Public-private Partnership Projects Research Articles

Credit risk in infrastructure PPP projects under the real options approach

The purpose of the paper is to provide a method to estimate the credit risk in infrastructure public–private partnership (PPP) projects by using a structural model, the Real Options approach, and the Monte Carlo simulation technique. To do that, previous models are extended under a structural framework for credit risk where the embedded options in the credit agreement such as the option to renegotiate and the option to exit are introduced as well as the uncertainty of the cash flows. In that sense, all the components of expected loss (EL) such as the probability of default, the exposure, and the recovery rate for lenders are modelled and estimated in a PPP toll road project by considering the embedded options as well as the default events. Consequently, it is found that the embedded options improve the recovery rate for lenders and their EL. Additionally, practical insights about the effects of the embedded options in the credit agreement and the probability of default are provided.

When bigger is better: Investment volume drivers in infrastructure public-private partnership projects

This research studies the factors that favour the establishment of high-investment infrastructure public-private partnership (PPP) projects. We analyse 9121 PPPs, hosted in 107 developing countries, in the period 1997–2017. We find that PPP projects adopting contractual forms in which the private party takes more risks, awarded through competitive methods and benefitting from indirect government support programmes, are characterized by a larger investment volume. A more business-friendly economy and robust institutions configure the most conducive environment to establish larger investment PPPs. Furthermore, multilateral development banks’ support of the projects relates positively to their investment volume.

Influence of public credit risk on private capital in public–private partnership models

AbstractPublic credit risk is an important factor in private capital's decision to participate in public–private partnership (PPP) projects. We explore why private capital participates in such projects using dynamic game theory. We assess the framework of credit rating agencies assessment of local fiscal risk and construct a measure of fiscal commitment risk and public credit risk evaluation indicators. Using China's provincial panel data from 2013 to 2019, we found that government credit risk reduces private partner participation. Private capital participates in PPP projects for profit if the local government has established good credit awareness and contractual spirit.

The influence of trust networks on public–private partnership project performance

Trust relationships can improve the performance of public–private partnership projects, but current research often starts from a dual perspective of the project owner and contractor. Since there are many stakeholders in each project, it is more reasonable to consider the network structure of trust relationships from the perspective of social network theory. Given the lack of research in this area, a study was undertaken to reveal the relationship between trust network, opportunistic behaviours and project performance among all participants in public–private partnership projects. Partial least squares structural equation modelling was used to analyse the data from 193 valid questionnaires. It was found that the density and stability of trust networks were negatively correlated with opportunistic behaviour and positively correlated with project performance. However, the centralisation of networks was positively correlated with opportunistic behaviour and negatively correlated with project performance. These conclusions are helpful in optimising public–private partnership project performance from the perspective of stakeholder management and trust network governance.

Who does it better and why? Empirical analysis of public-private partnership in infrastructure in Asia-Pacific

PurposeThis research has two primary goals: first, to develop a composite index that evaluates the degree to which Asian–Pacific economies are prepared to engage in public–private partnerships (PPPs), and second, to investigate the factors that have been most influential in the formation of PPP arrangements in the nations' infrastructure over the course of the period 1995–2016.Design/methodology/approachThe study constructs sectoral and overall index of possible determinants of PPP. Subsequently, it examines each constructed index's role in PPP investment. The author also conducted a panel data analysis to understand the role of each of the potential determinants on PPP projects and investments. This paper analyzes the author’s empirical models using a range of cross-section and panel estimators, including Poisson, zero-inflated Poisson and fixed effect.FindingsThe study’s results based on cross-section analysis suggest that regulatory and institution quality, institutional arrangement and regulatory frameworks, financial market development and macroeconomic stability positively impact investment in PPP. Moreover, the results depict that financial market development has the most substantial impact on PPP investment, followed by macroeconomic stability and prior experience with PPPs. The panel data analysis shows that per-capita income, financial development, inflation, debt, resource import and fuel export are crucial determinants of PPP in Asian–Pacific economies.Practical implicationsGovernments of the countries should promptly amend the important policies outlined in this study and adopt a more robust strategy to foster a competitive PPP environment. This will aid in maintaining transparency and gaining the confidence of investors. The study’s findings may assist policymakers in focusing on specific areas in need of improvement. Social welfare and industrialization are ultimately enhanced by the formulation of such policies and by attracting additional infrastructure investment.Originality/valueThis is the first attempt to rank countries on the basis of PPP enablers. Unlike previous studies, this study examines the role of a large number of indicators in determining PPP investment and projects in cross-section as well as panel data framework. The study also investigates the effects of PPP specific provisions and rules. Furthermore, the focus is specifically on Asian–Pacific countries, which are a mix of third-world, emerging, developing and developed countries. Focusing on Asia–Pacific is also crucial because the region is home to most of the world's population, and the region's infrastructure outcomes significantly impact their lives.

