Public Private Partnership Infrastructure Projects Research Articles

PPP事業(官民連携インフラ事業)のアジア的変容

PPP事業(官民連携インフラ事業)のアジア的変容

System Dynamics Model to Determine Concession Period of PPP Infrastructure Projects: Overarching Effects of Critical Success Factors

AbstractThe determination of the concession period (CP) in public–private partnership (PPP) infrastructure projects presents complexities to decision makers because various critical success factors...

How Infrastructure Public–Private Partnership Projects Change Over Project Development Phases

This research adds to work on the development of infrastructure public–private partnership projects (P3s), which is a rapidly growing mode of infrastructure service delivery. Infrastructure P3 projects typically have a long life cycle, but little is understood about the nature of the changes that such a project goes through over the phases of its life cycle. This article contributes to project research as it studies the changes that an infrastructure P3 project goes through over its life cycle and suggests how those changes can be governed over the life cycle of the project. The research is empirically informed from an in-depth case study of a highway transportation P3 in California over a 20-year period. This research shows that the developmental phases of P3s differ by dramatic changes in the composition of stakeholder networks and the use of institutional logic. First, employing social network analysis (SNA), we map the network of stakeholders in the P3 case and show how the stakeholder network changes over four phases. Second, we identify how different stakeholders use formal and informal institutional logic in their interactions, and demonstrate that the dominant institutional logic employed in the P3 changes from informal to formal over the P3’s life cycle. We further show how this change in the P3’s dominant institutional logic corresponds to the dynamism in the stakeholder network. We propose that infrastructure P3s should be analyzed and governed as the dynamic arrangements they are—constellations of stakeholders that change individually and undergo change collectively over a long life cycle of different phases.

Multi-Criterion Two-Sided Matching of Public–Private Partnership Infrastructure Projects: Criteria and Methods

Two kinds of evaluative criteria are associated with Public–Private Partnership (PPP) infrastructure projects, i.e., private evaluative criteria and public evaluative criteria. These evaluative criteria are inversely related, that is, the higher the public benefits; the lower the private surplus. To balance evaluative criteria in the Two-Sided Matching (TSM) decision, this paper develops a quantitative matching decision model to select an optimal matching scheme for PPP infrastructure projects based on the Hesitant Fuzzy Set (HFS) under unknown evaluative criterion weights. In the model, HFS is introduced to describe values of the evaluative criteria and multi-criterion information is fully considered given by groups. The optimal model is built and solved by maximizing the whole deviation of each criterion so that the evaluative criterion weights are determined objectively. Then, the match-degree of the two sides is calculated and a multi-objective optimization model is introduced to select an optimal matching scheme via a min-max approach. The results provide new insights and implications of the influence on evaluative criteria in the TSM decision.

Risk evaluation of electric vehicle charging infrastructure public-private partnership projects in China using fuzzy TOPSIS

Abstract With increasing worldwide attention on clean energy and sustainability of environment development, electric vehicle (EV) projects have been growing in number and scale all over the world. However, increasing demand-supply imbalance in charging infrastructure becomes the major obstacle of Chinese EV development. Governments are applying Public-Private Partnership (PPP) mode in this field to effectively make use of solid capital and advanced technological capability of private sector to improve charging performance and service. To ensure project success, risk evaluation, which has remained nebulous, has become a crucial step. This paper aims to explore risk factors through questionnaire survey and calculate the overall risk levels of EV charging infrastructure PPP projects with an integrated approach with Fuzzy Order Preference by Similarity to Ideal Solution (Fuzzy TOPSIS). Results of risk factors identification consisted of project/technical, political/legal, economic and social/environmental risk categories and four risk factors were selected for specific concern of charging infrastructure in China: inadequate PPP project experience, high battery cost, long charging period and power price rise. Overall risk levels of three alternative projects were evaluated and ranked with proposed approach whose feasibility and effectiveness were verified through a comparative analysis and a sensitivity analysis. Moreover, awareness of existing risks, suggestions were provided for private sectors of EV charging infrastructure PPP project. The detailed implications and limitations were presented in the suggestions and the conclusions.

