Experience Of Public-private Partnerships Research Articles

Business Value in Public-Private Partnerships: The Positive Impact of Trust and Task-Relevant Competencies on Business Outcomes in PPPs

ABSTRACTGovernments and businesses enter public-private partnerships (PPPs) to achieve better outcomes, but successful partnerships are not easily accomplished. Because businesses’ expectations about PPP outcomes affect how and whether they participate as partners, managing PPPs effectively requires knowing not just what governments lose or gain, but also the value businesses receive. This article demonstrates how structural, collaborative, and participant factors associated with both public and private partners affect business value in PPPs. Based on a mixed-methods approach, this study tests four hypotheses on how PPPs influence value creation for businesses. The findings show that PPP experience, trust, and size have significant effects on business value. However, they only increase certain types of value, depending on the presence and performance of other factors. Moreover, the results show that businesses gain more intangible values, such as network development and knowledge, than revenue.

Factors Affecting the Operational Performance of Public Private Partnership (PPP) Projects: Cases in Malaysia

The Implementation of Public Private Partnership (PPP) Programme in Malaysia aims to improve the delivery of infrastructure facilities and services for the public sectors. Hence, it is vital to ensure the success of PPP projects by monitoring the projects’ performance to earn value for money (VFM). However, there are several factors influencing the PPP projects’ performance as deliberated by previous scholars. Among these factors are lack of building facility management, lack of performance measurement systems and low monitoring levels which would affect the success of PPP projects especially at the operational stage. Therefore, the purpose of this research is to determine the factors affecting the operational performance of PPP projects in Malaysia. A qualitative approach of semi-structured interviews from selected case studies was adopted. A purposive sampling technique has been chosen which involves PPP experts as a sample population. The data was analysed using Atlas.ti8© qualitative analysis software. From the findings, authors revealed eight factors contributed to the poor projects’ performance namely; defects occurrence, lack of competency among staff or person in charge in PPP, service delivery failure, lack of strategy in assessing performance, lack of monitoring, lack of experience and understanding of PPP among stakeholders, and poor management. The findings of this study may benefit practitioners to further improve the operational performance by eliminating or minimizing factors that affect the successful implementation of PPP projects in Malaysia.

Ten Lessons from Ten Years PPP Experience in Belgium

AbstractIn 2004 Flanders, the northern region of Belgium launched a range of large public–private partnership (PPP) projects for a total value of 6 billion euros. Ten years later, PPP has become a well‐embedded procurement method for long‐term public infrastructure projects. This article makes a critical ‘round‐up’ of PPP experience in Belgium based on the perspectives of infrastructure professionals who were asked to provide their views on performance‐related issues in PPP projects. Two workshops were held to further enrich the input and ideas. Based on this empirical material this article formulates 10 lessons to improve PPP performance, which is deliberately broadly defined. It argues that the dominant ‘value for money’ evaluations, following strictly financial or commercial logics (in both the private and public sectors), need to be broadened. Given the large impact and cost of large infrastructure projects on society, broader societal and spatial contributions of PPPs are needed.

A cost and performance comparison of Public Private Partnership and public hospitals in Spain.

Public-private partnership (PPP) initiatives are extending around the world, especially in Europe, as an innovation to traditional public health systems, with the intention of making them more efficient.There is a varied range of PPP models with different degrees of responsibility from simple public sector contracts with the private, up to the complete privatisation of the service. As such, we may say the involvement of the private sector embraces the development, financing and provision of public infrastructures and delivery services.In this paper, one of the oldest PPP initiatives developed in Spain and transferred to other European and Latin American countries is evaluated for first time: the integrated healthcare delivery Alzira model.Through a comparison of public and PPP hospital performance, cost and quality indicators, the efficiency of the PPP experience in five hospitals is evaluated to identify the influence of private management in the results.Regarding the performance and efficiency analysis, it is seen that the PPP group obtains good results, above the average, but not always better than those directly managed. It is necessary to conduct studies with a greater number of PPP hospitals to obtain conclusive results.Electronic supplementary materialThe online version of this article (doi:10.1186/s13561-016-0095-5) contains supplementary material, which is available to authorized users.

