Public-private Partnership Projects Research Articles

A Study on the Dynamic Evolution Paths of Social Risks in PPP Projects of Water Environmental Governance—From the Vulnerability Perspective

The Chinese economy is transitioning from high-speed development to high-quality development, and water environmental governance is a key factor promoting economic transformation. Due to low returns and high investment in China’s water environmental governance, the PPP (public–private-partnership) model is often adopted. However, the PPP model has historically faced challenges adapting to local conditions in China, leading to social risks in the PPP projects of water environmental governance. To reduce these risks, this paper takes a vulnerability perspective, employing the system dynamics simulation method to explore the dynamic evolution process of social risks in the PPP projects of water environmental governance. The main results show the following: (1) the external manifestations of social risks during the construction and operation periods vary significantly, exhibiting notable fluctuations; (2) during the construction period, there is a surge in social risks followed by a returns to lower than normal levels, then a gradual upward trend; during the operation period, social risks initially decrease to a lower level before gradually increasing; and (3) city class, relevant legal systems, and resource reserves emerge as critical factors influencing vulnerability and social risks. The higher the city class, the lower the project vulnerability; the soundness of the legal system for PPP projects can effectively reduce vulnerability and social risks; sufficient resource reserves can reduce social risks. Based on the above findings, this paper proposes several suggestions aiming to reduce the vulnerability and social risks in PPP projects, optimize the process of water environmental governance, and further promote the sustainable development of water environmental governance and the high-quality economy of China.

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.

Determinants of public-private partnership governance structures: evidence from India

ABSTRACT Public-private partnerships (PPPs) represent a continuum of governance structures characterized by wide variability in private sector risk transfer. Despite the widespread adoption of PPPs, few studies examine the reasons for such heterogeneity. We investigate the factors explaining variability across PPP governance structures and their impact on the extent of private sector risk transfer using ordinal logistic regression on a novel dataset of 2330 Indian PPP projects. We find that the risk transfer is mainly driven by economic and fiscal factors, service-specific transaction costs and project-specific factors, while political factors and institutional quality barely influence it.

PUBLIC-PRIVATE PARTNERSHIP AS A TOOL FOR FINANCIAL SUPPORT OF THE ENERGY SECTOR IN UKRAINE: ANALYSIS, MECHANISM, FINANCIAL REPORTING

Based on the analysis of the dynamics of implementation of public-private partnership (PPP) projects in Ukraine, key problems have been identified and its priorities in financial support for the recovery of the native energy sector have been determined. It is appointed that PPP concession agreements are the main mechanisms for attracting investment in the global electric power industry. The expediency of using the concession model on BOT terms for the implementation of large projects in the energy sector is substantiated, which will contribute to the intensification of investment attraction and will allow to distribute risks between the state and business. Recommendations on the formation of an information platform for participants in the implementation of PPP projects on the basis of disclosure of information on the effectiveness of concession operations in accounting and financial statements have been developed. The tools for the formation of the financial mechanism of public-private partnership, where the priority is budget and venture financing, are substantiated. To make decisions on the implementation of PPP investment projects, an approach to assessing the financial support of project initiatives is recommended, the basis of which is the proposed criteria for compliance with financial security, the choice of funding sources, indicators of scenario analysis and efficiency. The proposed methodical approach to assessing the effectiveness of PPP allows us to assess the synergistic effect, which reflects the totality of economic, social and environmental effects. The formulated recommendations for improving the relationship between the state and business will contribute to the intensification of the attraction of private investment resources on the basis of PPPs for the restoration of the energy sector in Ukraine.