Review of studies on the public–private partnerships (PPP) for infrastructure projects

Public–private partnership (PPP) is an approach adopted to enhance the economic value of infrastructure outputs, and it encompasses a broad spectrum of public sector infrastructure. Many researchers have explored the application of PPP to improve the efficiency of infrastructure delivery. This study aims to review the existing PPP research to explore the status quo, trends, and gaps in research for PPP infrastructure projects. A systematic process involving a three-phase word frequency analysis, cluster analysis, and a search on potential research topics helps to provide enough potential articles related to PPP research and reduce arbitrariness and subjectivity involved in the research topic analysis. As a result, six main research topics aligned with the infrastructure PPP projects were derived. The research gaps and research directions can serve as a motivation for researchers and practitioners to work on the next generation of PPP studies to support the development of infrastructure.

Shifting Financing of Infrastructure in India from Banks to Bonds

The Indian bond market traditionally has had limited participation in financing infrastructure projects in India. An analysis of infrastructure financing in India from various sources indicates that infrastructure projects in India have been funded primarily by commercial banks and financial institutions, with a negligible contribution from bond markets. Commercial banks continue to remain invested in infrastructure projects through construction and over the longer term in operational phases of infrastructure public–private partnership projects. This article explores some of the reasons for low participation by institutional investors in Indian infrastructure assets through market instruments and provides policy and institutional recommendations for shifting the financing of infrastructure in India from banks to bonds—including the need to offer focused credit enhancement solutions for operational infrastructure projects.

Efficiency Analysis of Government Subsidy and Performance Guarantee Policies in Relation to PPP Infrastructure Projects

Sustainable operation of public-private partnership (PPP) infrastructure projects that are characterized by considerable external benefits is of vital importance. However, a liquidity shock might trigger an inefficient liquidation of a project by the special purpose vehicle (SPV) and the bank, whose objectives are to maximize the profits generated by the project. This study argues that performance guarantee and subsidy policies implemented by the government play a role in encouraging socially efficient decision-making by the SPV and the bank to ensure the continuation of socially valuable projects. The results show that both government subsidy and performance guarantee policies are effective in avoiding the inefficient liquidation of PPP infrastructure projects when the external benefits are large and certain. However, a performance guarantee policy might lead to inefficient continuation when the external benefits of a project are uncertain. Finally, we discuss the possibility that an integrated policy combining performance guarantees and government subsidies improves the efficiency of a PPP infrastructure project.

Contractual Efficiency of PPP Infrastructure Projects: An Incomplete Contract Model

This study analyses the contractual efficiency of public-private partnership (PPP) infrastructure projects, with a focus on two financial aspects: the nonrecourse principal and incompleteness of debt contracts. The nonrecourse principal releases the sponsoring companies from the debt contract when the special purpose vehicle (SPV) established by the sponsoring companies falls into default. Consequently, all obligations under the debt contract are limited to the liability of the SPV following its default. Because the debt contract is incomplete, a renegotiation of an additional loan between the bank and the SPV might occur to enable project continuation or liquidation, which in turn influences the SPV’s ex ante strategies (moral hazard). Considering these two financial features of PPP infrastructure projects, this study develops an incomplete contract model to investigate how the renegotiation triggers ex ante moral hazard and ex post inefficient liquidation. We derive equilibrium strategies under service fees endogenously determined via bidding and examine the effect of equilibrium strategies on contractual efficiency. Finally, we propose an optimal combination of a performance guarantee, the government’s termination right, and a service fee to improve the contractual efficiency of PPP infrastructure projects.