The Portuguese Experience with Public-Private Partnerships

Abstract: This paper documents the Portuguese experience in Public-Private Partnerships (PPPs). Since 1993, Portugal has been using PPPs intensively, mainly for highway construction and in the health sector. This has enabled the country to close the infrastructure gap and avoid the budget constraints at the moment of the investment. Doubts about whether PPPs represent value-for-money have emerged. There are several reasons why PPP were unsuccessful: (i) the concentration PPP projects was very high over a limited time span and the public sector was not prepared nor had the ability to manage and control the contracts, (ii) the incentive to resort to PPPs was mainly to avoid budget constraints, but not to use of public resources better by taking advantage of private sector efficiency, (iii) the risk allocation between the private and public sector was flawed because the private sector bore too little risk and payments from the public to the private sector were considerably above the investment cost. The current and future annual payments from the state to the private sector are a substantial burden in the current times of austerity and budget consolidation. As the country had to ask the troika (IMF, ECB, and European Commission) for a financial rescue from, PPP renegotiations are ongoing to reduce public payments.

The importance of non-financial determinants on public–private partnerships in Europe

In previous work regarding public–private partnership (PPP) arrangements the theoretical rationales and empirical results have mainly focused on analyzing the importance of quantitative features related to budget constraints deriving from public deficits, the existence of an infrastructure gap and the efficiency hypothesis. Thus, this study aims to identify the underlying determinants behind the proliferation and execution of PPPs, emphasizing the importance that non-financial (such as political, legal and macroeconomic) determinants have in establishing a PPP, as well as the factors that enhance the attractiveness of a country to encourage the private sector through PPPs in the European context.The results of this study show that the macroeconomic environment – represented by economic freedom, competitiveness and the unemployment rate – is essential for PPPs, as well as the legal system, where regulatory quality and effective rule of law are associated with the effective execution of a PPP. The political environment and previous experience of PPPs are also key factors in making a country more attractive for establishing PPPs.

Risk ranking and analysis in PPP water supply infrastructure projects

Purpose – This paper aims to identify and evaluate the most significant risk factors that strongly affect the implementation of public–private partnership (PPP) water supply projects. PPP for water supply infrastructure services has seen continued growth over the past two decades, following public sector’s budgetary constraints and inability to provide infrastructure-based water services efficiently and cost effectively. However, these projects are often subjected to major risks leading to failures. Design/methodology/approach – Following extensive literature review and case study analyses, an international questionnaire survey was conducted with practicing and experienced PPP experts to establish the significant risks in PPP water projects. Both the probability of occurrence and severity of 40 risks were evaluated by the expert panel to determine their significance and impact on water projects procured under the PPP arrangement. Findings – The paper presents a derived risk factor list, ranks the factors and describes the “top-ranked” risk factors as: poor contract design, water pricing and tariff review uncertainty, political interference, public resistance to PPP, construction time and cost overrun, non-payment of bills, lack of PPP experience, financing risk, faulty demand forecasting, high operational costs and conflict between partners. Originality/value – This factor list broadens PPP stakeholders’ view of important project risks, rather than relying on culture-dependent studies – an area that has received less attention in PPP risk management research. The identified risk factors would provide governments and investors a useful tool in implementing constructive water PPPs by facilitating the development of risk mitigation strategies, particularly for developing countries with poor risk management practices.

National Varieties of Public–Private Partnerships (PPPs): A Comparative Analysis of PPP-Supporting Units in 19 European Countries

Most countries that have adopted the public–private partnership (PPP) model as a means of implementing infrastructure projects have launched dedicated supporting units to guide policy development and stimulate project implementation. This paper draws on the theoretical notion of PPP-enabling fields to carry out a comparative analysis of the roles and functions of PPP-supporting units across 19 European countries with varying PPP experiences. We distinguish four categories of national support of PPPs, from skeptical systems of zero support to full-fledged PPP systems. Furthermore, we take initial steps to analyze the possible link between national differences in institutionalized PPP support and the amount of implemented PPP projects. Finally, pathways for further research on PPP-supporting units are discussed.