LONG-TERM LENDING FOR PUBLIC-PRIVATE PARTNERSHIP PROJECTS: OPPORTUNITIES AND PROSPECTS

The article is devoted to the topical issues of long-term lending to public-private partnership projects in the context of a permanent shortage of budget funds and the financial instability of business entities. The purpose of the study is to highlight the problems of attracting long-term credit resources by partners in the process of implementing joint projects and to outline areas for their solution. To achieve this goal, general scientific research methods and analytical data from the State Statistics Service of Ukraine and the National Bank of Ukraine were used.The article reveals the main problems in the development of the debt financial instruments market, which make partnership projects between the state and business unattractive for investors. It is argued that the possibility of providing long-term loans depends not only on the actions of the bank, but also on the monetary policy of the NBU, which should ensure the introduction of preferential reserve requirements for banks, the provision of irrevocable deposits, the NBU's approval to refinance banks for the implementation of PPP projects, and the introduction of preferential lending by banks to PPP projects. The authors emphasize the priority importance of the state policy on the development of programs for the availability of long-term loans in the process of implementing partnership projects. Given the underdevelopment of financial instruments for public-private partnerships, the author substantiates the need to use innovative instruments – credit derivatives, the effectiveness of which is confirmed by international experience. The article offers a list of the most effective financial instruments that should be used at each stage of the project life cycle.It is concluded that the recommendations provided will ensure that the partners attract the necessary amount of financial resources in the process of long-term project implementation and will allow them to obtain a synergistic effect from such cooperation.

Impact of Risk, Subsidy, and Bid-Criteria on the Private Investment in Public–Private Partnerships in Infrastructure Projects

Public–Private Partnerships (PPPs) are formed to finance and deliver large infrastructural projects that may not be entirely feasible by governments alone. This study investigates the intricate role of financial risks, subsidies, and bidding criteria in the context of PPPs in India, and their relationship to the amount and extent of investments made by private partners. Studies have claimed that the success of PPP projects is determined by the type of funding, the nature of risk undertaken by investors, and the bidding criteria used by a government to attract investors. However, there is sparse literature on these variables impacting the private investment in these projects. Thus, in an attempt to address this gap, we collated data from the World Bank for a ten-year period (i.e., 2009 to 2019) for the study variables, and used regression to analyze the hypotheses, while adopting both SPSS 24 and PROCESS Macro. This study disapproved some commonly held notions of risk relationships, such as the government using “viability gap” funding to attract private investment, and that “leverage” does not moderate the relationship between risk assumed and private investment, thereby contributing to the literature on private investment in PPPs as impacted by several factors. This study is among the first to recognize and elaborate on financial risk relationships, specifically in the context of Indian PPPs. These findings are significant for both private and public participants in terms of financial considerations in PPP projects, especially within the ambits of emerging markets.

Government subsidy and benefit distribution mechanisms for transportation PPP projects: An evolutionary game perspective

Public-private partnerships (PPP), as an important model for collaboration between the public and private sectors, is an urgent and critical topic due to the serious financial losses of governments involved in transportation PPP projects in recent years. Current research focuses on the government subsidy model, in which the effective implementation of government subsidies relies on the design of incentives for stakeholder behavior. Although the positive externalities are strong, they are prone to the problem of “free riding,” which leads to low project performance and challenges in compensating for the government's financial losses. Therefore, this study proposes a novel dynamic subsidy mechanism that can be adjusted based on actual changes in transportation demand and that is linked to project performance. We use evolutionary game theory to construct a two-party evolutionary game model of the government and social capital, focusing on the stability and influencing factors of these interactions. Our research unveils that reaching specific thresholds in both the incentive coefficient and benefit distribution ratio induces an “positive management–negative management” shift in the behavior of involved parties, leading to enhanced project outcomes. Notably, fluctuations in operational quality substantially enhance the efficiency of the active management of private sector, with no discernible impact on the subsidy efficiency of the government. Therefore, our study provides a theoretical framework for improving the revenue allocation and government subsidy mechanism, which has theoretical and practical implications for enhancing the effect of government incentives and improving the quality of operational social capital.