IMPACTS OF RISK FACTORS ON THE PERFORMANCE OF PUBLIC-PRIVATE PARTNERSHIP TRANSPORTATION PROJECTS IN VIETNAM

The rapidly increasing demand and the inefficacy of financing transportation infrastructure project investments have contributed to various challenges for Vietnam in recent decades. Since the country’s budget is inadequate for investing in all necessary infrastructure projects, the Vietnam government has been inviting other economic sectors, especially the private sector, to participate in infrastructure development. The cooperation between the government agencies and the private entities, called PublicPrivate Partnership (PPP), must encounter various challenges leading to difficulties in attracting private investors. A main reason is that private investors must deal with critical risks concerning PPP investment environment. It is a challenging task for the government to optimally manage such risks to enhance the attractiveness of PPP projects for private investors. This paper examines the critical risk factors that influence the private sector’s investment decisions on PPP transportation projects in Vietnam. Risk factors inherent in typical PPP projects were compiled by comprehensive literature review. To reflect unique characteristics of PPP projects in Vietnam, the compiled risk factors were reviewed by a group of PPP experts from both the public and private sectors in Vietnam through indepth interviews and questionnaire surveys. In addition, ten PPP project case studies in Vietnam were analyzed to derive the risk profile of PPP transportation projects of the nation. These risk factors were quantitatively assessed based on their probabilities and impact levels. We found that the critical risk factors of PPP infrastructure projects in Vietnam are acquisition/compensation problems, approvals and permits, inadequate feasibility studies, finance market issues, subjective evaluation methods, and change in laws and regulations. By performing factor analysis, these critical risk factors were grouped into four categories: (1) bidding process, (2) finance issues, (3) laws and regulations, and (4) project evaluation issues. These critical risk factors represent the obstacles that repel private investors from PPP transportation projects in Vietnam. Thus, the Vietnam government agencies should meticulously address these issues to attract both domestic and foreign private investors in PPP projects.

Uncertainty analysis of value for money assessment for public-private partnership projects

In recent years, private sectors are encouraged to take an active part in franchising of urban infrastructure investments and operations, which promotes the rapid development of public-private partnership (PPP) in infrastructure and public service supply. Value for money (VFM) assessment has been officially proposed to provide a reference for selection of projects planning to adopt PPP. Based on the bottlenecks of VFM application in China and the uncertainties for urban infrastructure PPP projects, a discounted cash flow (DCF) model is established for VFM of infrastructure PPP projects. Then, a Monte Carlo simulation model is established on the basis of uncertainty factors for VFM. Through the analysis of Huai’an trams PPP project, coping strategies of uncertainties for VFM are put forward. Findings of the research may propel the establishment of a complete VFM evaluation system for PPP projects. Key instructional functions of VFM during the process of decision-making can be brought into full play and PPP may develop orderly.

Cross-sectional comparison of public-private partnerships in transport infrastructure development in Nigeria

PurposeAlthough scientific research community has shown considerable interest in identifying critical success factors (CSFs) for public-private partnership (PPP) projects, yet effort at assessing and compare CSFs within similar PPP infrastructure projects received scant attention. The purpose of this paper is to identify, assess, and compare the CSFs in PPP transport infrastructure projects.Design/methodology/approachThe study adopted literature review and three PPP case studies including structured interviews and review of documentary reports in each case study. The outcome of literature review provided a total list of 26 identified success factors, which was used to design a case study protocol using failure mode and effect analysis (FMEA) technique. FMEA was conducted on each 26 identified success factor to assess their criticality in the three PPP case studies.FindingsThe results of FMEA revealed a total of ten CSFs in the concession of the road; four CSFs in the concession of the airport; and eight CSFs in the concession of the seaport. Also, the cross-case analysis showed the three prevalent CSFs, this includes government involvement by providing guarantees, political support, and project economic viability.Practical implicationsThe study findings including lessons learnt in each case study would positively influence policy development towards PPP transport infrastructure projects and the manner in which partners (i.e. public and private sector) go about the development of PPP transport projects.Originality/valueThis research would help PPP stakeholders to focus their attention and priorities in managing the identified CSFs in achieving long-term success in PPP transport infrastructure projects implementation.

Empirical Analysis of Firms’ Willingness to Participate in Infrastructure PPP Projects

AbstractPrivate participation is the key element in forming a public-private partnership (PPP). Numerous studies have identified the factors of private participation in infrastructure projects, but...