Public-Private Partnership Experience in India: Challenges and Prospects

India has caught a significant attention of World economies for its robust economic growth in thebeginning of twenty first century. However, the sustaining of higher economic growth requiressubstantial investment in infrastructure. On this front, country has been struggling hard todevelop the infrastructure. The government is looking towards budgetary allocation, tariff policy,fiscal incentives, private sector participation, etc. In this direction the role of PPP model is wellacknowledged. The present study is an addition to the exiting economic literature for bringingthe experiences of Indian PPP projects in terms of their distribution across sectors, states andstatus, key challenges and future prospects, under an umbrella. Indian PPP agreements are in anascent stage, and it is not possible to give exclusively concluding statement regarding PPPssuccessful. However, the case studies of few projects suggest that PPP projects in India haveattended the growing demand for infrastructure facilities, managed higher losses of fuels andpollution and controlled the losses to electricity transmission. The successfulness of Indian PPPmodel is limited due to land acquisition, delays in clearances, lack of effective regulation, etc.The legal journey of India for ensuring the effective delivery of PPP projects is a remarkable stepto realize the growth potentials and other welfare gains.

Implementing systems thinking to manage risk in public private partnership projects

The complexity of public private partnership (PPP) projects ensures that risks can arise and spread in unpredictable and sometimes catastrophic ways. Systems thinking is often proposed as a potential solution to this problem but has not been widely adopted in practice. To explore the reasons for this, interviews were conducted with sixteen senior construction professionals with experience of PPPs. The results show that the main barriers to the adoption of systems thinking are: conflicts of interest within PPP projects; confrontational contracts; resistance to change; lack of time and resources; perceptions of complexity; unknown legal implications of sharing risk; and external validation of existing risk management practices. It is concluded that in moving to a systems thinking approach, deeply imbedded ontologies, path dependencies, confrontational practices, and traditional linear and reductionist risk management practices will need to be challenged. Five key questions are also proposed for future research in this area.

New Paradigm of Infrastructure Services – Concerns and Issues Relating To Public Private Partnerships

India today is plagued by inadequate infrastructure that struggles to keep up with an ever increasing population. This study highlights the importance of a new approach to infrastructure investment, through commercialization of infrastructure projects. This research paper attempts to study the international experience of Public Private Partnership (PPPs) in infrastructure programs and why India needs widespread use of PPPs and various public private initiatives in India. We also look at the performance of top fifteen companies that have adopted the PPP format. In addition, this paper identifies factors constraining private investment in the infrastructure sector, and gives suggestions for future rollout of PPPs.

Experience of public private partnership in highway infrastructure development: an exploratory study of PPP mature countries and scenario in India

Public-private partnership (PPP) in which private sector partners take on increased responsibility for projects design, construction, financing and operation have become popular in various countries around the world as a means of delivering large-scale transportation infrastructure. Britain, Australia, France, Spain, Canada, Italy like PPP mature countries have implemented this model with less public debt and completed in a short span of 20 years. On the other hand, countries like China, Brazil, Malaysia, India, Belgium and Russia are implementing it as per their own requirements. However, PPPs can present more risk sharing to the private sector in design, implement and management. This model should only be considered if it can be demonstrated that they will achieve additional value, compared with traditional public procurement models. It can be an effective implementation structure only if the objectives of all parties can be met within the partnership. PPP is not the only method to deliver projects financing and realisation.

Public-private partnerships in Spanish Ports: Current status and future prospects

Public-Private Partnerships (PPPs) have proved to be more than adequate as a means to develop transport infrastructure, especially in the case of large-scale infrastructure such as ports. However, under certain specific circumstances they can lead to certain failures, and so huge public losses. Both the country's hard-hit economy and its vast experience in PPP investments make Spain an ideal case to analyse the successes and failures of these types of contracts, at a time of severe public investment constraints and need for real efficient execution of projects. This paper aims to provide an up-to-date review of PPP experiences in Spanish ports under a legislative framework which fosters public-private cooperation. More explicit and exhaustive contract terms, proper risk assignment, a higher control over demand forecast in port projects, and certain competition concerns are identified as the main requirements for future policy actions.

