Public Private Partnership Infrastructure Research Articles

A DYNAMIC PERFORMANCE-BASED PAYMENT MECHANISM FOR PUBLIC-PRIVATE PARTNERSHIP PROJECTS: AN INTEGRATED MODEL FOR PRINCIPAL-AGENT AND MULTI-OBJECTIVE OPTIMIZATION MODELS

Performance-based payment mechanism is one of the key issues to ensure all stakeholders’ benefits in infrastructure Public-Private Partnership (PPP) projects. However, most existing research on performance-based payment with a fixed incentive coefficient can’t play a good incentive role. This study aims to the intrinsic mechanism between the performance appraisal score and the performance-based payment structure, so as to design the dynamic performance-based payment mechanism for infrastructure PPP projects. Firstly, the multi-objective optimal method is used to calculate the unit-payment. Second, principal-agent theory is used to construct the performance-based payment model with a changeable incentive coefficient. The findings of this study show that, the performance-based payment mechanism can effectively motivate participants to provide high-quality and efficient services, because their remuneration directly depends on their performance. When the outcome does not meet expectations, the amount paid can be adjusted accordingly, thus ensuring the maximum protection of public resources as well as the private sector’s profits. They serve a dual purpose, on one hand, they offer insights to rectify the shortcomings in the current unsatisfactory payment structure. On the other hand, the study provides a theoretical reference for the public sector to effectively incentivize the private sector in enhancing project performance.

Fuzzy Analysis of Financial Risk Management Strategies for Sustainable Public–Private Partnership Infrastructure Projects in Ghana

Public–private partnership (PPP) is a prominent tool for sustainable infrastructure development. However, the positive contributions of PPPs toward the attainment of sustainable, climate resilience and zero-carbon infrastructure projects are hampered by poor financial risk management. This problem is more prevalent in developing countries like Ghana where private investment inflow has plummeted due to the COVID-19 recession and poor project performance. Thus, this study aims to assess the key financial risk management strategies in ensuring sustainable PPP infrastructure projects in Ghana. The study utilised primary data from PPP practitioners in Ghana solicited through survey questionnaires. Factor analysis, mean scores and fuzzy synthetic analysis are the data analysis techniques for this study. The results revealed that sustainable and green funding models, effective cost-reduction initiatives, a competent team with committed leadership and emerging technologies and regulations constitute the key strategies for managing the financial risks of sustainable PPP infrastructure projects. Although future studies must expand the scope of data gathering, the findings of the study enrich the theoretical understanding of financial risks in sustainable investments in PPP infrastructures. Relevant remedies that will aid the development of practical financial risk management guidelines are also provided in this study for PPP practitioners.

Critical Success Factors for the Implementation of Public-Private Partnerships in Zimbabwe's State Universities

A weakness of the extant Public-Private Partnerships (PPPs) literature to date has been its normative approach to the subject, creating in effect, a 'one size fits all view' of the preconditions or Critical Success Factors (CSFs) for the implementation of PPPs yet they vary with the context and sector. This study challenges the existing prominent CSFs model for the implementation of PPP which it perceives to be broader and biased towards economic infrastructure in rich industrial nations and excludes the realities of post-colonial third world countries. The research developed a refined sector-specific Educational Infrastructure Critical Success Factor Model (EICSFM) that will inform effective implementation of educational infrastructure PPPs in Zimbabwe state universities. Validated suggestions from research participants were compared to the existing model used to guide this study and results showed that some of the suggested CSFs for PPPs in Zimbabwe state universities tallies with this extant widely accepted CSFs model for PPPs, whereas some differ. The new suggested emerging sector-specific CSFs for effective implementation of PPPs in state universities include; the need for state universities to have absolute autonomy, the establishment of institutional PPP Committees, state universities to be creative and aggressive, vibrant leadership at state universities, universities to have good business orientation, the establishment of innovative PPPs models for educational infrastructure projects (social infrastructure projects), the creation of project bankability and attractiveness to investors, the need for political will and creation of trust. Comparing such suggestions to the extant CSFs model, the study concluded that even though some these preconditions for successful implementation of PPPs may be similar to some of the existing ones, their application is not similar but context-based. The study thus recommends governments avoid a ‘one size fits all’ perception and approach, but rather encompass sector-specific considerations when adopting and implementing PPPs as an alternative funding option for infrastructure development.

