Public-private Partnership Contracts Research Articles

Does facility-maintenance service quality drive tenants’ willingness to pay higher rent? Evidence from Indian residential real estate infrastructure

Purpose This paper aims to empirically investigate the effect of facility–maintenance service quality on tenants’ satisfaction and their subsequent willingness to pay higher rent in the National Capital Region (NCR), India. Design/methodology/approach The data for this study was collected from 1,692 tenants in NCR, India. SmartPLS4.0 was used to analyze the data using structured equation modeling. Findings The study findings indicate that all parameters of facility–maintenance service quality (tangibles, service personnel quality and empathy) positively impact tenants’ satisfaction. Further, satisfied tenants are willing to pay higher rentals. In addition, customer satisfaction partially mediates the relationship between facility–maintenance service quality and willingness to pay higher rent. Research limitations/implications The study extends evidence-based research in the service industry to provide empirical evidence that facility–maintenance service quality positively impacts customer satisfaction in real estate settings in emerging markets (India). This research will guide future researchers to explore other dimensions to support evidence-based research in real estate settings. Practical implications Based on the data collected online after personal interaction in residents’ meetings, the study findings provide significant insights for stakeholders such as policymakers, practitioners, landlords, associations and builders. With rising housing demand because of rural migrations toward urban or metro locations coupled with the government’s inability to expand the infrastructure simultaneously, the government has enhanced the role of public–private partnership (PPP) in housing development. The findings will help policymakers incorporate the service angle into key performance indicators in PPP contracts. Additionally, with rising competition in the housing sector, understanding these factors will help landlords and resident associations improve service quality standards, thus enhancing the residential societies’ word-of-mouth publicity and attracting high-paying residents. Originality/value To the best of author’s knowledge, this is a pioneer study to empirically investigate the impact of facility–maintenance service quality standards on tenants’ satisfaction and willingness to pay higher rent in a residential setting in India.

Bureaucratic redundancy and administrative burden: Evidence from public‐private partnerships (PPPs) in China

AbstractAdministrative burden is experienced by both individuals and businesses when dealing with government entities. While previous literature suggests administrative burden arises from the deliberate choices of political actors, this study highlights how bureaucratic redundancies also lead to administrative burden. Using a dataset of public‐private partnerships (PPPs) in China, this study explored the influence of bureaucratic redundancy on administrative burden, in particular contractors' compliance costs caused by PPP regulations. The analysis found that bureaucratic redundancy has a positive and curvilinear relationship with compliance costs, which in turn has a positive relationship with the likelihood of PPP contract termination. These results hold even after controlling for political and economic factors. Nevertheless, such effects can be mitigated through government reforms, such as jurisdictional reduction and legislative centralization.

Learning from the End of the Public-Private Partnership for Lesotho's National Referral Hospital Network.

Public-private partnerships (PPP) are one strategy to finance and deliver healthcare in lower-resourced settings. Lesotho's Queen 'Mamohato Memorial Hospital Integrated Network (QMMH-IN) was sub-Saharan Africa's first and largest integrated healthcare PPP. We assessed successes and challenges to performance of the QMMH-IN PPP. We conducted 26 semi-structured interviews among QMMH-IN executive leadership and staff in early 2020. Questions were guided by the WHO Health System Building Blocks Framework. We conducted a thematic analysis. Facilitators of performance included: 1) PPP leadership commitment to quality improvement supported by protocols, monitoring, and actions; 2) high levels of accountability and discipline; and 3) well-functioning infrastructure, core systems, workflows, and internal referral network. Barriers to performance included: 1) human resource management challenges and 2) broader health system and referral network limitations. Respondents anticipated the collapse of the PPP and suggested better investing in training incoming managerial staff, improving staffing, and expanding QMMH-IN's role as a training facility. The PPP contract was terminated approximately five years before its anticipated end date; in mid-2021 the government of Lesotho assumed management of QMMH-IN. Going forward, the Lesotho government and others making strategic planning decisions should consider fostering a culture of quality improvement and accountability; ensuring sustained investments in human resource management; and allocating resources in a way that recognizes the interdependency of healthcare facilities and overall system strengthening. Contracts for integrated healthcare PPPs should be flexible to respond to changing external conditions and include provisions to invest in people as substantively as infrastructure, equipment, and core systems over the full length of the PPP. Healthcare PPPs, especially in lower-resource settings, should be developed with a strong understanding of their role in the broader health system and be implemented in conjunction with efforts to ensure and sustain adequate capacity and resources throughout the health system.

