engagement. This has spotlighted local communities, which are increasingly involved in various infrastructure projects, specifically renewable energy projects. However, because individual communities often find it difficult to establish infrastructure projects independently, they tend to collaborate in the framework of inter-community partnerships. Despite the global prevalence of such partnerships, it is still unclear what constitutes the “glue” binding various communities together, enabling them to promote infrastructure projects, and renewable energy projects in particular. Our study addresses this research lacuna, focusing on the role of climate intermediaries in facilitating these partnerships. Based on internal correspondences regarding the promotion of “Ru’ach Bereshit,” the largest wind farm planned in Israel to date, we demonstrate how an individual climate intermediary engaged in negotiations in four arenas: within communities, between communities, vis-à-vis private developers, and vis-à-vis regulators. By exploring climate intermediaries’ multi-arena negotiations, this study demonstrates how such intermediaries succeed in synchronizing local energy policies with national energy policies to promote a renewable energy project that transcends the community level of analysis.
Many countries require financial mechanisms, leading to increasing coverage through sustainable infrastructure systems (SISs). However, establishing such mechanisms demands innovative approaches and analyses that contribute to the development of financial schemes by providing a new vision for private investors and public entities promoting sustainable development and, therefore, the creation of new eco-financial assets. To address this need, this paper proposes a methodology for analyzing capital structure in sustainable infrastructure systems, which is validated in a case study. Thus, a mathematical model that identifies the impact on the final capital structure according to an investment plan and capital structures per period is developed. Additionally, this proposal integrates a financial framework that involves sustainable financing, capital markets, and public–private sectors. The results of the case study show that debt-service capacity was always higher than 1.0×. Hence, this study provides a better understanding of financing processes for SISs. Additionally, this contributes to the debate on infrastructure financing and its implications for main stakeholders.
Set within the context of developing countries, we conduct a state of the art systematic review of project-focussed, public-private partnership literature published between 1997 and 2021. The outcome of this review provides critical insight into trends in publication volume over time, types of projects addressed, chosen research methods, major research themes identified and their variances, but also identifies the critical challenges facing PPP projects in developing countries. More specifically, we find that for PPP projects in developing countries, the three most commonly reported challenges were ‘Appropriate risk allocation and risk-sharing’, ‘Political support’, and ‘The private sector’s financial strength’. We also find that in developing countries, factors such as ‘Compatibility and complementary skills among key parties’, ‘Competitive procurement process’, ‘Democracy’, ‘Efficient approval processes’, ‘Favourable legal framework’, and ‘Transparent and efficient procurement’ are contingent problems associated with the use of PPP in construction project delivery. The main contribution of this study resides in the detailed identification, evaluation and classification of the literature. This taxonomy provides a detailed overview and evaluation of existing literature; providing for more comprehensive appreciation of PPP.
Purpose
Public–private partnerships (PPPs) are notoriously prone to disputes among stakeholders, some of which may unduly jeopardize contract performance. Contract disputes arising in Iran are often due to inefficiency of PPP concession agreements and practice. This study presents a causal-predictive model of the root causes and preventive measures for inter-organization disputes to enhance the likelihood of achieving desirable performance in PPP projects.
Design/methodology/approach
A theoretical “causal-predictive” model was developed with fourteen hypotheses based on extant literature and contractual agency theory, which resulted in the creation of a pool of 110 published items. Data were obtained from a questionnaire survey with 75 valid responses, completed by 4 stratified groups of Iranian PPP experts. Partial least square structural equation modeling (PLS-SEM) was used for validating the proposed model via a case study.
Findings
Results reveal that the main three factors of PPP desirable performance are as follows: on-time project completion, high quality of activities/products and services for public satisfaction. Further, the most influential factors of the lifecycle problems, construction stage, and preferred risk allocation included risk misallocation, improper payment mechanism and failure to facilitate a timely approval process.
Originality/value
For researchers, the findings contribute to the theory of contractual agency; specifically, how different influences among the model's elements lead to better PPP performance. In practical terms, proposed outcome-based strategies will inform PPP stakeholders to avoid dispute occurrence and thus improve the time, quality and services of projects.
Public private partnership is known as a model used in many different sectors and projects today. From this point of view, the aim of the study is to subject the studies published in YOKTEZ and Dergipark databases on public-private partnership in the health sector in Turkey to the bibliometric analysis method and to draw a comprehensive framework in this direction. Publications on the public-private partnership model in the health sector in Turkey, which were published between 2010-2020 using the keywords "public private partnership in the health sector, public private cooperation in the health sector, city hospital and city hospitals" from the relevant databases, were included in the analysis; Studies that use city hospitals as data collection sites for different research topics are excluded. As a result of the review, a total of 20 master's theses within the scope of the study were analyzed on the YOKTEZ database, and a total of 25 articles on the Dergipark database. According to the study findings, in the last ten years, the most thesis work was done in 2019; In the articles, it was determined that the number of articles written in the last three years constituted 60% of the total articles. It is foreseen that in the relatively new public-private partnership practices in Turkey academic studies will provide significant support to increase and intensify the experience and expert opinions, and various suggestions are made in this direction.
Design/methodology/approach – The literature review was used in this study to extract the Public-Private Partnerships (PPPs) Key Performance Indicators (KPIs). Experts’ judgment and interviews, as well as questionnaires, were designed to obtain data. Copula Bayesian network (CBN) has been selected to achieve the research purpose. CBN is one of the most potent tools in statistics for analyzing the causal relationship of different elements and considering their quantitive impact on each other. By utilizing this technique and using Python as one of the best programming languages, this research used machine learning methods, SHAP and XGBoost, to optimize the network.
Purpose - Being an efficient mechanism for the value of money, Public-private partnership (PPP) is one of the most prominent approaches for infrastructure construction. Hence, many controversies about the performance effectiveness of these delivery systems have been debated. This research aims to develop a novel performance management perspective by revealing the causal effect of key performance indicators (KPIs) on PPP infrastructures.
Findings - The sensitivity analysis of the KPIs verified the causation importance in PPPs performance management. This study determined the causal structure of KPIs in PPP projects, assessed each indicator's priority to performance, and found 7 of them as a critical cluster to optimize the network. These KPIs include innovation for financing, feasibility study, macro-environment impact, appropriate financing option, risk identification, allocation, sharing, and transfer, finance infrastructure, and compliance with the legal and regulatory framework.