Configuration analysis of asymmetric trust between infrastructure PPP project participants

PurposeTrust is the glue that holds cooperative relationships together and often exists in an asymmetric manner. The purpose of this study is to explore how to mitigate the issue of losses or increased transaction costs caused by opportunistic behavior in a soft environment where trust asymmetry is quite common and difficult to avoid.Design/methodology/approachThis study focuses on examining asymmetric trust between the government and the private sector in public-private partnership (PPP) projects. Drawing upon both project realities and relevant literature, the primary conditional variables influencing asymmetric trust are identified. These variables encompass power perception asymmetry, information asymmetry, interaction behavior, risk perception differences and government-side control. Subsequently, through the use of a survey questionnaire, binary-matched data from both the government and the private sector are collected. The study employs fuzzy-set qualitative comparative analysis (fsQCA) to conduct a configurational analysis, aiming to investigate the causal pathways that trigger asymmetric trust.FindingsNo single conditional variable is a necessary condition for the emergence of trust asymmetry. The pathways leading to a high degree of trust asymmetry can be categorized into two types: those dominated by power perception and those involving a combination of multiple factors. Differences in power perception play a crucial role in the occurrence of high trust asymmetry, yet the influence of other conditional variables in triggering trust asymmetry should not be overlooked.Originality/valueThe findings can contribute to advancing the study of trust relationships in the field of Chinese PPP projects. Furthermore, they hold practical value in facilitating the enhancement of trust relationships between the government and the private sector.

EFFICIENCY OF PUBLIC-PRIVATE PARTNERSHIP IN INFRASTRUCTURE DEVELOPMENT: ANALYSIS AND PROSPECTS

In 2022, the magnitude of investments in Public-Private Partnerships (PPP) within the infrastructure sector demonstrated a gradual resurgence. Beyond the well-established practice of attracting significant PPP investments in developed nations, there has been a notable increase in the engagement of middle-income countries in the utilization of public-private collaborative mechanisms for the advancement of their infrastructure. Among the sectors, transportation, and communications have consistently maintained a prominent position in terms of both investment influx and the quantity of successfully executed infrastructure projects on a global scale. Quantitative performance indicators within the sphere of PPP projects, encompassing metrics such as the count, monetary volume, and the proportion of different agreement types, manifest encouraging trends in the execution of infrastructure PPP initiatives. Conversely, the qualitative outcomes of this investigation reveal a spectrum of issues that are intrinsically linked to CSFs. These CSFs represent the principal benchmarks that exert a direct influence on the efficiency of PPP projects concerning their established objectives, processes, and management framework. The research undertaken by the authors has successfully identified a range of disparities in the challenges faced during the implementation of PPP projects across diverse nations, notwithstanding the similarity in the underlying mechanisms of cooperation.

Ex ante required rates of return and related factors in Indonesian PPP infrastructure projects

PurposeThis paper delves into the ex ante rates of return demanded by the private sector in Indonesian public–private partnership (PPP) infrastructure projects and the manifold factors emanating from project attributes that can influence these rates.Design/methodology/approachThis paper analyzes feasibility studies of 37 PPP projects across different sectors. The studies were carefully selected based on relevance, completeness and validity of data. The analysis uses statistical techniques, including Levene’s tests, t-tests, ANOVA tests, Cohen’s effect size and Pearson correlations, to explore differences in cost of capital and excess returns across various attributes.FindingsBased on the statistical analysis, no significant difference exists between the excess return of 200 basis points (bps) and the equity excess return of 0 bps. This suggests that the eligibility criteria for PPP projects require an internal rate of return (IRR) equal to the weighted average cost of capital plus 200 bps or an equity IRR equal to the cost of equity. The variations in the tested variables among diverse project attributes do not exhibit statistically significant disparities, even though specific attributes display moderate to high effect sizes.Originality/valueThis paper represents one of the first attempts to examine the rates of return demanded by the private sector in the context of Indonesian PPP projects. It comprehensively explores the factors that influence these rates, drawing on insights derived from feasibility studies.