Suggestion on tax policy for promoting the PPP projects of charging infrastructure in China

Tax is an exogenous variable of the vehicle charging infrastructure in a Public–Private Partnership (PPP), and tax policy will play a great role in regulation during the contract cooperation in PPP mode for vehicle charging infrastructure. This study analyzed the relevant tax policy of China's current vehicle charging infrastructure PPP projects, and identified several problems, such as a low level of legislation, lack of fairness, many ambiguous areas, lack of refinement, obsolete tax incentives, lack of pertinence, low degree of policy coordination and poor systematization. To perfect the tax policy of a vehicle charging infrastructure PPP project, it is necessary to give policy suggestions based on the establishment of rules and regulations, classification of tax-related expenditure, construction of differentiated dynamic tax preferential policies and construction of a multi-level coordination and supporting policy system. Project experience should also be summarized, to create a favorable tax policy environment for the forecasted rapid development of vehicle charging infrastructures.

Design and Development of a Risk Identification and Analysis Tool (RIAT) for Australian Public-Private Partnership Infrastructure Projects

Design and Development of a Risk Identification and Analysis Tool (RIAT) for Australian Public-Private Partnership Infrastructure Projects

A fuzzy synthetic evaluation analysis of operational management critical success factors for public-private partnership infrastructure projects

PurposeThe purpose of this paper is to identify the factor groupings of a set of 19 critical success factors (CSFs) associated with managing public-private partnership (PPP) projects at the operational stage and examine the most significant factor grouping using fuzzy synthetic evaluation (FSE) technique.Design/methodology/approachThe paper adopted a comprehensive review of the pertinent literature and an empirical questionnaire survey geared towards targeted international PPP experts. Survey responses were analysed using factor analysis and FSE modelling.FindingsThe results from factor analysis show five CSF groupings (CSFGs) for managing operational PPPs. These are proficient service delivery and adequate legal structures, simplified payment mechanism and consistent project monitoring, effective contract variations management, suitable stakeholder management mechanism and environmental health and safety control. The FSE modelling shows that “simplified payment mechanism and consistent project monitoring”, is the most critical CSFG. The operational management CSFs under this grouping are acceptable level of user fee charges, efficient and well-structured payment mechanism, consistent project performance monitoring and long-term demand for public facility.Research limitations/implicationsThe major limitation lies in the low sample size that was used for analysis; however the years of research and/or industrial experience of respondents and the wide coverage of different cultural backgrounds (18 countries from five regions globally) contribute to the authenticity of the survey responses. Future research should adopt interviews and case study analysis to unravel CSFs in managing operational PPPs.Originality/valueThe findings of this study are considerably beneficial to both public authorities and private operators. They inform practitioners of the strategic procedures and measures to employ in optimising the operational performance of PPP projects. Further, the methodology employed allows project management experts to reliably select the operational management CSFs for their projects.

The East West Link PPP Project's Failure to Launch: When One Crash‐Through Approach is Not Enough*

AbstractThe East West Link (EWL) project was to have been a $22.8 billion public–private partnership (PPP) to construct and manage an 18 kilometre road linking freeways east and west of Melbourne. Contracts were signed before and terminated after a state election by different governments. These actions are examples of government control over traditional governance conventions and operational outcomes, also referred to as the ‘crash‐through’ approach. This long‐term infrastructure PPP project enabled the first government to crash‐through its infrastructure plans. However, the newly elected government argued that a new democratic mandate was more important than commercial contract continuation. This option came with a significant cost in excess of $1.1 billion. The project's failure to launch is examined via key events and controversies, and fulfilment of 13 PPP requirements. None were fulfilled, including the proper choice of a PPP as the procurement method and the delivery of value for money. Lessons learnt include the risk of suboptimal PPP outcomes when substandard and rushed state advice is used for decision making. We consider Victoria's Auditor‐General's new ‘follow‐the‐money’ powers and the recently established Infrastructure Victoria in addressing PPP legitimacy.