Practical implications – Identifying the most scenic indicators helps the private sector to allocate the limited resources more rationally and concentrate on the most influential parts of the project. It also provides the KPIs’ critical cluster that should be controlled and monitored closely by PPP project managers. Additionally, the public sector can evaluate the performance of the private sector more accurately. Finally, this research provides a comprehensive causal insight into the PPPs’ performance management that can be used to develop management systems in future research.
Originality/value – For the first time, this research proposes a model to determine the causal structure of KPIs in PPPs and indicate the importance of this insight. The developed innovative model identifies the KPIs' behavior and takes a non-linear approach based on CBN and machine learning methods while providing valuable information for construction and performance managers to allocate resources more efficiently.
This study presents empirical research examining how economic and political imperatives impact prospects for successful use of Public-Private Partnerships (PPP) to deliver projects in Saudi Arabia. A conceptual model and several hypotheses are developed. A questionnaire survey obtains data from two hundred and fifty-seven (257) project management practitioners involved in projects being procured using PPP within Saudi Arabia. Data is analysed using Structural Equation Modelling (SEM). The conclusion is that economic, but not political imperatives moderate the relationship between Critical Success Factors (CSFs) and PPP project success in Saudi Arabia. To an extent, these findings offer a risk-focussed typology for exploring conditions for PPP project success.
recent years, due to the budget deficit and limited financial resources of the government, public-private partnership agreements in our country have received serious attention. Proper implementation of PPP projects requires the identification, analysis and review of critical success factors in the construction industry. This article identifies the critical success factors using library studies and past experiences in implementing this type of contract system. After reviewing the articles and reviewing past experiences, 65 factors were extracted. Of these 65 factors, 39 are each listed separately in at least three studies; Therefore, they are more important than other factors. Also, in the continuation of studies, the importance of using the public sector in such projects became clear. In many countries, governments have resorted to the use of popular force to adopt 4P contracts instead of 3P contracts, which has several advantages over 3P contracts. The results of this study provide in-depth insights into identifying critical success factors in order to better advance this type of contractual system.
The community of Tambakrejo village needed an assistance regarding innovation and advertising of products derived from mangrove forest, as well as waste management in mangrove forest areas. To support the use of products from mangrove forests this research describes the form of collaborative cooperation between elements of the Quadruple Helix which aims to: (1) develops mangrove products as natural dyes for Malang traditional batik textile, (2) Knowing the limitations and difficulties in the manufacture of mangrove-based product felt by the community, (3) Describe the Quadruple Helix Collaboration strategy in encouraging mangrove-based product to improve the economy of the community in Tambakrejo Village. This quadruple helix model is considered effective because it provides additional opportunity for participation for all existing stakeholders in the area, expressly the community who sees it exclusively as an object of policy-making process. Data collection used a qualitative descriptive approach. The data analysis method uses the Miles and Huberman interactive analysis model. Our findings showed by utilizing Quadruple helix collaborating strategy trial is used in the first model, thus making Universitas Terbuka as a driving force to encourage innovation due to the fact that there was not any community-based creative industry center in Tambakrejo Village. In addition to the fact that the community had never received funding to afford a formal training in the manufacture of mangrove-based product. Mangrove stems, fruits, leaves and roots are used as a raw material for producing natural dye for batik textiles. The collaboration was carried out between the government (head of the village), academics (Universitas Terbuka), private entity (LPK Nawata Korea Center), and 12 member of the community of Tambakrejo. This approach has succeeded in encouraging the community to kick-start innovation in the development of mangrove-based products as natural dyes for Malang traditional batik textile to improve the economy of the community in Tambakrejo village.
Changes in public-private partnership (PPP) projects are inevitable and often lead to project failure, hence, the management of changes in PPP projects are more challenging than with traditional projects. The complex nature of changes in PPP projects, however, lacks systematic investigation and a quantitative approach in current literature. To fill this gap, this study considers the development process of major changes in PPP projects from a whole-life cycle perspective. The findings reveal significant relationships between causes and negative change results, as well as the enlarged interactive effects of certain causes. Most of the negative changes occur at the operational stage and vary across different types of project and regions, but the pre-contract stage is the most critical stage to prevent future negative changes. Hence, more proactive change management strategies are suggested for the government decision makers and project managers. This study contributes to the body of knowledge in PPP literature by providing a meta-case analysis approach, which can improve the accuracy of case selection and facilitate statistical analysis. The findings can help the researchers and practitioners to better understand the nature of changes and manage them in a more efficient way.
The Palapa Ring Western Package is the first Public Private Partnership infrastructure project in Indonesia implementing Availability Payment (AP). Prevailing regulations allow the Government Contracting Agency (GCA) and Implementing Business Entity (IBE) to determine the system of incentives and penalties of AP in their project contract. This research explores two main issues: (1) whether the IBE has obligation for contingent cost liabilities outside of the contractually determined AP amount in the occurrence of damage caused by a third party which interrupts or disrupts infrastructure service availability and (2) whether the GCA has the right to penalize AP amount to the IBE in the occurrence of damage by a third party which interrupts or disrupts service availability. By applying normative legal research using the statute approach, this research concludes that in this project, the IBE has obligation for contingent cost liabilities outside of contractually determined AP amount in the occurrence of damage by a third party and the GCA has the right to penalize AP amount if the IBE fails to maintain service availability. The contractual allocation of operational and maintenance risk to the IBE creates obligation to bear costs during the project lifetime including those due to third-party risk. Further, the use of formula to calculate AP to IBE is solely based on performance data in maintaining service availability according to contractually agreed standards. Thus, the use of AP in the Palapa Ring Western Package may be a point to reference for future Public Private Partnership infrastructure projects.