Articulation between Soft Law and Hard Law in the Award of Public-Private Partnership Contracts through Unsolicited Bids in Burundi: Towards Harmonization with International Practice

Articulation between Soft Law and Hard Law in the Award of Public-Private Partnership Contracts through Unsolicited Bids in Burundi: Towards Harmonization with International Practice

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.

Public-Private Partnership in Indonesia: Solutions and corruption loopholes

We need to better understand Public-Private Partnership (PPP), since most people perceive PPP as a riskless solution for government, as it involves private sector funding. In Indonesia, infrastructure development is one of the top priority sectors for Joko Widodo’s administration, and PPP has become a viable option due to budgetary constraints. However, PPP is not an impeccable solution, as there are weaknesses and loopholes for corruption to be aware of. In this literature review, we combine our previous study on Indonesia’s toll road PPP with other PPP studies to identify the weaknesses and corruption loopholes in PPP practices in Indonesia. There is clear evidence that PPP projects could end up as “white elephants”, indicating misallocation of resources and poor planning. PPP could also be used to create “fiscal illusion” to deceive public by the government. We also discovered that toll road PPP contracts in Indonesia remain vulnerable, potentially creating room for loopholes and corruption.

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.

Desalination of seawater in Morocco: Case study of Chtouka and Dakhla public‐private partnership projects

AbstractSituated between the southern Mediterranean and the Sahara Desert, Morocco has a semi‐arid climate characterized by low and irregular rainfall and a succession of dry years. With demographic and economic growth, the country's water needs are constantly increasing. The desalination of sea water is an option adopted by the government to cope with the drying up of water resources. A number of projects have been launched to secure the country's drinking water and irrigation needs. In this study, the contributions of the public‐private partnership (PPP) set‐up are assessed from the institutional, financial, technical, and management points of view, as well as the contribution of this set‐up to the success of major desalination projects for irrigation. To achieve the objective, the study focused on two desalination projects for irrigation, one in the Chtouka plain and another in the Dakhla area, based on an assessment of the various components of the two projects, and the key success factors for each of them. The study reveals that the PPP arrangement brings several advantages to these desalination projects for irrigation, principally: the participation of the private partner in the financing, the sharing of risks between the two public and private parties, and the sustainable management of the various components of the project. The Dakhla project also offers added value compared with other desalination PPP projects, because it is the first project to be included in Law No. 86‐12 on PPP contracts. At the same time, the PPP structure presents risks in terms of controlling delays caused by external events. Thus, the inauguration of new desalination PPP projects, as part of the Generation Green strategy, is proving to be a relevant solution for guaranteeing additional resources for irrigation and improving the technical, economic, and financial conditions for managing the irrigation water service.

Effective criteria in the public-private partnership in developing countries to apply the sustainable development goals: GAN-based decision support system for the renewable electrical system, case study Syria

The cost of generating electricity in developing countries surpasses the government's ability to sustain it, necessitating the involvement of the private sector in this service provision through public-private partnerships (PPPs) contracts. In Syria, the electricity system has been highly susceptible to damage as a result of the ongoing crisis, leading to frequent and prolonged blackouts. This research focuses on addressing the need for a comprehensive system that aids decision-making for PPPs contracts in the country. By employing a combination of studies, reports, and interviews with domain experts, significant general and exclusive factors that guide decision-makers in PPPs contracts are identified and organized into questionnaires. These questionnaires are then filled out by professionals engaged in PPPs contracts. The collected data is analyzed and validated using SPSS software. However, due to insufficient data collected, generative adversarial neural networks (GAN) are utilized to enhance the research data. Additionally, Expert Choice and the analytic hierarchy process are employed to calculate weights for each factor. Remarkably, the calculated weights for both general and exclusive factors align with real-life strategies. General factors primarily address the financial and commercial considerations associated with PPPs, while exclusive factors primarily focus on the operational aspects of the electrical power system. These factors are arranged in descending order of effectiveness, enabling stakeholders to determine whether the private sector should be engaged in the project or if it should remain within the public sector's purview. The proposed system has demonstrated its reliability and can serve as a promising starting point for PPPs contracts.