A systematic review of artificial intelligence in managing climate risks of PPP infrastructure projects

PurposeRecent United Nations Climate Change Conferences recognise extreme climate change of heatwaves, floods and droughts as threatening risks to the resilience and success of public–private partnership (PPP) infrastructure projects. Such conferences together with available project reports and empirical studies recommend project managers and practitioners to adopt smart technologies and develop robust measures to tackle climate risk exposure. Comparatively, artificial intelligence (AI) risk management tools are better to mitigate climate risk, but it has been inadequately explored in the PPP sector. Thus, this study aims to explore the tools and roles of AI in climate risk management of PPP infrastructure projects.Design/methodology/approachSystematically, this study compiles and analyses 36 peer-reviewed journal articles sourced from Scopus, Web of Science, Google Scholar and PubMed.FindingsThe results demonstrate deep learning, building information modelling, robotic automations, remote sensors and fuzzy logic as major key AI-based risk models (tools) for PPP infrastructures. The roles of AI in climate risk management of PPPs include risk detection, analysis, controls and prediction.Research limitations/implicationsFor researchers, the findings provide relevant guide for further investigations into AI and climate risks within the PPP research domain.Practical implicationsThis article highlights the AI tools in mitigating climate crisis in PPP infrastructure management.Originality/valueThis article provides strong arguments for the utilisation of AI in understanding and managing numerous challenges related to climate change in PPP infrastructure projects.

A review of circular economy models and success factors on public-private partnership infrastructure development

PurposeThe application of circular economy (CE) has received wide coverage in the built environment, including public-private partnership (PPP) infrastructure projects, in recent times. However, current studies and practical implementation of CE are largely associated with construction demolition, waste and recycling management. Few studies exist on circular models and success factors of public infrastructures developed within the PPP contracts. Thus, the main objective of this article is to identify the models and key success factors associated with CE implementation in PPP infrastructure projects.Design/methodology/approachA systematic review of the literature was undertaken in this study using forty-two (42) peer-reviewed journal articles from Scopus, Web of Science, Google Scholar and PubMed.FindingsThe results show that environmental factors, sustainable economic growth, effective stakeholder management, sufficient funding, utilization of low-carbon materials, effective supply chain and procurement strategies facilitate the implementation of CE in PPP infrastructure projects. Key CE business models are centered around the extension of project life cycle value, circular inputs and recycling and reuse of projects.Research limitations/implicationsAlthough the study presents relevant findings and gaps for further investigations, it has a limited sample size of 42 papers, which is expected to increase as CE gain more prominence in PPP infrastructure management in future.Practical implicationsThe findings are relevant for decision-making by PPP practitioners to attain the social, economic and environmental benefits of transitioning to circular infrastructure management.Originality/valueThis study contributes to articulating the key models and measures toward sustainable CE in public infrastructure development.

Determinants of the successful signing of public–private partnership contracts for water and sanitation infrastructure financing in Zimbabwe

Abstract The private sector remains hesitant to invest in water and sanitation infrastructure in Zimbabwe. For policymakers and investors, it is pertinent to understand the factors that determine the signing of water and sanitation public–private partnership (PPP) contracts, in order to leverage expertise and resources to achieve the Sustainable Development Goal targets. This study applied count econometrics on data collected for the 25 years from 1996 ending in 2021, with the aim of investigating the determinants of the number of PPP contracts signed in Zimbabwe. Poisson regression estimations identified positive macroeconomic prospects, financial market development, and strong institutional governance environment as important determinants for PPP contracting in Zimbabwe. The number of PPP contracts is further confirmed to be dependent on the availability of inward foreign direct investment flows. The influence of institutional governance quality on the number of water and sanitation PPP contracts was tested using a composite index constructed using the principal components analysis technique. It is advised that the government of Zimbabwe should strengthen their governance institutions and further develop their capital and bank credit markets, so as to attract investors to take up the water and sanitation infrastructure PPP contract opportunities available in the country.