Public–private partnerships (PPPs) have been accused of importing practices and norms from the private sector that could conflict with core public values (e.g., accountability, transparency, responsiveness, responsibility, and quality). Some scholars believe that PPP renegotiations can enhance public values through ex post adaptation, interference, and monitoring, while others emphasize that PPP renegotiations incentivize opportunistic behaviors on the part of governments and other stakeholders. Focusing on China’s PPPs, this study investigates how the renegotiation of PPP projects impacts public values in infrastructure service delivery through a Delphi survey. Two rounds of Delphi survey questionnaires were conducted with 14 PPP experts in China. The result shows that, in general, renegotiations can safeguard or even strengthen public values in PPPs, although sometimes at the expense of managerial values. Government-led renegotiations are more likely to increase public values than contractor-led renegotiations. This study contributes to the extant literature on PPPs by shifting research concerns from managerial values to public values, and from ex ante planning to ex post renegotiation. Practitioners can derive benefits from renegotiations by paying attention to their positive impact on public values.
A critical issue in public-private partnerships (PPPs) in international infrastructure development is the selection of the right private-sector partner. This necessitates a best value source selection methodology in which the establishment of a set of appropriate selection criteria is a prerequisite. Various important selection criteria have been identified through a literature review of previous studies on critical success factors; experience drawing and lessons learning from international PPP practices; examination of selection criteria used in worldwide PPP projects; and interviews/correspondence with international PPP experts and practitioners. These identified criteria are classified into four evaluation packages for PPP projects in general: (1) financial, (2) technical, (3) safety, health, and environmental, and (4) managerial. The relative importance of these evaluation packages and the relative significance of the criteria within each package have been statistically analyzed based on a structured questionnaire survey of worldwide PPP expert opinions. These statistical analyses include validity and reliability analysis, Mann Whitney U tests, direct comparisons of mean criterion significance indexes and criterion rankings between respondents across public, private, and academic sectors, and a general rank agreement analysis across sectors for each evaluation package. These research outputs would facilitate the formulation of a multicriteria best value source selection methodology for PPP projects in general and the development of both objective and subjective evaluation criteria to select the right private-sector partner for a particular PPP project.
Infrastructure privatization has multidimensional impacts with long-term uncertainties and wide risk portfolios. A wide range of barriers to public-private partnerships (PPPs) in infrastructure development have been identified through a questionnaire survey, which are broadly classified into six aspects: (1) social, political, and legal risk; (2) unfavorable economic and commercial conditions; (3) inefficient public procurement framework; (4) lack of mature financial engineering techniques; (5) problems related to the public sector; and (6) problems related to the private sector. To explore measures for removing these barriers, a systematic research approach (literature review, case studies and interviews/correspondences with experts and experienced practitioners) has been taken to draw experience, learn lessons, and benchmark the best practices in international PPPs. An improved PPP protocol for infrastructure projects in general has been developed, addressing key issues in nine areas: (1) appropriate roles of governmental authorities; (2) best value for money approach; (3) effective management of adviser services; (4) formulation of appropriate PPP schemes; (5) use of relational contracts; (6) improvement of the procurement framework; (7) payment structure; (8) contract monitoring, termination, and step-in rights; and (9) transfer management. Effective measures for successful PPPs are identified in each of the nine areas.
Various innovative public private partnerships (PPPs) have been explored in worldwide infrastructure development in which BOT (build-operate-transfer) is the underlying concept. Selection of the right concessionaire, which is critical to the success of such BOT-type PPPs, depends on the quality of identifying and defining suitable project-specific criteria and the quality of formulating an efficient tender evaluation methodology. A systematic research approach (including literature review, case studies, interview/ correspondence, and a structured questionnaire survey) has been adopted to draw experience and learn lessons from international PPP practices and to unearth and refine experiential and expert knowledge from worldwide experts and practitioners. Tender evaluation criteria and methods currently used in diverse types of PPP projects in both developed and developing countries are identified, compared, analyzed, and then generalized.
The concessionaire of a build-operate-transfer (BOT) type infrastructure project undertakes many responsibilities, and consequently, assumes a broad scope of risks and potential financial consequences. In addition, appropriate financial engineering skills are required in nonrecourse or limited-recourse financing, which is usually used in BOT-type projects. Therefore, strong financial capability of the concessionaire is an important prerequisite to the successful development of a BOT-type project. A common set of 35 financial criteria has been identified through a systematic research approach, and their relative significances determined based on worldwide expert opinions solicited by a structured questionnaire survey. Statistical analyses of the responses to the survey conclude that (1) the public, private, and academic sectors consider financial criteria rather similarly in the evaluation of the concessionaire's financial capability, and there is no significant statistical difference in the rating of the significances of the 35 financial criteria across these sectors; (2) almost all of the 35 financial criteria are important in measuring the concessionaire's financial capability; and (3) the 35 financial criteria can be grouped to measure the concessionaire's financial capability in four dimensions: "strong financial engineering techniques," "advantageous finance sources and low service costs," "sound capital structure and requirement of low-level return to investments," and "strong risk management capability." Outputs of this research facilitate the private sector in assessing their financial capability and making corresponding improvements to increase their financial competitiveness, and the public sector in evaluating potential concessionaires' financial capability for BOT projects in general.
A significant realignment of risks between project participants is a fundamental facet of the new procurement paradigm of BOT (build-operate-transfer). A BOT concessionaire assumes far more and deeper risks than a contractor. One critical contributor to the success of a BOT project is the selection of an appropriate concessionaire who has the necessary capacity to provide the best overall deal throughout the build-operate-transfer process. However, various BOT type procurement protocols are not yet proven and are still being tried and tested. Many countries are at the lower ends of their learning curves. Therefore, there is a need to benchmark the best practices that have been emerging. The Hong Kong government has developed a well-structured concessionaire selection framework supported by the Kepner-Tregoe decision analysis technique. This paper analyzes and draws experiences and lessons from this concessionaire selection practice. Current concessionaire selection practices worldwide are also discussed with a view to improve the procurement process of regions lacking in such experiences or expertise.
Purpose
The paper aims to report the findings of research into perceptions of what makes the Private Finance Initiative (PFI) attractive or unattractive as a procurement system for projects in the UK.
Design/methodology/approach
The research uses a postal survey questionnaire technique for primary data collection. Literature review is used to identify relevant factors, which are then incorporated into the design of the survey instrument. Survey response data is subjected to descriptive statistical analysis and subsequently to rotated factor analysis.
Findings
Public/private partnerships (PPP)/PFI project procurement is perceived as most attractive in terms of positive factors relating to better project technology and economy, greater public benefit, public sector avoidance of regulatory and financial constraints, and public sector saving in transaction costs. Negative aspects, relating to factors such as the inexperience of the participants, the over‐commercialisation of projects, and high participation cost and time, make PPP/PFI procurement less attractive.