Investigation into the causes of delay in land acquisition for PPP projects in developing countries

PurposeThe land is a critical resource for public-private partnerships (PPPs) in infrastructure development. However, acquisition of land for PPP infrastructure projects implementation increasingly becomes problematic in developing countries. Yet, effort at investigating the factors causing a delay in land acquisition for PPP infrastructure projects through an empirical method in developing countries received scant attention. Therefore, the purpose of this study is to identify and critically assess the factors predisposing PPP projects implementation to land acquisition delay in Nigeria using an empirical approach.Design/methodology/approachThe study adopted literature review and questionnaire survey. For instance, literature review was used to identify the factors causing delay in land acquisition for PPP projects in developing countries, which was used to design the questionnaire survey culminating in data analysis. To capture a broad perception, the questionnaires were administered to three different primary stakeholder groups comprised public sector authorities (i.e. ministries, department, agencies), concessionaires and lenders/banks involved in PPP projects implementation in Nigeria. Data collected were analysed using mean score, Kruskal–Wallis test and factor analysis.FindingsThe study revealed the mean score ranking of 22 identified factors causing a delay in land acquisition for PPP projects in Nigeria. The result of factor analysis grouped the 22 identified factors into 4 principal factors, namely, resettlement issues with political interference; non-availability of land with a higher cost of land transactions; weak planning institutions; and rehabilitation issues with extensive legal delays.Practical implicationsThese study findings have implications for both policymakers considering PPP projects and private investors seeking to finance a PPP project in developing countries. Also, the study findings would be useful for the governments in Nigeria and other developing countries to formulate clear policies framework that facilitates the smooth acquisition of land for PPP projects.Originality/valueThe study will be beneficial to the potential local and foreign private investors and governments by broadening their awareness on impediments in land acquisition for PPP projects in Nigeria and developing countries at large. These study findings are crucial, as not many empirical studies have been conducted in Nigeria and many other developing countries.

An approach for flexible design of infrastructure networks via a risk sharing contract: The case of CO2 transport infrastructure

This paper presents a systematic design analysis method based on the flexible design approach and the concept of real options to support decision-makers during conceptual design of infrastructure public–private partnership projects under uncertainty. It employs probabilistic and simulation methods to model uncertainty and flexible design concept to generate flexible design strategies within the physical layout and the contractual structure. Monte Carlo simulation is used to compare the value effects of design strategies. Illustrated on a stylized public–private partnership to develop a carbon capture and storage infrastructure, it was found that partners could find design solutions that not only reduce risk exposure but also enable value-creation. For example, by designing the physical network with flexibility options such as extra capacity and length coupled with flexible revenue guarantee contract, partners can be able to reduce risk and enhance their respective value in the face of capacity demand uncertainty. Such a design strategy can be a promising way to realize multi-user carbon capture and storage investments.

Critical success factors for PPP infrastructure: perspective from Taiwan

Taiwan opened up international competitive bidding for its first public private partnership (PPP) project in Oct. 1996, the western corridor High Speed Rail (THSR) project, and the contract was signed in July 1998, which was the largest Build-Operate-Transfer (BOT) project in the world at the time. Then, other PPP projects were launched for improving Taiwan’s infrastructure. Based on the statistics provided by Taiwan Ministry of Finance (TMOF), Taiwan then conducted a total of 1217 PPP projects between 2002 and 2014. Many PPP projects are successful. However, studies on the critical success factors for Taiwan’s PPP Projects are scant. The purpose of this paper is to present the findings which resulted from a study which aimed to identify & prioritize those factors critically contributing to the success of PPP infrastructure projects in Taiwan and to demonstrate the methodologies used. Four principal groups were extracted via factor analysis. They are: supportive legal frameworks, a favorable investment environment, selection of appropriate PPP projects and public support. Hopefully, the findings and the associated methodologies illustrated in this study can serve as references for successfully conducting PPP infrastructure projects in the future.