Critical Factors Affecting the Viability of Using Public-Private Partnerships for Prison Development

AbstractBuilding, managing, and operating prisons is essential for sustaining a country’s criminal justice system. The provision of prison services usually incurs large capital expenditures and high operating costs, requires hybrid types of operational services, and involves multigroup stakeholders. Internationally, public-private partnerships (PPPs) were introduced by governments to bring forward prison projects. This research aims to evaluate PPP experiences in the prison sector, extract critical factors affecting the viability of PPPs and recommend strategies and measures for improved use of PPPs for prison development. Comparative case studies of two prison projects were adopted as the main research method with semi-structured interviews and focus group as primary data collection instruments. The research shows that the critical factors leading to the success of prison PPP are (1) relevant business case development, (2) robust and streamlined project development, (3) effective contract administration ...

Public private partnerships/private finance initiatives for financing infrastructure in public tertiary institutions in Nigeria

Purpose – The purpose of this paper is to investigate the factors that influence the adoption of private finance initiatives (PFIs) for infrastructure projects in tertiary institutions of learning. It also determines the relationship between the levels of awareness, years of experience and the identified factors. Design/methodology/approach – Data for this study were gathered from administration of questionnaires. The instruments were administered after validation on the stakeholders in the concerned departments. Data collected were analyzed using descriptive, cluster and correlation analyses. Findings – There is a high level of awareness and experience in public private partnerships (PPPs) among the respondents on the initiative. It is found that nature of project, risk involvement and the technical capabilities are the three most influential factors. There is correlation between the identified factors. There is also a significant relationship between the respondents’ years of experience in PPP and “technical capabilities factors.” Research limitations/implications – The study is limited to four selected public tertiary institutions in a single geo-political zone (six states) in southwestern Nigeria, out of four geo-political zones in Nigeria. Southwestern Nigeria is a major zone where tertiary institutions embrace PPP/PFIs initiative. Practical implications – Empirically, PPPs in the educational sector of a developing economy have been explored and consequently implied that there is a relationship among the factors that determine the adoption of PPP. Hence, findings would be useful for the policy makers and stakeholders on decision relating to infrastructure provision in tertiary institutions. Originality/value – This study is one of the few empirical studies in relation to educational sector in developing/emerging economies on the subject of PPP/PFIs for infrastructure projects.

Using public-private partnerships for the building and management of school assets and services

Purpose – The provision of school assets and associated services is essential for achieving a country's educational outcomes. Building and managing schools usually features large component of operation, multiple groups of stakeholders, relatively simple design and technical requirements and tight timeframes to be completed to meet the open date. Internationally, public-private partnerships (PPPs) were introduced as innovative delivery models to bring forward school projects. The purpose of this paper is to evaluate the PPP experiences in the school sector focusing on the critical dimensions impacting on the viability of using PPPs for school development. Design/methodology/approach – Comparative case studies of two school PPP projects based in Australia and New Zealand were adopted as the main research method. Semi-structured interviews with key stakeholders were used as primary data collection method. Findings – By examining the procedural and organisational arrangements from a comparative perspective, the research finds that, for a successful school PPP, the followings are critical: sound business case development; size-adjusted and streamlined tendering process; localised private sector partner and streamlined finance; extensive stakeholder engagement; and effective governance and organisational structure and enhanced partnership. Originality/value – The findings provide practical implications for policy makers and public procuring authorities initiating school projects and private entities seeking investment opportunities. By implementing the strategies derived from this research and adjusting to their own social and economic environment, governments and industry would be at a better position to develop and manage schools using PPPs.