Competing with Leviathan: Law and government ownership in China’s public-private partnership market

Despite years of economic reform, government-owned enterprises (GOEs) continue to be prevalent in certain sectors of China’s economy. Drawing on empirical evidence from China’s public-private partnership (PPP) market, this article empirically tests whether the theory of the ownership of enterprise can explain the distribution of GOEs in China. It first conducts an empirical study on the disclosed judgments of Chinese courts to show that the enforcement of PPP contracts remains relatively weak in China, which gives rise to the concern of government opportunism. It then presents empirical evidence that the level of government ownership in each project correlates with the chances of government opportunism, which can be measured by project duration, project sector, and renegotiation terms in the contract. These findings show that the level of government ownership is affected by two competing forces—ownership costs and transaction costs. While GOEs incur relatively high ownership costs, they generally incur lower transaction costs because they can curb government opportunism and thus can outcompete private firms in some projects.

Driving Factors of Concession Period in Healthcare Public Private Partnerships

Public Private Partnerships (PPPs) play a vital role in infrastructure development and public service delivery, with government entities collaborating with private sector organizations to achieve shared goals in the long term. An essential aspect of PPP contracts is the concession period, during which Special Purpose Vehicles (SPVs) are responsible for financing, building, operating, and maintaining public assets. The concession period has significant implications, associated with project risk, revenue, operations expenses, profitability, and bankability. While numerous studies focus on determining “optimal” concession periods, fewer explore the factors driving concession periods in national PPP programs, especially for social infrastructure projects relying primarily on availability payments. To fill this gap, this research aims to identify and analyze the effect of various potential factors on the length of the concession period, using linear regression analysis on a data set of healthcare PPP projects in Italy. This research theoretically contributes to understanding the driving factors of concession periods in PPP projects and provides insights for a balanced approach to PPP project planning and regulation and related strategies. On the practical side, decision makers can negotiate optimized concession periods, ensuring successful and sustainable public infrastructure projects.

Identification of Various Execution Modes and Their Respective Risks for Public–Private Partnership (PPP) Infrastructure Projects

The public–private partnership (PPP) based model for the execution of infrastructure projects originated from Anglo-Saxon countries and was initially used in 1977 by the United Kingdom (U.K). Since then, its popularity has increased worldwide. Earlier studies by researchers and many other professional sectors and departments have introduced PPP contracts into different execution modes like Build, Operate, and Transfer (BOT); Build, Own, Operate, and Transfer (BOOT); and Build, Lease, and Transfer (BLT), etc. All definitions of PPP contracts are different but have a few common characteristics and risks. Previously, numerous pieces of literature were available on these common risks for various execution modes of PPP contracts. However, each PPP mode still has unique risks that must be identified to understand and successfully implement the PPP projects properly. This paper fills the gap mentioned above and aims to identify various commonly used PPP execution modes in infrastructure projects and their corresponding risks after placing the different PPP execution modes into four (04) different categories. Identified risks for the corresponding PPP categories were also divided into seven (07) stages of the PPP life cycle. Semi-structured interviews were conducted to gather information from thirty-four (34) PPP experts worldwide. Accordingly, interviews are transcribed and processed for thematic analysis in academic NVIVO software. These identified risks are further placed in the respective PPP category for the convenience and better understanding of the study’s outcome to the users and for the subsequent prioritization and allocation of these identified risks accordingly to the PPP parties during the finalization of the PPP execution mode.

Incentive Mechanism of Utility Tunnel PPP Projects with User Involvement

Users of utility tunnel public–private partnership (PPP) projects are productive corporate entities with a specific scope, a limited quantity, and strong bargaining power. They possess the ability and motivation to participate in PPP projects through equity investments. Tunnel PPP projects involving user participation are implemented jointly by consortia comprising construction contractors and users. Given that the government, construction contractors, and users have different interests, significant conflicts of interest arise among them. Furthermore, there exists dual information asymmetry between the government and construction contractors, as well as between the government and users. The government lacks a direct observation of the true ability endowments of construction contractors and users prior to signing PPP contracts, and it cannot directly observe the effort levels exerted by the construction contractors and users after contract signing. The combination of dual information asymmetry and conflicting interests may result in adverse selection and moral hazard on the part of construction contractors and users. Drawing on principal–agent theory, this study constructed incentive models with and without user involvement, examined the impact of user involvement on the effort level of construction contractors and the performance of PPP projects, and designed a reasonable incentive mechanism. The objective is to ensure that construction contractors and users truthfully report their ability endowments during the bidding stage and exert optimal efforts during the construction and operation stages. This research provides new insights for promoting the sustainable development of tunnel PPP projects. A case analysis of a PT tunnel PPP project and an SC tunnel PPP project demonstrates the reasonableness and feasibility of the research findings.