Originality/value
The procurement of public facilities and services under arrangements involving partnerships between the public and private sectors is claimed to provide a wide variety of net benefits to the public sector and to the private sector participants. In the project development process, the parties have to make decisions based on suitable evaluation criteria. At the early stage of preparing a business case, a clear and common understanding of the positive and negative factors surrounding PPP/PFI procurement will provide a more informed basis for decision making.
BOT-type schemes are attracting increasing interest with the growing thrust towards privatizing infrastructure projects in both developing and developed countries. However, an intelligent allocation of risks is a prerequisite to success of this relatively new procurement route, amidst the many variables and unknowns in such ‘long-term’ and more complex scenarios. Concerted efforts from both government and private sectors, as well as appropriate political, legal and economic environments are also essential. This paper identifies and discusses various issues that governments need to deal with, for the BOT mechanism to work smoothly. These issues are further illustrated by relevant examples from Hong Kong experience in evolving an effective BOT project management framework for transportation/tunnel projects.
The Build-Operate-Transfer (BOT) project development scheme allows realization of pub-lic works through private financing. This context is full of risks due to the great number of stakeholders from different disciplines involved. The contribution of this paper is the provision of a comprehensive list of the legal risks, associated with the BOT projects in their lifecycle. The framework of legal risks is discussed, the justification for each risk is presented and the content of each individual risk is elaborated. Furthermore, a risk classification approach is presented, based on the time of occurrence and risk generation source. This list is a useful tool for practitioners because it substantially facilitates the risk analysis process in a BOT project and can be used as a shared platform of BOT legal issues.
This paper examines the requirements for project risk action management techniques which can assist clients and project managers to assess and pre-empt potential sources of risk. These sources may be external or internal to the project and include those which may result from the manager's own actions. The aim is to encourage project managers to be sensitive to these potential sources of risk, to be able to anticipate their occurrence, to appreciate their potential impacts on the project objectives and to reduce their future impact through appropriate risk action management strategies.The paper examines project management goals and objectives and discusses risks which may arise to threaten the achievement of these objectives. The conventional risk analysis approach is reviewed in the context of the need to identify and assess such risks and their potential effects. The paper reviews the direct relationship, as presented in the conventional approaches to risk analysis, between ‘risk drivers' and risked consequences, and demonstrates that this represents a primarily passive approach to project risk management. It argues that, if the manager is able to anticipate risks, he should also be able to take appropriate pre-emptive actions before they occur. Thus, we show how risk action management techniques, within the context of project management, can support project managers in the formulation of project strategies, planning and the achievement of project objectives.
For Gomez-Ibanez, infrastructure provision is a problem of long-term contracting and he openly states his preference for private contracts in these sectors. He outlines four strategies for regulating infrastructure monopolies ranging from marked-based approaches based on private contracts, to concession contracts, discretionary regulation, and finally publicly owned and operated enterprises. Through diverse comparative case studies covering extended historical periods, Gomez-Ibanez seeks to demonstrate that non-market-based policies often result in market inefficiencies which undermine regulatory regimes as prices rise. In some cases, this leads to state intervention, such as the expropriation and nationalization of private enterprises. Although recognizing that not all environments are conducive to private enterprise, the book only details private market-based cases and not public enterprises.
Public/private partnership (PPP) procurement is seen as an effective way to achieve value for money (VFM) in public infrastructure projects. The Private Finance Initiative (PFI) in the UK is a form of PPP that seeks to combine the advantages of competitive tender and flexible negotiation, and transfer risk away from the public sector. The final risk allocation agreement is reached along with overall contract agreement. It is important for the public client and the private bidders to assess all the potential risks through the whole project life.A questionnaire survey was conducted to explore preferences in risk allocation. Analysis of the response data shows that some risks should still be retained within the public sector or shared with the private sector. These are mainly macro and micro level risks. The majority of risks in PPP/PFI projects, especially those in the meso level risk group, should be allocated to the private sector. However, there are a few risks where unilateral allocation is not always obvious.The research findings should enable public sector clients to establish more efficient risk allocation frameworks in the early stages of project development.
In many countries, limitations upon the public funds available for infrastructure have led governments to invite private sector entities to enter into long-term contractual agreements for the financing, construction and/or operation of capital intensive projects. For the public procurer, there is an obvious need to ensure that value-for-money has been achieved. To the project sponsors, such ventures are characterised by low equity in the project vehicle and a reliance on direct revenues to cover operating and capital costs, and service debt finance provided by banks and other financiers. Risk evaluation is complex, requiring the analysis of risk from the different perspectives of the public and private sector entities. This paper analyses the principles involved, drawing on practical experience of evaluating such projects to present a framework for assessing the risks, and using as illustration a case study of a waste water treatment facility in Scotland which is typical of most PPP projects.
This paper identifies the theoretical stimulants and impediments associated with the implementation of PFI/PPP (Private Finance Initiative/Public Private Partnership) projects. A current defect of this procurement approach is the unintentional constraint upon the innovations incorporated into the development of PFI projects. A critical evaluation of the published literature has been utilized to synthesize a theoretical model. The paper proposes a theoretical model for the identification of potential innovation stimulants and impediments within this type of procurement. This theoretical model is then utilised to evaluate four previously completed PFI projects. These project case-studies have been examined in detail. The evaluation demonstrates how ineffective current procedures are. The application of this model before project letting could eliminate unintentional constraints and stimulate improved innovation within the process. The implementation of the model could improve the successful delivery of innovation within the entire PFI/PPP procurement process.
China is actively investigating ways to introduce project financing, specifically through the build-operate-transfer (BOT) scheme to meet the needs for the country's infrastructure and to be attractive to foreign investors and lenders. The advent of concession agreements, backed by new BOT laws, will be a positive move forward to achieving project-financed infrastructure projects. There are thus opportunities especially in the power sector for foreign investors. However, it is important to identify and manage the unique or critical risks associated with China's BOT projects. This is especially so after policies were introduced in late 1996 when the first state-approved BOT project, the US$650 million 2 × 350 megawatt (MW) coal-fired Laibin B Power Plant (Laibin B), was awarded. They include a competitive tendering process and 100% foreign ownership of the operating company. This paper is based on the findings from an international survey on risk management of BOT projects in developing countries, with emphasis on power projects in China. It discusses specifically the criticality of foreign exchange and revenue risks which include exchange rate and convertibility risk, financial closing risk, dispatch constraint risk and tariff adjustment risk. The measures for mitigating each of these risks are discussed also.