Effectiveness of Public-Private Partnership Projects During the COVID-19 Pandemic

The purpose of the study is to assess the effectiveness of public-private partnership (PPP) projects during the COVID-19 pandemic, taking into account the specificities of the industry. The empirical research base included the main characteristics (contract price, federal district of the project, customer, general contractor, project start period, project start year, project deadlines, price reduction during project implementation, application security, contract security and type of activity) of 144 regional investment projects. The research methodology included mathematical modeling using the DEA (Data Envelopment Analysis) data convolution method, on the basis of which an efficiency index was assigned to each PPP project from 0 to 1. The study concluded that prior to the COVID-19 pandemic, regional investment projects received more funding; after the start of the COVID-19 pandemic, the implementation time of regional investment projects has increased, the contract value more often changes downwards during the project implementation; and the average support for a project application has increased. The efficiency of implementation of regional investment projects, calculated using the DEA method, was reduced. The results obtained will be useful to private investors and government authorities when implementing joint projects to improve their efficiency.

Analyzing the effect of public private partnership mode on sewage treatment in China

The public–private partnership (PPP) mode is one of the main ways to promote environmental governance through marketization in the sewage treatment industry. This mode is crucial for environmental protection and livelihood improvement. In order to investigate the impact of PPP mode on sewage treatment, the influence of financial development and the government–business relationship on the effectiveness of sewage treatment under PPP mode, and the role of government in this context, an empirical model is established. To achieve this, data from 284 prefecture-level and above cities in China from 2009 to 2017 has been selected as research samples. The total amount of regional sewage treatment PPP projects is used as the proxy variable for participation in the PPP mode. The findings reveal that the PPP mode of sewage treatment effectively reduces the intensity and amount of sewage discharge. Moreover, the results indicate that a higher level of financial development and a more perfect financial system are associated with better sewage treatment effects under the PPP mode. Similarly, a more harmonious government–business relationship and a higher health index of this relationship correspond to improved sewage treatment effects under the PPP mode. The government should actively enhance government transparency, formulate appropriate corporate taxes and fees, clarify the responsibilities and obligations of the government and enterprises, and optimize the business environment in order to optimize the sewage treatment effect of the PPP mode.

Ensuring the spatial integration of Ukraine based on updated instruments of cooperation of regions and communities

The article aims to delve into the potential of Ukraine's spatial integration, focusing on activating regional and community cooperation tools. the study employed a robust set of scientific methods, including induction and deduction, comparison, systematization and generalization, and the graphic method, underscoring the thoroughness and reliability of the research. The article critically examines the current state and pressing issues surrounding enhancing public-private partnerships and inter-municipal cooperation. This analysis is particularly relevant in the context of Ukraine's need to form an integrated economic space amidst the challenges of war and post-war recovery, highlighting the urgency and importance of the topic. It was established that the main problems that inhibit the development of public-private partnerships in Ukraine are the considerable duration of the procedure for preparing PPP projects, instability of the state's tax and investment policy, limited financial resources of stakeholders, lack of specialists for the development of public-private partnership projects, its full-fledged technical and economic justification, preparation of tender documentation, etc. Considering the above, ways of increasing the effectiveness of public-private partnerships as a tool for forming an integrated and competitive economic space of Ukraine in the conditions of post-war reconstruction are proposed. The main problems that slow down the development of inter-municipal cooperation as a tool for the formation of an integrated economic space are named (lack of a consistent and clear regional policy of stimulating the development of inter-municipal cooperation of territorial communities; low effectiveness of the implementation of existing agreements on inter-municipal cooperation due to a lack of financial resources, the transfer of forces and funds to the wartime economy; limited possibilities of attracting credit instruments by MMC participants; lack of statistical information on the effectiveness and efficiency of the implementation of existing agreements on inter-municipal cooperation). Considering the above, directions for increasing the effectiveness of inter-municipal cooperation as a tool for forming an integrated economic space of Ukraine in the conditions of post-war reconstruction are named. The importance and necessity of simplifying the procedure of inter-municipal cooperation, clarifying roles and responsibilities, and removing legal barriers to inter-municipal cooperation were emphasized. Keywords: spatial integration, community cooperation, public-private partnership, inter-municipal cooperation, post-war reconstruction, regional economy.