Public–Private Partnerships: A Fresh Risk-Based Approach to Water Sector Projects

This study focused on the unbalanced relationships that can arise in current public–private partnership (PPP) risk management frameworks, especially in developing countries’ water sectors. Different stakeholders’ perceptions of risk management were examined by analyzing 15 interviews in Portugal and Mozambique. The hybrid method included semantic, descriptive statistic, content, and narrative analyses. To achieve the research objectives, the semi-structured interview transcripts were processed using quantitative and qualitative techniques to collate relevant actors’ opinions of risk management in PPP water projects. Five risk categories were identified. The interviewed experts ranked the financial risk category as the most crucial, followed by infrastructure, commercial, technical and operational, and context risks. However, when the transcripts were evaluated from a risk factor perspective, the context risk category unexpectedly jumped to first place. Twenty-five high-impact risk factors were isolated in the semi-structured interview contents. The top five most critical risk factors were political interference, no performance measurement baselines, an unfavorable private investment climate, nonpayment of bills, and water assets uncertain condition. The results comprise a fresh contribution to the existing knowledge about experts’ perceptions of PPP contract risks, including that prior research and specialists categorize financial risks as the most important. The findings further reveal that experts consider managing context risks to be the key factor in PPPs success in developing countries, as well as highlighting the need to explore these risks more fully in emerging economies’ water sectors. In addition, a complete risk management cycle is proposed based on the interviewed professionals’ opinions, in which risk assessment and risk treatment or mitigation measures are dealt with simultaneously.

Public private partnerships contract under moral hazard and ambiguous information

This paper studies optimal Public Private Partnerships contract between a public entity and a consortium, with the possibility for the public to stop the contract. The public (“she”) pays a continuous rent to the consortium (“he”), while the latter gives a response characterized by his effort. Usually, the public cannot observe the effort done by the consortium, in addition, the law of the Agent’s effort which affects the distribution of the total output is to be chosen over a set of probabilities, leading to a Principal-Agent problem with moral hazard and Knightian uncertainty characterized by [Formula: see text]-ignorance. Our problem is formulated as a Stackelberg leadership model between the public and the consortium. This problem is solved in three steps. The first one consists on characterizing the worst case, then we derive the Agent’s best response. In the third step, we solve the Principal problem by maximizing the social value of the project minus the rent paid, which is a standard stochastic control problem. The public value function is characterized by the solution of an associated Hamilton–Jacobi–Bellman variational inequality. The public value function, the optimal effort and the optimal rent are computed numerically in a feedback form by using the Howard algorithm. We show numerically that each increase in the degree of Knightian uncertainty leads to increase the optimal effort, and decrease the value function.

The effects of governance on performance: the case of Public–Private Partnership (PPP) toll roads in Indonesia

This article examines how contract model selection shapes PPP governance, which may affect the construction performance of PPP Toll Roads in Indonesia. This study compares the performance of PPP contracts used to build the 49 toll road projects, i.e. the Build-Operate-Transfer (BOT), Supported BOT (SBOT) and Design-Build-Finance-Operate-Maintenance (DBFOM) contracts. Using an Instrumental Variable Two-Stage Least Squares Regression (IV-2SLS) approach, this study discovers that SBOT contracts have lower costs and shorter completion times than BOT contracts due to a better incentive structure, which includes not only various government supports but also stronger control mechanisms in preparation, monitoring and audit. Meanwhile, using an OLS regression, DBFOM contracts have lower costs and shorter completion times than BOT contracts because private firms were able to better internalize externalities and perform better design and monitoring because they were in charge of the planning from the beginning. These findings suggest that the choice of contract has significant effects on the construction performance of PPP and transaction cost minimization is one of the keys to consider in the selection of PPP contract governance, especially to anticipate cost overrun and time delay risks.

Legislative framework for public–private partnerships in the Sultanate of Oman

An effective regulatory framework is essential to attract international investment in infrastructure development and public services through public–private partnerships (PPPs). A transparent and predictable regulatory environment makes PPPs work in the long term, as this enables private sector participants to manage long-term risks in the most effective and efficient way. The legal framework for PPPs in Oman consists of four key pieces of legislation. The Foreign Capital Investment Law (Royal Decree 50/2019) outlines the procedures for application of an investment project licence and provides for investment incentives and guarantees to international investors. The Law of Privatization (Royal Decree 51/2019) provides a transparent framework for awarding of privatisation contracts. The Public Private Partnership Law (Royal Decree 52/2019) outlines the procedures for tendering and award of PPP projects and the essential elements of PPP contracts. The Bankruptcy Law in Oman (Royal Decree 53/2019) updates the law on corporate distress and introduces the concepts of corporate restructuring, preventative composition and bankruptcy-filing procedures. These four royal decrees are evaluated in this paper. The royal decrees promulgated in succession by the Sultanate of Oman bring privatisation and PPP policy in line with international best practice and constitute a central component of the nation’s strategy and supply side reforms to diversify the economy.