Asya'nın Karayla Çevrili Gelişmekte Olan Ülkeleri İçin Altyapı Finansmanı Alternatifi Olarak İslami Finans

Various infrastructure financing methods are being used worldwide, each with its own set of advantages and obstacles. Basically, the advantages and disadvantages of a financing method manifest differently depending on each country's economic system, geographical location, economic dependency, political conditions, cultures, and beliefs. Using a funding strategy in one country may be beneficial under certain situations but harmful in another. As a result, the usefulness and efficacy of financing methods should be studied in light of the countries' circumstances. The Asian Landlocked Developing Countries (LLDC), which share the same fate in terms of geographical constraints and economic reliance, are grappling with severe infrastructural gaps in all sectors. These countries have an emerging economy, are largely dependent on agriculture, have a poor management structure, are unorganised and have weak financial markets, and rely heavily on their neighbours’ transit routes to interact with the global economy. Some of these countries depend upon foreign assistance, and the lack of transparency and binding nature of this funding has had little impact on developing such countries' infrastructure. As a result, in order to finance their infrastructure projects, these countries must select the most acceptable financing option for their circumstances. The national budget constraint, inadequate local financial markets, the risk of foreign credits, and cultural and religious values in these countries are among the obstacles that contemporary financing methods present. Consequently, looking for alternative financing methods for these countries' infrastructure projects is critical. This paper intends to look at infrastructure financing methods and their challenges in Asian landlocked developing countries and evaluate Islamic finance as an alternative to conventional finance. The qualitative research method is used for this study. Furthermore, document analysis has been utilised as a data collection tool. First, the concepts of Islamic finance will be presented before moving on to the definitions and types of infrastructure. Afterwards, the conventional infrastructure financing methods, along with the shortcomings of these methods in Asian landlocked developing countries, will be discussed. Then the development of Islamic finance in Asian LLDCs will be studied. Finally, how Islamic finance addresses the challenges of conventional finance methods will be perused. The study found that the Islamic finance models, which are founded on the principle of shared income or risk sharing, can be implemented as an alternative to conventional finance in infrastructure financing. Public-private partnership (PPP) initiatives can be implemented effectively within the framework of Islamic financing concepts because the elements of the public-private partnership initiatives are congruent with Islamic finance principles. First of all, public-private partnership initiatives allow for risk sharing among project participants, including financiers. In addition, public-private partnership projects allow Islamic financiers to become project participants rather than just lenders. Following that, PPP infrastructure projects are by definition, free of speculation and gambling. Finally, project contracts are frequently well-specified and free of uncertainty. Besides this, creating financial inclusion and risk sharing in the framework of Islamic finance reduces the currency risk and the cost of financing and causes equitable distribution of wealth in society.

Factors influencing investment attraction in road infrastructure BOT projects: A comprehensive analysis in the southern key economic zone of Vietnam

Over the course of the last two decades, Vietnam has demonstrated a growing interest in public-private partnership (PPP) investments within the domain of road transport infrastructure. However, the overall success rate of these endeavors has remained constrained and, in fact, has displayed a propensity for decline. Understanding the primary determinants behind this phenomenon, particularly the internal factors within the management system, has been a perplexing and protracted process, hindering the development of viable solutions. This research employs a qualitative analysis approach, leveraging in-depth interviews conducted with 250 road traffic infrastructure PPP project managers and experts. The objective is to discern the factors that exert influence over the investment attractiveness of build-operate-transfer (BOT) projects in the vital Southern Key Economic Zone of Vietnam. Subsequently, utilizing the collated data, this study employs a quantitative methodology to measure the impact of these factors via a derived multivariate regression equation. The findings reveal the existence of five distinct groups of factors that affect the investment attractiveness of BOT projects in the Southern Key Economic Zone, classified by their respective levels of influence. These groups encompass factors relating to the role of the state, the legal framework, human resources engagement in PPP ventures, supportive financial instruments, and the allocation of risk. Notably, these outcomes align with previous research efforts, further substantiating the robustness and reliability of the findings presented within this study.