Influencing Factors of Early Termination for PPP Projects Based on Multicase Grounded Theory

The public-private partnership (PPP) model has been widely used in infrastructure projects around the world to alleviate government shortages of funding and practical experience. Although the early termination of PPP projects frequently occurs in different parts of the world and brings huge economic losses, there are few relevant studies on its influencing factors. Most of influencing factor identification models are subjective and do not consider dependencies and feedback relationships between influencing factors. Using the data of 113 PPP projects, this paper proposes a multicase grounded theory and an interpretative structural model (ISM) to identify the key influencing factors of early termination and to analyze the hierarchical structure among influencing factors. The results show that there are 53 factors leading to the early termination of PPP projects, which can be divided into 19 main categories and 7 levels. Among them, political environment and natural environment are the most fundamental factors. In addition, a 3-level coping strategy is developed based on the constructed multilevel hierarchical model. The proposed methodology can be applied to risk analysis of early termination of PPP projects, and can help decision makers formulate strategies by considering the interaction of influencing factors.

Criticality analysis of financial risks of public-private partnership projects in a Sub-Saharan African country

Integrating sustainable and complex financial performance models into Public-Private Partnership (PPP) project management is a challenging task due to the sheer number of inherent financial risks. Financial risk is a key impediment in the development of public infrastructure projects in Ghana. Studies on PPP projects in the country have concentrated on critical success factors and stakeholder management with little in-depth assessment of financial risks. This study develops and analyses the key financial risks of PPP infrastructure projects in Ghana. The research methodology is set as follows. First, the identification of twenty-eight financial risks in institutional and project reports, and peer-reviewed articles. Second, collection of primary data via surveys from 126 PPP experts (academics, risk managers and project managers). Third, the development and testing of a novel quantitative model on the criticality of financial risks of PPP projects. The findings show high interest charges, excessive operating expenses, and huge construction material costs as some of the critical financial risks that must be tackled immediately in the country. The outcomes of this study broaden the understanding of financial risks of PPP projects, and it sets the stage for further research.

Effect of transparency on the development phase of public-private partnership: Analysis of highway projects

The impact of transparency on large Public-Private Partnership (PPP) projects has been a topic of interest for scholars and policymakers. However, empirical evidence of its impact has been limited. Governments from more than 100 countries across the globe have enacted transparency laws in the recent past. The development phase of PPP projects is critical for the success of the subsequent two phases- construction and operation. The objective of this study was to determine the influencing characteristics of projects and the environment in which they operate, as well as the impact of transparency laws on the duration of the development phase. Regression analysis using data of 469 PPP highway projects implemented in India revealed that concession period, length of the road, nodal authority implementing the project, duration of the construction phase, and road density in the region significantly impact the duration of the development phase. Mean comparison and regression analysis showed that the projects implemented after the enactment of the transparency law had a longer development phase. However, the projects with a longer development phase had a shorter construction phase. Understanding the factors affecting the duration of the development phase will help the nodal authority and the concessionaire to develop strategies to complete the project in a reasonably time-bound manner.

Experiences on the path to achieving SIDCER recognition of an Ethics Committee

Ethics Committees (ECs) are endowed with the responsibility of ensuring ethical conduct of biomedical research and human research participants’ protection. Although mandating its registration with central regulatory agency/agencies like Department of Health Research or Central Drugs Standard Control Organisation helps to improve its quality of functioning, further progress in achieving highest standards of ethical review is facilitated by undergoing various recognition/accreditation programs. One such is the Strategic Initiative for Developing Capacity in Ethical Review (SIDCER) recognition program, which was established under the World Health Organization–Tropical Disease Research (WHO-TDR) as a public-private partnership project in the year 2005. An EC is recognized by SIDCER after assessing five standards namely its structure and composition; adherence to specific policies; completeness of its review process; after review process; and documentation and archiving. This review describes the experiences of an EC of Sri Manakula Vinayagar Medical College and Hospital (SMVMCH), on the path to receiving SIDCER recognition and way beyond.