This paper is concerned with identifying universal criteria for prequalification and bid evaluation, and the means by which different emphases can be accommodated to suit the requirements of clients and projects. The information, assessment and evaluation strategies currently used by procurers for screening contractors are considered, and the results are reported of an extensive literature review and a Delphic interview study with a small select sample of construction professionals with extensive experience in prequalification and bid evaluation processes. The findings indicate that the most common criteria considered by procurers during the prequalification and bid process are those pertaining to financial soundness, technical ability, management capability, and the health and safety performance of contractors.
We review the experience of both private toll-roads built in the United States during the 1990s, and argue that the problems they encountered could have been avoided if the length of the franchise contract would adapt to demand realizations. We also argue in favor of adjudicating private toll-roads via BOT-type contracts in competitive (Demsetz) auctions. The lessons of this paper are relevant since growing congestion and troubled government finances have made private toll-roads increasingly attractive in the United States. Copyright Springer 2006
Public—Private Partnerships (PPPs) are becoming popular in Europe, but does the reality match the idea of co-operating actors who achieve added value together and share risks? An analysis of three PPPs in the Netherlands suggests that, in practice, PPPs are less ideal than the idea. Partners have difficulty with joint decision-making and organization and tend to revert to traditional forms—by contracting out and by separating responsibilities.
The introduction of market mechanisms and a new public management are transforming government and public service throughout the world. Drawing on the experience of a number of countries but focusing, in particular, on the UK where change has progressed furthest and on the broadest front, this is the first comprehensive account of the impact of a whole range of innovations such as charging, contracting, internal markets and the creation of devolved agencies.
Public-Private Partnerships (P3) have emerged over roughly the last two decades as a popular strategy for infrastructure development worldwide. Initiatives within the United Kingdom, Australia and Canada are well known while the use of private capital for infrastructure projects within emerging economies has become a global trend. Within the US, P3 arrangements have been used somewhat selectively thus far, but their momentum is building as states put enabling legislation in place to permit public-private initiatives and as "successes" such as the recent leases of the Chicago Skyway and the Indiana Toll Road are reported. Proponents of P3's tout numerous advantages while detractors often claim that the marginal benefits rarely materialize or that they are obtained at too great an expense. Thus, the question arises, are P3s effective as infrastructure development strategies? A research initiative is underway to answer this question in the context of the US. Thus far, the work has: (a) synthesized notable literature regarding P3s and infrastructure development, (b) developed a framework to measure the effectiveness P3s at the programme and project level, and (c) begun a longitudinal case-based study of both P3 programmes and projects where the framework is applied. Preliminary results are presented and discussed. While the research has not progressed far enough to make categorical conclusions, the early findings suggest that P3 initiatives in the US have had limited effectiveness and that the future success of these endeavours may depend upon establishing national guidelines for their implementation and assessment.
Risk allocation to the construction firm within a private finance initiative (PFI) project. The introduction by the UK government of the private finance initiative (PFI) in 1992 was intended to lead to a radical increase in capital projects which had previously been funded by the public sector. The construction industry whilst initially interested because of the potential extra work have subsequently expressed reservations about the successful implementation. The additional risk bearing was seen as a major concern by the industry. This paper addresses these concerns and considers the most appropriate and fairest means to both parties of assessing risk, including the possible use of independent risk assessors.
The willingness of contracting parties to take on risks is an important consideration in the allocation of project risks. A number of factors contribute to willingness to bear risks, but not all motivate conscientious, effective project risk management. A party's willingness to take on risk is reflected in the premium that he or she is able to charge for doing so. However, contractors face a number of difficulties in being able to price risk properly. The regarding of contractors as quasiinsurers suggests pricing rules that are analogous to insurance practice, and important complications associated with adverse selection and moral hazard.
The potential slowdown of the economic growth in China has led the government to increase spending in basic infrastructure such as roads, ports, and power generation facilities. There are opportunities in the infrastructure sectors for foreign investors. It is important however to identify and manage the unique or critical risks associated with investments in China's infrastructure projects. Such issues have received special attention with the closure of the Guangdong International Trust and Investment Corporation in 1998 and the subsequent confusion over government support and guarantees. This paper is based on the findings from an international survey on risk management of build-operate-transfer (BOT) projects in developing countries, with emphasis on infrastructure projects in China. It discusses specifically the criticality of the political and force majeure risks. Based on the survey, the following critical risks, in descending order of criticality, are identified: Chinese Parties' reliability and creditworthiness, change in law, force majeure, delay in approval, expropriation, and corruption. The measures for mitigating each of these risks are also discussed.
Governments in many industrialized nations have made concerted efforts to reduce their immediate expenditures and to reduce the cost of major infrastructure projects. Public–private partnerships (P3s) are one emerging method that might do so. Despite the increased use of P3s, there is little independent research on the effectiveness of P3s as a public policy instrument. This article considers the major rationales for P3s, including cost savings and keeping project financing off government budgets. It then presents a transaction cost model that suggests that P3s can often be prone to conflict, high contracting costs, opportunism and failure. Evidence from six major infrastructure projects and a summary analysis of US prisons is then presented. These cases confirm that contracting costs have been high, as predicted by the model. Specifically, high contracting costs reflect the presence of complexity/uncertainty, asset specificity, the potential for ex post bilateral opportunism and a lack of contract management skills by governments. Given these circumstances, the private sector can behave opportunistically at the expense of the public sector as there has sometimes been a political imperative to prevent projects from terminating. Public partners have also behaved opportunistically after projects are in place. Unless public sector managers recognize that they must design contracts that both compensate private sector partners for risk and then ensure that they actually bear it, P3s have little chance of being efficient or effective service delivery mechanisms.