Closing capability gaps for procuring infrastructure public-private partnerships: A case study in China

This paper explores how public sector owners (PSOs) close capability gaps between existing capabilities and required capabilities when first entering into infrastructure Public-Private Partnerships (PPPs). Drawing on the dynamic capabilities view and research on owner project capabilities, the paper presents an exploratory in-depth case study of a state-owned enterprise in China, as it was in the process of initiating PPP metro line projects for the first time. The findings show that PSOs closed capability gaps by obtaining owner strategic, commercial and governance capabilities at the initial phase of PPP procurement. This process was undertaken through a combination of acquiring capabilities externally and developing capabilities internally. The study contributes to the literesture on capability development and sheds light on the conditions when and where internal capability development and external capability acquisition are integrated to close capability gaps for procuring infrastructure PPPs.

Strategies for Minimising Failure of Public-Private Partnership Infrastructure Projects in North Central Nigeria

The global adoption of the public-private partnership (PPP) concept has been driven by the growing demand for public infrastructure. However, many PPP projects have faced challenges and yielded unfavourable outcomes such as failures, delays, and concession revocations. This research paper aims to investigate the key factors influencing private investments in PPP markets in developing countries like Nigeria. The study employed an empirical questionnaire survey, collecting data from PPP experts involved in six PPP construction projects in northern Nigeria. Based on previous research, a set of 19 success factors and 21 failure factors were identified and used as the basis for quantitative data obtained. The data were analysed using the Failure Mode and Effects Analysis (FMEA) methodology. The findings of the study revealed that three critical failure factors (CFFs) played a role in the varying degrees of failure in the studied PPP projects. These factors include public sector corruption, lack of competition and transparency in procurement processes, and political interference during project implementation. On the other hand, six critical success factors (CSFs) contributed to the success of the PPP projects to different extents. These factors encompassed the availability of suitable financial markets, a favourable investment environment, appropriate risk allocation, competition in the procurement process, a comprehensive and realistic assessment of costs and benefits, and trust among stakeholders. The results of this study can serve as a valuable reference for PPP stakeholders seeking to minimize failure in the implementation of PPP infrastructure projects.

Procuring infrastructure public-private partnerships: capability development and learning from an owner perspective

The expanding application of Public-Private Partnerships (PPPs) in infrastructure development and public service delivery has posed numerous commercial challenges for public sector owners (PSOs) regarding their capabilities to initiate, procure and manage PPP projects. This paper starts from the important role of owner project capabilities in infrastructure delivery and explores how PSOs learn to develop new commercial capabilities to match the PPP context. We draw on a qualitative single-case study of a state-owned enterprise in the Chinese context, which at the time of the study was in the early stages of applying the PPP approach in procuring metro line projects. The finding indicates the process of how the PSO learned to establish and develop the necessary owner commercial capabilities to procure infrastructure PPPs for the first time, such as the abilities to define project scope, procure, and manage suppliers. It sheds light on the roles of different types of learning mechanisms – experience accumulation, knowledge articulation, and knowledge codification – on capability development for PPPs over time from an owner perspective.

Examining the impacts of capital investment in London’s Underground: A long-term analysis

The deferred repair of infrastructure is often a pressing issue since infrastructure failures can have severe economic consequences for both operators and users. Although the benefits of non-expansion capital spending are well-known within the industry, empirical validations of such benefits from an organisational perspective are relatively rare. This exploratory research seeks to understand the impact of non-expansion capital spending on demand-side measures and operating cost using 70 years of unique data from London Underground. The data was collected for this research, and is among the longest time series for metros available within the academic literature. We adopt an autoregressive distributed lag model and discuss implications in the context of industry practices, including analysis of the company’s history and London’s urban development and politics. The exploratory results suggest that a 10% annual growth in cumulative non-expansion capital spending is associated with, on average, 4%–5% annual growth in passenger demand. Additionally, investment’s overall impact on demand increases over time. The 2000s period of infrastructure public–private partnerships was also found to be associated with positive annual growth in operating cost and negative growth in passenger demand. These results highlight the importance of capital investment and the impact of local politics on rail organisations’ long-term financial health.