Renewable energy curtailment practices in Jordan and proposed solutions

• Jordan is a pioneer in renewable energy, However, 17% of Jordan's wind energy capacity is curtailed. • Energy Curtailment means despite the ability to generate energy, the government stop generation. • In the case of energy curtailment, the government has to pay for this energy. • Curtailment energy could be used in charging electric cars. Curtailed energy could be used to improve techno-economic aspects and minimize emissions. Jordan is considered a leading country in renewable energy in the Middle East, particularly in wind energy. Due to the low energy demand during peak power generation, 17% of overall wind energy capacity is curtailed in Jordan. In this study, several energy storage systems are discussed to better usage of the curtailed energy which will eventually decrease the energy cost and reduce the carbon emissions. The Li-ion battery was used as a case study to store the curtailed energy produced from wind turbines in Jordan, where its capacity was designed to handle the curtailment for a typical day. The stored energy is then used to charge a significant number of electric vehicles, representing 11.8% of Jordan's total number of electric vehicles. An economic study, showed that the battery energy storage station is economically feasible solution. This would generate profit instead of loss and it will secure work opportunities if vehicle-charging stations were offered as a public-private partnership (PPP) project.

Evaluation of Risks Involved in Housing Projects Procured by Public Private Partnership in Kebbi State, Nigeria

Studies have shown that the adoption of Public Private Partnership (PPP) system which is expected to enhance the provision of affordable housing with diverse arrays of benefits, have failed to accomplish this task due to hindrances from several risk factors. The study evaluated the risks involved in housing projects procured by PPP in Kebbi State with a view to providing better housing delivery. Data were collected using questionnaire administered on professionals in 25 construction firms registered with the Kebbi State Ministry of Land, Housing and Urban Planning, and 15 purposively selected occupiers of PPP housing projects. Analysis of data was undertaken with the use of Mean Item Score (MIS) and Relative Importance Index (RII). The study revealed that the most important reason for the adoption of PPP procured housing projects was “Reduction in the size of inefficient bureaucracy” (RII = 0.87); the most critical risk associated with PPP procured housing projects was “Completion Risks” (MIS = 4.12); the factor leading to the success of PPP housing projects with the highest value was “Stable economic system” (MIS = 4.52; average MIS = 3.96), thus implying that the projects were successful; and Occupiers were satisfied with the conditions surrounding the Gesse Phase I and Phase II PPP Housing Estate in Birnin Kebbi, Kebbi State (MIS = 3.68 and 3.60 respectively). It was concluded that the risks involved in PPP housing projects in Kebbi State are fairly critical and can be effectively managed by adopting the drivers of the success of PPP projects and preventing the occurrence of the barriers to the success of PPP projects in Kebbi State, Nigeria. The major recommendation from the study was that the Government should focus more attention on implementing the strategies of “Stable economic system”, and “Avoidance of bribery and corruption among contracting parties”, so as to mitigate the barriers to the success of PPP housing projects in Kebbi State, Nigeria.

Public–Private Partnership Project Performance Analysis Compared to Design-Build in Highway Projects

Public–Private Partnership Project Performance Analysis Compared to Design-Build in Highway Projects

Identifying Measures of Effective Risk Management for Public–Private Partnership Infrastructure Projects in Developing Countries

The inadequate risk management of public–private partnership (PPP) projects is a principal cause of project distress or failure. This research seeks to identify and empirically validate measures of effective risk management (ERM) in the context of PPPs in a developing country, a subject that has received scant attention in the extant literature. The research is based on a comprehensive literature review, expert interviews and a questionnaire survey. Mean score ranking and factor analysis were employed to rank and group the identified measures, respectively. Tests were performed to determine the respondents’ agreement and establish the reliability and validity of the survey instrument. Analysis results indicate that all identified measures are important, are distributed over the entire project’s life cycle and exhibit a multi-organizational focus. The most significant measures focus on PPP-specific artifacts and procurement activities that are vital for ERM. Factor analysis established six critical underlying dimensions for the ERM of PPP projects. The extracted factors generally acknowledge the need for expert public- and private-sector project stakeholders with mature organizational structures, business processes and relevant experience to successfully handle and deliver PPP projects. Furthermore, a comprehensive PPP policy and sound legal and regulatory frameworks are essential for supporting the ERM of PPP projects. The findings will enable a better understanding of factors that influence the quality and outcomes of risk management efforts and promote sustainable infrastructure development via PPPs, where the success of a project strongly relies on positively managing a project’s risks in the economic and the social domains.