Procurement Rules Governing Public–Private Partnerships for Infrastructure in Zimbabwe and South Africa—A Stakeholder Analysis

This study delves into the critical, but often overlooked aspect of stakeholder management within Public–Private Partnerships (PPPs) based infrastructure projects in Zimbabwe and South Africa. It explores the diverse stakeholder interests in PPP projects by comparatively analysing PPP procurement rules in Zimbabwe and South Africa, through the lens of the stakeholder theory. The study reveals a disparity in the role of procurement rules in managing stakeholder interests in both countries. Zimbabwe’s recently enacted PPP procurement rules fall short of PPP stakeholder management standards. However, South Africa’s procurement rules have been improved over two decades to make them more comprehensive and pro-active. The findings show that PPP procurement rules in both countries play a critical role in averting project failure caused by conflicting stakeholder interests. Nonetheless, there is a need for more robust regulatory regimes in both countries that account for conflicting interests to prevent project failure and fulfil the social welfare objectives of PPPs. Overall, effective stakeholder management in PPPs can bridge the infrastructure gap and improve the economic prospects of both countries.

Why Are PPP Projects Stagnating in China? An Evolutionary Analysis of China’s PPP Policies

The Public–Private Partnership (PPP) model has significantly contributed to global infrastructure and public service provision. The evolution of the PPP model closely aligns with policy directives. China’s PPP policy evolution has included five stages: budding (1986–2000), fluctuating (2001–2008), steady (2009–2012), expanding (2013–2018), and stagnating (2019–present). This study employs bibliometric analysis and co-word analysis to examine 407 policies enacted by the Chinese government from 1986 to 2018. By extracting policy text keywords at various stages and constructing a co-word network matrix, this study delineates the distinctive characteristics of Chinese PPP policies across different epochs. It can be found that critical areas such as “government credit”, “contract spirit”, and “power supervision” are still underappreciated. The challenges confronting China’s PPP model are multifaceted, stemming from policy gaps that have led to substantial project difficulties. Although the government proposed a new mechanism for franchising in 2023, the new mechanism is only for new PPP projects, and the difficulties of existing PPP projects have not been solved. This study advocates for enhancements in project bankability, regulatory clarity, institutional environment improvement, contract spirit defense, and the development of the PPP-REITs model to address these issues.

МОДЕЛИРОВАНИЕ РИСКОВ ЭКОНОМИЧЕСКОЙ БЕЗОПАСНОСТИ ПРИ РЕАЛИЗАЦИИ ПРОЕКТОВ ГОСУДАРСТВЕННО-ЧАСТНОГО ПАРТНЕРСТВА

The modern economy is in a state of unstable, turbulent development. This is caused by a series of macroeconomic shocks (Covid-19 pandemic; anti-Russian sanctions) in recent years. As a result, there is a weakening of economic security at the regional and national levels. It is necessary to expand the range of tools to ensure this. One such tool is public-private partnership (PPP). Traditionally, partnerships are not considered in the context of ensuring economic security. They act as a tool for economic development and satisfaction of socially significant needs. The author's study proposes two approaches to considering PPP in the context of economic security. On the one hand, the implementation of PPP projects stabilizes the economy, i.e. contributes to ensuring economic security. On the other hand, when implementing PPP projects, all stakeholders have to face economic security risks. The author has proposed a 3D model that allows for the assessment and monitoring of such risks. Clear and understandable visualization of risks in the model leads to simplification of decision-making procedures for managing PPP economic security risks.

Decision analysis of PPP project's parties based on deep consumer participation.

Although PPP(Public-private partnership) mode has been applied for a long time in infrastructural project, the success rate is not very high. The sustainability of PPP projects is still influenced by many factors. In order to examine the evolutionary stable strategies (ESSs) of social capital, government, and paying consumers, a tripartite evolutionary game model is established in this work. In order to further promote consumer participation, it is necessary to make the assumption that customer oversight and review can have an impact on service prices. The results show: i)The strategy choice of consumer depends on the comparison between supervision cost of consumer and price coefficient for consumer to social capital. ii)Consumer supervision can promote the provision of high-quality services by social capital. iii)The difference between high-quality cost and low-quality cost, subsidy coefficient, price coefficient and supervision cost of consumer are critical factors influencing both evolutionary results and trajectories. This paper also puts forward policy implications for the three stakeholders to promote social capital's high-quality strategy so as to maintain the sustainability of PPP projects.