Legal Nature of Concessionaire and Public-Private Partnership Contracts

Abstract This paper aims to analyze the legal nature of concessionaire and PPP contract in Albanian Legislation and through the perspective of European legislation analyzing mainly the Italian and French legislation and doctrine in this area. The main hypothesis that this paper aims to address is related to the fact, if it is enough to categorize these kinds of contracts with a hybrid status between public and private law, or the fact that so many countries appellate more and more to the concessionaire and PPP contracts is the momentum to create a separate law discipline as so many universities in France, USA, Japan do. Also, this paper aims to make a comparative study of Albanian legislation in the area of concessionaire and PPP contracts with the European legislation being the fact that for Albania this is a new area, and is a considerable lake of doctrine and legal studies that analyze the specifics and characteristics of such kind of contracts, putting at the last instance not only the Albanian contractual authorities but also the national courts in difficulties of implementation and interpretation.

Public investment as downward benefit distribution: Theory and evidence from China’s public–private partnership programs

Although previous studies have documented the political cycle of public investment in various countries, we still know little about its distributional consequences. We address this question by analyzing an emerging form of public infrastructure investment in China: public–private partnership (PPP). We argue that mayors use infrastructure investment to distribute benefits, thereby securing local compliance and support. Our empirical analysis draws on a unique dataset that matches PPP contracts with Chinese mayors who served from 2010 to 2017. We demonstrate a salient tenure effect: mayors decrease public investment over time during their tenure. Moreover, the tenure effect is more salient among mayors who lack local work experience. Contract-level evidence shows that mayors disproportionately allocate more investment to local firms, especially local state-owned enterprises, to garner local support. We show that the downward tenure effect is mainly driven by officials’ survival concerns rather than promotion incentives.

Avoiding Disputes in PPP Road Contracts: Quantifying Impacts of Increased Allowable Truck Loads

Dealing with changes is one major concern in long-term public-private partnerships (PPP) concessions, especially during the implementation phase, as some changes might lead to disputes between PPP partners and disrupt the successful execution of the project. In the transport sector, a change in the law regulating truck loading standards inevitably influences the financial stability of road projects procured through PPP. That is, the government’s decision of increasing the permissible truck load can lead to an accelerated deterioration of the pavement, and accordingly imposes additional expenditures that are borne by the concessionaire for maintaining the road condition at a satisfactory level, as required by the PPP contract terms. Given the fact that PPP concessions allow for additional compensations to the concessionaires in the case of modifications in the legislative and regulatory conditions, this study proposes two remuneration strategies for consideration by the concerned government to mitigate the adverse implications of increasing truck load limit on the concessionaire’s financial status and consequently to avoid the occurrence of disputes with the concessionaire. The work presented herein is twofold, as it quantifies the impact of the change in truck load regulations on two main contract terms: the toll regime and the concession period. Under the first approach, the government would provide direct compensation to the concessionaire through a shadow toll paid per overloaded truck. The value of the shadow toll was found to be largely influenced by the truck class, truck load, pavement structure, climatic conditions and traffic volumes. Moreover, it was found that the highest values of shadow tolls would apply to projects with relatively thin pavements and high traffic volumes. Under the second approach, an extension of the concession period was considered, which allows the concessionaire to recover the increased pavement maintenance costs. It was found that the length of the extended term depends, to a great extent, on the project’s characteristics in terms of the pavement structure, climatic conditions, traffic volumes, and more importantly on the toll revenues generated during the extended period. The two proposed alternative compensation techniques were devised and demonstrated through a methodology that involved flexible pavements performance prediction under varying loading conditions, using AASHTOWare Pavement ME. The proposed methodologies represent a framework that helps the two main parties involved in a PPP road project (i.e., the concessionaire and the highway agency) to accurately assess the effect of any increase in truck loading on the pavement performance and to decide on a fair compensation to be offered by the highway agency to the concessionaire, thereby contributing to the avoidance of dispute occurrence.