Features of the use of debt financial instruments of public-private partnership in domestic and foreign practice

Introduction. Financial cooperation of the state with subjects of entrepreneurial activity is carried out with the help of appropriate tools that contribute to the creation of a favorable investment environment for the implementation of socially important infrastructure projects. At the same time, an important place is occupied by debt financial instruments, which make it possible to ensure the fulfillment of obligations undertaken by partners. The purpose of the paper is to highlight domestic and foreign practice and issues of using debt financial instruments in the process of implementing public-private partnership projects. Results. The results of the study show that when financing public-private partnership projects, partnership participants seek to attract cheap and long-term debt financial instruments. Therefore, the most accessible and profitable financial instrument used in the process of financing public-private partnership projects are bank credit resources. However, small banks do not have the ability to independently finance these projects. In such a case, an effective tool is syndicated lending, the participants of which can become not only large banks, but also small ones with a different share of lending. It was established that an alternative to bank lending is the issuance of debt securities - infrastructure bonds, the use of which makes it possible to reduce the burden on budgets of various levels and attract extra-budgetary sources of financial resources. Conclusion. Effectiveness of using debt financial instruments needs to solve problems on the debt capital market, in particular regarding the legislative regulation of their formation, circulation and use in the sphere of public-private partnership, ensuring investment attractiveness, transparency and openness. Prospects for further research in this direction are the search for ways to improve the financial tools for the development of public-private partnerships, taking into account the best achievements of world experience.

The Arm-wrestling Between Public and Private Partners: An Investigation of Critical Success Factors and Risk Allocation Preference in PPP Projects

This study aims at investigating the public and private perspectives on both the critical success factors (CSFs) and risk factors (RFs) in large Public-Private Partnership (PPP) projects. It aims at analyzing how risk allocation occurs and its implications. A case-based research approach was applied, combining qualitative and quantitative analysis strategies. This research in-depth examines four large PPP projects in the Brazilian metro-rail sector. Dyadic archival and interview data were collected from public-private parties, including 34 interviews, and archival sources, such as contracts and reports. The results identify the critical success factors and risk factors in PPP projects in the transport sector. The analysis shows that public and private sectors pursue different critical success factors but converge on the risk factors. The most stressed risk factor is “corruption and bribery,” which reveal the corrupted context spanning in the studied projects. Finally, the conflict in perceptions shows an explanation of context-dependent aspects explored in the qualitative analysis.

The Role of Public–Private Partnerships in Local Government Debt Is a Potential Threat to Sustainable Cities: A Case from China

(1) Background: Public–private partnerships (PPPs) play an essential role in sustainable cities and are widely applied in the public environment, health, and transportation sectors. One of the main functions of PPP projects is to attract private capital to provide better public services and infrastructure. PPP projects require government investment, potentially threatening the debt of local governments. However, few scholars have shown attention to the relationship between PPP projects and local government debt. (2) Methods: Therefore, this study selects data from 36 cities in China from 2014 to 2018. Ordinary least squares (OLS), quantile regression, and placebo tests are used to investigate this claim. (3) Results: This study finds that PPP projects can affect local governments’ debt; based on this result, this study further proposes that the effect of PPP projects on local government debt has regional heterogeneity. Compared with eastern regions, PPPs in central and western areas of China have a noticeable impact on local government debt. This study also investigates the effect of different types of PPP projects on local government debt. In terms of the number of new additions, comprehensive urban development PPP projects have the largest effect on the exacerbation of government deb. In terms of the amount of new investment, environmental protection PPP projects have the greatest exacerbating effect on government debt. (4) Conclusion: These findings try to identify PPPs’ effect on local government debt. It is of potential reference for sustainable cities and helps to provide better transport, environmental, and health public services.