Parties that are involved in an infrastructure project under public–private partnership (PPP) procurement system typically have different perceptions of proper risk allocation. Consequently, disputes may arise between those parties thus reducing the chances for the project’s success. Moreover, PPP projects are generally challenged with both project management problems which require day-to-day supervision (short-term) as well as partnership problems which require more of a strategic approach (long-term). Consequently, PPP projects can be considered to have governance concerns because they deal with monitoring and overseeing strategic direction as well as strategic decision-making.This research is conducted to discover the perception of proper risk allocation of each party involved and utilises the findings as the foundation to develop the concept of good project governance. Accordingly, this concept will perform as a mean to achieve proper risk allocation in tollway projects that are developed under PPP procurement system which would enhance the project’s performance. A case study research on a tollway project in Indonesia is carried out for this purpose and the preliminary results of the analysis are presented in this paper.
The multiple objectives of public clients in formulating partnerships with the private sector in infrastructure development and the radical realignment of risks, responsibilities, and awards among project participants in such partnerships necessitate a best value source selection (BVSS) methodology to choose the right private sector partner who assumes far more and much deeper risks than a mere contractor. One critical step in adopting the BVSS is to express the client's objectives in terms of best value contributing factors (BVCFs), against which alternative proposals are evaluated and consequently a sound and defensible contract award decision made. A set of 21 BVCFs in public private partnerships (PPPs) has been identified through literature review of BVCFs in different types of contracts, case studies of worldwide PPP practices, and interviews or correspondence with international PPP experts and experienced practitioners. The relative significance of these BVCFs is statistically analyzed based on a questionnaire survey of worldwide expert opinions. Results show that there is no statistical difference in the rating of these BVCFs between responses from academia and those from industry. Except for four BVCFs that are at a significance level between "fairly significant" and "significant" according to overall, academic, or industrial responses, all other BVCFs are at a significance level greater than "significant." These research outputs facilitate a BVSS process for PPPs in general.
A critical contributor to the success of a public/private partnered (PPP) infrastructure project is the selection of the right private-sector partner, the concessionaire, who would provide the best overall deal throughout the build-operate-transfer (BOT) development process. This paper proposes a core concessionaire selection protocol that incorporates public procurement principles, best-value selection approach, competitive selection process, and multicriteria tender evaluation. Key pointers for an improved concessionaire selection protocol are discussed and analyzed by drawing experience and learning lessons from worldwide PPP practices. These include improved project brief and tender documents, formulation of a best-value selection methodology, determination of suitable criteria and methods for prequalification and tender evaluation, capital structure (equity-to-debt ratio), financial models, and potential improvements in different stages of the concessionaire selection process. Relevant results of a questionnaire survey of international PPP expert opinions on an enhanced concessionaire selection protocol are also presented.
Infrastructure megaprojects have often failed to meet original stakeholder expectations in both "pure" free markets and totally central-planned economies. Such failures provide the rationale for public-private partnerships (PPPs) that synergize both public and private strengths. Build-operate-transfer (BOT) type schemes are a popular type of PPP. They improve project procurement environments by changing traditionally adversarial scenarios to partnerships that integrate finance, design, construction, and operation. Many countries are still inexperienced in the complexities and implications of PPPs. The growing body of multi-country experiences in this domain needs to be tapped through comparison and benchmarking. Various kinds of BOT-type infrastructure developments in both developed and developing countries are compared in this paper to identify strengths from successful approaches and to draw lessons from less successful or abortive projects. Particular examples include toll roads in the United States, the Private Finance Initiative in the United Kingdom, and BOT and its variants in China. The experiences derived and lessons drawn are expected to improve the procurement protocols of public clients in future partnered infrastructure projects.
The build-operate-transfer (BOT) model of project development is implemented through the award of a concession to a private sector consortium for the financing, building, and operating of infrastructure projects. Project promoters must, however, realize that the process of winning a major BOT contract in a competitive tender is full of uncertainties and risks. This paper shows that the financial and technical strength of the consortium is regarded as the most important critical success factor in a BOT tender. It also presents the competitive tendering and negotiation model for BOT promoters involved in tendering BOT projects. BOT promoters must give special and continued attention to the model in order to develop a superior proposal that will increase their chances of securing a profitable BOT contract.
Government support plays an important part in risk-return trade-off of participants in privately financed infrastructure projects. Depending on the level of government support, risk-return trade-off of the private sponsor varies from project to project. Case studies on two of China's build-operate-transfer (BOT) power projects that were developed at different time periods illustrate that government support has a significant effect on both risk and return of the private sponsor. It is hoped that such understanding would help the private sponsor strike a desirable risk-return trade-off in structuring a BOT deal.
The process of implementing Seattle's Tolt design‐build‐operate project provides a road map for other utilities interested in alternative contracting approaches.
The city of Seattle, Wash., used an innovative public‐private partnership to develop its first water filtration plant. The new Tolt treatment facilities will increase system reliability and flexibility by allowing continuous operation of Seattle's Tolt source through periods of high turbidity. It will also improve system yield and allow long‐range compliance with anticipated regulations. As an alternative to the conventional public works procurement process, Seattle created a design‐build‐operate (DBO) model to provide reliable, cost‐effective project development while maintaining public ownership of the facility. The DBO contract is valued at $101 million, which represents a savings of $70 million over the $171‐million estimated cost of developing the same facility using conventional design‐bid‐build procurement with city operations for 25 years. The Tolt facility, expected to be operational in late 2000, will be a 120‐mgd (45 10 ⁶ ‐m ³ /d) filtration and ozonation plant for treatment of Seattle's Tolt River source of supply, which provides about a third of the water for Seattle and its 26 regional wholesale customers.
Two common approaches have been used by governments for the implementation of public-private partnerships (PPPs): a finance-based approach that aims to use private financing to satisfy infrastructure needs, and a service-based approach that aims to optimize the time and cost efficiencies in service delivery. The implementation of PPPs, however, may suffer from legal, political, and cultural impediments. In the United States, the federal government enabled a number of acts to ease the impediments and promote PPPs for infrastructure development. Based on a detailed analysis of PPPs in the United Kingdom and British Columbia, Canada, this paper describes principles that would characterize the implementation of PPPs at the program level (e.g., whether the implementation is successful). The principles pertain to the: availability of a PPP legal framework and implementation units; perception of the private finance objectives, risk allocation consequences, and value-for-money objectives; maintenance of PPPs process transparency; standardization of procedures; and use of performance specifications. Guidelines for successful implementation are explained and discussed in the context of the United States PPPs experience and impediments.