Public-Private Partnership Experience in the International Arena: Case of Turkey

AbstractPublic-private partnership (PPP) models are frequently used in construction projects worldwide. The experiences of developed and developing countries vary depending on existing legal, economical, social, and political environments. Although there are some common challenges, risks, limitations, and success factors, practicing PPP framework is also dependent on country-specific factors. In this paper, first the state of the art in frequent PPP practicing regions/countries such as Europe, the U.K., and China are summarized; and a review of PPP experience in the U.S. is presented. Then, Turkey, where different PPP models have been used for nearly three decades, is analyzed in more depth as an example for developing countries. A new PPP law has been drafted to expand the legal context and types of models and overcome the existing limitations since the first introduction of PPP projects in Turkey in early 1980s. An intensive PPP literature survey has been made to present the common success factors, risk...

A public–private partnership experience in the management of an irrigation scheme using decision-support tools in Burkina Faso

Within the framework of a national policy on food sufficiency dating back to the late 1960s, a 1200ha State-run irrigated rice scheme, called the ‘Kou Valley’ scheme, was established in south-western Burkina Faso. Jointly managed over a long period by State officials and a series of international development agencies, all aid ended abruptly in 1993, leaving the farmers and their hastily assembled Water Users Association (WUA) poorly prepared to assume management of the scheme.Concerned about the poor state of the water management and aware of their lack of management skills, the WUA turned to a private external operator for support via a public–private partnership (PPP), which involved outsourcing the water management. Initially, the PPP was funded and assisted by an international development agency. The costs are now gradually being met by the WUA and will ultimately represent 12% of the water fees collected from WUA members. An irrigation advisor was appointed on a full-time basis, and technical studies were conducted to assess the water management problems and put forward viable solutions using decision-support tools (SIMIS).At various stages, participatory meetings were organised to enable the farmers to express their opinions and to propose and discuss possible solutions. After 3years, there was some improvement in the land occupation situation and the water distribution was more equitable in some parts, as shown by various performance indicators and a general survey. However there are limits to what water management change alone can achieve without essential infrastructural improvements.As the WUA members lacked the necessary education, effective knowledge transfer was not possible and therefore assistance on water management is likely to remain in private or State hands. The farmers, however, have indicated their satisfaction with the proposed approach and their willingness to participate in PPP-based management of the scheme.

Valuing Public-Sector Revenue Risk Exposure in Transportation Public–Private Partnerships

A methodological framework can be used to evaluate public revenue financial risk exposure when transportation infrastructure is delivered through public–private partnerships (PPPs) in the United States. Transportation agencies worldwide and across the United States are increasingly using PPPs as a mechanism to deliver infrastructure. An analysis of international experience conducted for this research shows that countries with more extensive experience in PPPs than the United States have devised sophisticated methodologies to value and manage risk exposure in the context of value for money and optimum allocation of project risks. However, a review of major U.S. transportation PPP transactions reveals that U.S. states currently lack a well-documented methodology to quantify and incorporate the cost of public-sector risk into the evaluation of PPP projects. This evidence suggests that U.S. transportation agencies might benefit significantly from implementing more systematic approaches to incorporate the cost of risk in the evaluation of PPP projects. The framework proposed in this research provides a step-by-step methodology to quantify revenue risk exposure and is aimed at facilitating the estimation of the risk-adjusted costs of delivering a project as a PPP. The methodology is based on the concept of contingent liabilities and uses option pricing techniques. The application of the methodology is demonstrated by two U.S. transportation PPP case studies.

Issues of asymmetric information in public-private partnership contracts within Jordanian healthcare sector

Public-private partnership (PPP) contract is a special type of governance. Under a PPP contract, a central-government agency or a local authority and a private agent bargain a long-term contractual agreement to build a public infrastructure or the providence of a public service, such that risks, returns and resources are optimally shared among partners. The health sector has applied such PPP schemes in the recent decades for two primary reasons: 1 lack of government budgetary support for the health sector and the search for an alternative source of funding 2 the emergence of privatisation in the health sector. However such schemes of contracts are fully related to issues of asymmetric information such as the problems of moral hazard, adverse selection and market for lemons. These problems undermine the shared optimal results of PPPs contracts. Jordanian Health sector has witnessed some healthcare cuts. The sector also endeavoured on such PPP contracts to lessen the deteriorating consequences of the health sector. This paper exposes the Jordanian experience of PPPs in the health sector. Related issues of asymmetric information are treated and some remedy propositions are advanced.