PUBLIC-PRIVATE PARTNERSHIPS IN THE FIELD OF THE “GREEN” ECONOMY OF THE MEGAPOLIS

The purpose of the research is to analyze the concept of public-private partnership and the practice of its implementation in the field of «green» economy to achieve sustainable development of the city.Methodology – the study is based on scientific papers on the topic of public-private partnership, collected from the international databases Scopus, Web of Science for the period from 2008 to 2021. The main research methods include historical and logical methods, observation, analysis and synthesis.Originality / value – the authors present the most common models of public-private partnership in different countries of the world, describe the development of the concept of public-private partnership in Kazakhstan, including the field of "green" economy.Findings. The results of the study demonstrate the growing role of the private sector in the implementation of public-private partnerships to achieve the city's sustainable development goals. The mechanism of publicprivate partnership makes it possible to improve the quality and efficiency of services traditionally provided by the state, while reducing the financial burden on the state budget. The most successful models are publicprivate partnerships in the implementation of urban infrastructure projects based on «green» technologies and «green» financing. However, the number of «green» public-private partnership projects is significantly less than in other sectors of the economy. Currently, conditions have been formed in Kazakhstan for the implementation of the concept of public private partnership, however, in the field of green economy, this concept is not yet fully implemented. The main reason is the low profitability of projects, in this regard, it is necessary to provide in the legislation incentive measures for the development of public-private partnership by simplifying the procedures for concluding contracts, providing tax benefits, subsidies and revising the rates of fees for the provision of services.

Exploring the determinants of government ownership in port public-private partnerships

ABSTRACT Public-private partnership (PPP) is a popular form of port investment in developing countries. Collaboration with the government can be critical to the success of a port PPP, which may also eventually affect a firm’s risk and performance. This study empirically investigates the impact of project-specific and company-specific factors on government ownership in a port public-private partnership in developing countries. Results show that a higher proportion of government ownership in port PPPs is associated with a larger PPP investment amount, a higher historical proportion of government ownership, and presence of both foreign and other types of private investors. On the other hand, presence of bidding, local private investors, and vertical and horizontal integration are negatively correlated with the proportion of government ownership. This study can provide private investors with a reference framework to identify potential port PPP projects to enter based on their preferences, capabilities, and portfolios. It can also assist inexperienced port authorities in analysing when to take ownership of port PPPs.

Investigating cooperative strategies in low-carbon public–private partnership projects through evolutionary game

PurposePromoting low-carbon in the construction industry is important for achieving the overall low-carbon goals. Public–private partnership is very popular in public infrastructure projects. However, different perceptions of low-carbon and behaviors of public and private sectors can hinder the realization of low-carbon in these projects. In order to analyze the willingness of each stakeholder to cooperate towards low-carbon goals, an evolutionary game model is constructed.Design/methodology/approachAn evolutionary game model that considers the opportunistic behavior of the participants is developed. The evolutionary stable strategies (ESSs) under different scenarios are examined, and the factors that influence the willingness to cooperate between the government and private investors are investigated.FindingsThe results illustrate that a well-designed system of profit distribution and subsidies can enhance collaboration. Excessive subsidies have negative impact on cooperation between the two sides, because these two sides can weaken income distribution and lead to the free-riding behavior of the government. Under the situation of two ESSs, there is also an optimal revenue distribution coefficient that maximizes the probability of cooperation. With the introduction of supervision and punishment mechanism, the opportunistic behavior of private investors is effectively constrained.Originality/valueAn evolutionary game model is developed to explore the cooperation between the public sector and the private sector in the field of low-carbon construction. Based on the analysis of the model, this paper summarizes the conditions and strategies that can enable the two sectors to cooperate.

Research on PPP Enterprise Credit Dynamic Prediction Model

The debt default risk of local government financing vehicles (LGFVs) has become a potential trigger for systemic financial risks. How to effectively prevent hidden debt risk has always been a hot issue in public-private partnership (PPP) financing management research. In recent years, machine learning has become more and more popular in the study of enterprise credit evaluation. However, most scholars only focus on the output of the model, and do not explain in detail the extent to which variables affect the model and the decision-making process of the model. In this paper, we aim to apply a better credit rating method to the key factors and analysis of LGFV’s default risk, and analyze the decision-making process of the model in a visual form. Firstly, this paper analyzes the financial data of LGFVs. Secondly, the XGBoost-logistic combination algorithm is introduced to integrate the typical characteristics of PPP projects and construct the credit evaluation model of LGFVs. Finally, we verify the feasibility of the model by K-fold cross validation and performance evaluation. The results show that: (1) net worth, total assets, operating income, and return on equity are the most critical factors affecting the credit risk of LGFVs, asset-liability ratio and tax revenue are also potentially important factors; (2) the XGBoost-logistic model can identify the key factors affecting the credit risk of LGFVs, and has better classification performance and predictive ability. (3) The influence of each characteristic variable on model decision can be quantified by the SHAP value, and the classification decision visualization of the model improves the interpretability of the model.