Numerous public infrastructure projects have been privatized worldwide, where responsibilities, risks, and rewards are substantially reallocated between pubic and private sectors. The financial evaluation of a privatized infrastructure project is complex and challenging because of the risks and uncertainties due to the large size, long contract duration, nonrecourse financing, multiple project participants with different motives and interest, and the complexity of the contractual arrangements. Improved financial engineering techniques are required to overcome the limitations of traditional financial analysis techniques in addressing risks and uncertainties. This paper develops a methodology for capital structure optimization and financial viability analysis that reflects the characteristics of project financing, incorporates simulation and financial engineering techniques, and aims for win-win results for both public and private sectors. This quantitative methodology defines the capital structure of a privatized project in four dimensions, examines different project participants' perspectives of the capital structure, optimizes the capital structure, and evaluates the project's financial viability when it is under construction risk, bankruptcy risk and various economic risks (that are dealt with as stochastic variables), and is subject to other constraints imposed by different project participants. This methodology also evaluates the impact of governmental guarantees and supports, and addresses the issue of the equity holders' commitment to project success by initiating the concepts of equity at project risks, value of governmental loan guarantee, and project bankrupt probability during construction. A framework and a solution algorithm are provided for this proposed methodology. These research outputs will significantly facilitate both public and private sector in evaluating a privatized project's financial viability and collectively determining an optimal capital structure that safeguards their respective interests.
Different types of public-private partnerships (PPPs) have been practiced in worldwide infrastructure development with diverse results and a variety of problems have been encountered. A number of factors combine to determine the success or failure of an infrastructure project in terms of its objectives. There is an urgent need for a workable and efficient procurement protocol for improved practices in future PPP projects. As an important step toward the development of such a protocol, this study identifies, analyzes, and categorizes various critical success factors (CSFs) for PPPs in general based on a public-private win-win principle and a systematic research approach that includes case studies, literature review, and interviews/correspondence with international experts. A CSF package is developed that contains five main CSFs, each including a number of success subfactors (SSFs). Relative significances of these CSFs and SSFs are examined based on the results of a questionnaire survey of international expert opinions. Agreement analysis shows that there is a good agreement in the ranking of these CSFs and SSFs between respondents from the industrial sector and those from the academic sector.
BOT (build-operate-transfer) project delivery systems have provided effective routes to mobilize private sector funds, innovative technologies, management skills, and operational efficiencies for public infrastructure development. However, many countries and regions lack BOT expertise and experience. Hong Kong, one of the pioneers in optimizing private sector participation in infrastructure development, has developed five large tunnels on the BOT basis since the late 1960s, the first of which recently completed its franchise period and entered into the posttransfer operation phase. Experience and lessons gained in formulating and managing BOT projects over more than 30 years have enabled the Hong Kong government to develop a well-structured BOT framework. This proven BOT model is useful for countries and regions lacking such expertise and still in need of BOT-based infrastructure. This paper discusses key development aspects of the five BOT tunnels, including feasibility study; tender selection; legal, financial, and land issues; design and construction; operation and maintenance; transfer; and posttransfer management.
This paper concerns the participation of the private sector in the financing and management of public infrastructures and focuses, more particularly, on the forms of this participation. The author discusses exclusively hardships associated with private sector involvement in the financing and the management of infrastructures through delegated management. The paper addresses obstacles and hardships hindering endeav ours to speed up and rationalize the private sector's involvement in the financing and management of public infrastructure through delegated management.
Public-private partnership (PPP) projects are a special type of project which has lately become of increasing interest to both the public and the private sectors. For such projects (e.g. a bridge, tunnel or industrial area), both sectors are the joint principals. Owing to the fact that these joint partners often have conflicting interests, the organization of this type of project requires special attention. This conclusion was reached after analysis of both the project-management issues and several PPP projects in the Netherlands. To avoid pitfalls during the execution phase of a PPP project, more attention should be paid during the preparation phase to the causes of these pitfalls. Lessons learned on this subject from other types of projects must be put to use. A PPP project also requires a specific organization structure so that the conflicts of interest can be managed. The structure should focus on the constraints and on one common (agreed-upon and accepted down to the last detail) goal. The paper analyses the causes and effects of the problems which arise (pitfalls) when PPP projects are organized and managed. A number of practical recommendations are made to prevent the pitfalls identified. The necessity and importance of PPP projects are not explicitly discussed.
Concession agreement is one of the infrastructure privatization models. In Asia, the rise of concession projects began in the 1980s, and the number of such projects continues to grow. This research provides an overview and detailed analysis of the Asian concession market. Eighty-seven concession projects awarded between 1985 and 1998 covering 12 Asian countries were examined. Findings show that Asia has been implementing concession models actively in response to the high demand of infrastructure development in the power, transportation, and water sectors. Approximately 30% of the total concession projects had disappointing performances resulting in financial loss, cancellation, delay, and suspension of the project.
Communities benefit most from the private provision of public infrastructure when project risks are distributed appropriately between private and public sectors. This is not easy given the technical, legal, political and economic complexity of infrastructure projects and the range of constituencies involved. Too often, risks are under estimated and allocated to parties without the knowledge, resources and capabilities to manage them effectively. The result is increased costs, project delays and services which fail to deliver value-for-money to the community. This paper presents a case study of the controversial $920 million New Southern Railway project in Sydney, Australia. It analyses the rationale behind decisions about risk distributions between public and private sectors and their consequences. It also demonstrates the complexity and obscurity of risks facing such projects and the difficulties in distributing them appropriately. The paper concludes with a series of recommendations to better manage risks in such projects.
This paper analyses the UK's Private Finance Initiative (PFI) at a conceptual level by focusing on the management of risk, which is central to the justification for the policy and its application across the public services, and uncertainty, which underlies the role of the state. The paper argues that the rhetorical support for PFI rests on a conflation of risk and uncertainty and that PFI leads to contractual arrangements that are inappropriate for the provision of public services over the medium term.