Public-private partnerships and achievement of public value: The experience of Jordan’s Queen Alia International Airport

Despite the existence of a voluminous body of literature covering the impact of infrastructure public-private partnerships (PPPs) on public value within the context of Western countries, scant attention has been paid to this topic in the Middle East. Given that the region has hosted numerous PPP projects that were implemented even without the rudimentary legal and regulatory frameworks considered essential for such projects to succeed, a study of PPPs within that region would thus be particularly useful, since an unpacking of the success factors for PPPs in the Middle East can reveal important practical insights that will advance the knowledge of PPP success factors overall. This paper, therefore, explores the rehabilitation and expansion of Jordan’s Queen Alia International Airport via the PPP route. It finds that the factors contributing to the project’s successful implementation can be categorized into those on the macro level related to political support, and the micro level factors concerned with management of daily activities involved in the partnership between the public and private sectors.

Indicators, Strategies, and Rule Settings for Sustainable Public–Private Infrastructure Partnerships: From Literature Review towards Institutional Designs

Public–private partnerships (PPPs)-driven infrastructure projects frequently disappoint in terms of sustainability outcomes. This paper substantiates this. It develops and presents an institutional design that can integrate environmental and social sustainability principles into PPP infrastructure projects (sustainable PPPs). The institutional design includes principles for the planning processes (preparation, procurement, contracting) and outcome indicators. The paper builds upon and synthesizes extant research through a literature review that employs the Preferred Reporting Items for Systematic Reviews and Meta-Analysis (PRISMA) statements. The review covers the appropriateness of the used indicators for the investigation and measurement of environmental and social sustainability policy strategies designed to enhance sustainability and institutional intercalation. About the latter, a specific lens to focus on the relationships between the institutional design characteristics (the rule settings) of planning processes and the sustainability outcomes is developed based on three variables within the institutional analysis and development (IAD) framework of Ostrom. Consequently, rule settings that enable the investigation of the institutional process preconditions for sustainable PPPs and the evaluation of the sustainability outcomes are amalgamated. Our study indicates that the IAD framework provides a useful theoretical lens to harmonize and categorize process principles to achieve the rule settings that guide involved actors towards sustainable PPPs and place lenses on the envisioned environmental and social sustainability outcomes.

Investigating the use of PPPs for upgraded urban water infrastructure

Clean, sufficient water is becoming increasingly scarce worldwide, particularly in African metropolitan areas. Today's urban water systems face several challenges, including, among other things, migration from rural to urban areas, climate change, natural disasters, and a lack of institutional capacity, expertise, and financial and human resources. As a result, governments across Africa are struggling to meet constitutional requirements to provide clean and sufficient water and sanitation. This article aims to investigate the value of public-private partnerships (PPPs) in improving Africa's urban water infrastructure. The research in this article was qualitative. Data were gathered through a literature review, and conceptual analysis was used. The findings show that a variety of factors are at work.

Transformational Community Engagement in Urban Infrastructure Public-Private Partnerships: A Governmentality Approach to Create Social Value

Based on the Foucauldian concept of governmentality, this paper overcomes the atomistic view of external stakeholder engagement research to examine the specific conditions under which community engagement in urban infrastructure public-private partnerships (PPPs) can be transformational and create social value with and for communities. In particular, it shows that a transformational approach to community engagement is, in practice, closer to a form of governance that emphasizes involved stakeholders’ responsibility. It traces this line of argument through the literature and practice of social enterprises and other hybrid collaborations in the private sector. Conceptually, it contributes to a political and transformational understanding of community engagement within the context of public-private partnerships. First, by proposing a “governmentality analytical framework” for understanding and uncovering the often purposefully concealed dynamic power relations in the engagement process between the state, communities, and private investors. Second, by proposing a set of guiding principles on how to: empower communities to be organized; reconfigure the institutional environment to offer incentives and reliability; and design public-private partnerships as hybrid organizations capable of including other actors, such as non-governmental organizations.

Dynamics in network governance of infrastructure public-private partnerships: evidence from four municipalities of China

ABSTRACT In public administration studies, public-private partnerships (PPPs) networks remain insufficient in terms of more advanced network measures and dynamic evolution. To address this issue, this study uses the infrastructure PPPs of four municipalities in China (Beijing, Tianjin, Shanghai and Chongqing) as examples, and builds collaborative networks to illustrate the dynamic evolutionary roles of participants. Depending on PPPs management policies of China, infrastructure PPPs networks were divided into three stages along with three governance patterns: government-led network, third-party-led network and construction entity-led network. The findings provide implication for the government sectors to engage in public service delivery and make governance strategies.