This paper contains a study of build-operate-transfer (BOT) project financing strategies from the perspective of project sponsors. The financing strategy for a BOT project includes the selection of the appropriate mix of equity and debt financing, and the identification of appropriate financing sources. Project sponsors typically wish to minimize their financing costs to ensure their tenders are competitive. Thirteen transportation and power-generation BOT projects in North America and Asia were analyzed. Important considerations and financing strategies were identified and examined. The findings suggest that project risks, project conditions, and availability of financing are the major considerations in selecting a financing strategy. The project risks that were determined to be most significant in financing strategy selection were political, financial, and market risks. Based on the study findings, a decision model was developed that can be used by BOT project sponsors in selecting appropriate financing strategies.
This paper presents the early findings of an extensive literature review and an exploratory empirical investigation into five UK construction organizations and outlines the management and organization design issues in introducing service delivery based on teamworking practices in construction. In particular, it highlights the challenges facing the industry in transitioning from prioritizing an asset delivery focus to a service delivery focus (SDF), especially when delivering private finance initiative and public private partnership types of project.
The paper argues that introducing SDF cultures requires addressing issues commonly encountered in today's dynamic business environment, driven by the need to work collaboratively across organizational boundaries over long complex project cycles. Cultural change in this context is argued to be an emergent phenomenon resulting from the interconnectedness of a web of networks coexisting at the industry, organization, and project levels in a dynamic open system, prone to constant reconfiguration. This paper articulates the preliminary findings of an exploratory study that initiates much-needed understanding of how whole-life serviceability can be leveraged in construction projects. In essence, a network perspective of organizational design is enunciated, which suggests that ‘teamworking’ is the key to coordinating ‘design for service delivery’ across projects, across functions, across organizations, and over time (often 30 years plus). This dominant networked organizational form on which teamworking practices are focused is identified as the ‘special-purpose vehicle’ (SPV), an intermediary organization that is often the fundamental mechanism for project delivery. Further areas of research associated with the operations of SPVs are highlighted.
The build-operate-transfer (BOT) approach for developing infrastructure projects is a technique that allows fast realization of public works in cases of a shortage of public funds. This process is full of risks, due mainly to the complexity and extend of the disciplines, public agencies and stakeholders involved. The identification, classification and presentation of a comprehensive list of this type of risks will provide BOT project practitioners with a useful tool in the effort of setting up successfully a BOT concession agreement. The approach presented provides a practical insight into 27 financial risks, which are associated with the BOT projects in their lifecycle. This is achieved through proper justification and description of the content of each risk. Furthermore, a categorization of the risks is presented, according to the stage at which they occur and the sources of their origin. The findings of this research would facilitate the risk analysis process that is being conducted by risk managers prior to bidding for a BOT project and during the negotiation period.
The wherewithal of achieving best value in private finance initiative (PFI) projects and the associated problems therein are documented. In the UK, PFI has offered a solution to the problem of securing necessary investment at a time of severe public expenditure restraint. In PFI schemes, the public sector clients must secure value for money, while the private sector service providers must genuinely assume responsibility for project risks. A broad-based investigation into PFI risk management informs the discussion in this paper. It is based on 68 interviews with PFI participants and a case study of eight PFI projects. The research participants comprised of contractors, financial institutions, public sector clients, consultants and facilities management organizations. The qualitative software Atlas.ti was used to analyse the textual data generated. The analysis showed that the achievement of best value requirements through PFI should hinge on: detailed risk analysis and appropriate risk allocation, drive for faster project completion, curtailment in project cost escalation, encouragement of innovation in project development, and maintenance cost being adequately accounted for. Factors that continue to challenge the achievement of best value are: high cost of the PFI procurement process, lengthy and complex negotiations, difficulty in specifying the quality of service, pricing of facility management services, potential conflicts of interests among those involved in the procurement, and the public sector clients' inability to manage consultants.
Despite massive investment opportunities and the establishment of a framework for private sector participation in highway infrastructure development programmes in India, private investment (including foreign direct investment) in this sector is not up to the expected level. A high degree of risk exposure, disagreement on many risk issues among major stakeholders, and the absence of adequate government guarantees have been identified as some of the major reasons for this lukewarm response. This paper discusses the outcome of a risk perception analysis carried out to evaluate the risk criticality, risk management capability, risk allocation/sharing preference, and factors influencing risk acceptance of major stakeholders. A survey was conducted among senior project participants such as government officials, promoters, lenders and consultants of Indian BOT road projects. Eight types of risks have been identified as very critical in the Indian road sector under BOT set up with traffic revenue risk being the most critical. Though there is fair agreement among survey respondents with respect to the risk management capabilities of stakeholders, their preferences of allocations are divergent. The significant factors influencing the risk acceptance of each stakeholder are identified through regression analysis. The study reveals that the factors and their relative influence on the risk acceptance of stakeholders are considerably different.
A public-private partnership can be seen as an appropriate institutional means of dealing with particular sources of market failure by creating a perception of equity and mutual accountability in transactions between public and private organisations through co-operative behaviour. The relative merit of the idea of public-private partnership is oriented mainly around a mutual benefit. As the roles of government in public-private partnerships are not only to provide services, but also to monitor the marketplace, a well-defined regulation framework is essential. A sound regulatory framework will increase benefits to the government by ensuring that essential partnerships operate efficiently and optimise the resources available to them in line with broader policy objectives, ranging from social policy to environmental protection. In turn, it provides assurance to the private sector that the regulatory system includes protection from expropriation, arbitration of commercial disputes, respect for contract agreements, and legitimate recovery of costs and profit proportional to the risks undertaken.
Public–private partnerships (PPPs) allow private companies to build, own and operate public projects such as schools and hospitals on behalf of the public sector. PPP contracts commonly require the private agent to take responsibilities for the performance of the asset over a long term, at least for a significant part of its useful life, so that efficiencies arising from long-term investment and asset management can be realized. However, the evidence is finely balanced on the effectiveness of such initiatives in obtaining the intended goals. This brings to the fore the challenge of designing and implementing innovative partnership plans to manage public services more effectively. More emphasis needs to be placed on strategies for the transfer of risk for the successful conclusion of PPP contracts. Copyright Springer Science+Business Media, LLC 2007
PPI System in Korea and its Policy Issues
- H Park
H. Park, PPI System in Korea and its Policy Issues (Seoul: Korea Development Institute, 2006).