Community engagement, commitment and sustainability of public–private partnership projects

PurposeThis study aims to examine the association between community engagement, community commitment and sustainability of public–private partnership (PPP) projects in Uganda.Design/methodology/approachThis study adopted a cross-sectional and quantitative approach. Data were collected using a questionnaire from 42 PPP projects in Uganda.FindingsThe study found that community engagement and commitment are all positively and significantly associated with the sustainability of PPP projects in Uganda. Results also show that community commitment mediates community engagement and project sustainability.Research limitations/implicationsThe study results imply that for sustainability to be achieved, communities must be engaged in project activities such as planning, design and implementation to boost their commitment to project sustainability.Originality/valueThe sustainability of PPP projects is an emerging phenomenon. This paper contributes to scanty literature on ensuring the sustainability of PPP projects from a developing country’s perspective.

How to promote the sustainability of China's rural waste management system: Increase government subsidies or increase waste service management fees?

AbstractRural waste management is a highly complex issue requiring multi‐stakeholders' cooperation. The promotion of cooperative action through social mobilization is essential. Based on evolutionary game theory, this study constructs a dynamic model consisting of government, social funds, and rural residents to study the effectiveness of public–private partnership (PPP) projects in rural waste management in China. The results show that excessively high or low subsidies from the government to social funds are detrimental to the sustainability of rural waste management. The optimal subsidy rate ranges from 600,000 RMB to PPP 750,000 RMB. It may strike a balance between avoiding excessive financial burden on the government and encouraging a 5% increase in social funds' investment. Waste management fees are suitable for promoting the quality of rural waste management services, with the maximum ideal fee being 24 RMB. The simulation results also demonstrate that the policy combination of high incentives and high penalties and low supervision and high penalties is conducive to tripartite cooperation in PPP projects. In addition, the government should impose fines of more than 750,000 RMB on social funds to prevent potentially ineffective management services offered by the social funds.

The role of good project governance in PPP project for toll road infrastructure in Indonesia

The use of infrastructure as a catalyst for Indonesia’s economic growth faces significant challenges. One example is the construction projects, which have not reached the intended goal and have led to an increase in investment cost compared to the original plan. Additionally, the interaction between the government and companies involved in toll-road construction projects under the public-private partnerships (PPP) mechanism has yet to produce good quality project governance and expected project performance. This study aimed to find empirical data on the determination of Project Intellectual Capital and Project Ownership Structure through good project governance practices on Toll-Road Project Performance in Indonesia. This study adopted a quantitative approach that involved data collected through a survey conducted among toll-road projects from 2015 to 2019. The data was analyzed with Structural Equation Modeling Partial Least Square (SEM-PLS). The results showed that project intellectual capital and project ownership structure significantly affected good project governance practices. Good project governance Practices significantly affected project performance. Project intellectual capital and project ownership structure influenced project performance through the mediation of good project governance practices. Conversely, two hypotheses were not supported by the data, i.e., the effect of project intellectual capital and project ownership structure on project performance. The findings of this research contributed to the literature regarding the implementation of collaborative governance in PPPs toll road development projects in Indonesia by providing a framework and assessment tools, which could be valuable for researchers and policymakers in analyzing and evaluating the governance and performance of toll road construction PPP projects.

The behavioral strategies of multiple stakeholders in the NIMBY facility public-private partnership project: a tripartite evolutionary game analysis based on prospect theory

In this study, evolutionary game method, prospect theory, and system dynamics (SD) method are combined to analyze the key stakeholders’ behaviors in the public-private partnership project of not-in-my-back-yard facility. First, the interaction behavior of the public sector, the private sector, and the public and their equilibrium state was analyzed based on the evolutionary game method and prospect theory. Then, the SD method was used to simulate and analyze the impact of different variables on the behavior of the three stakeholders. The results show that the greater the perceived cost difference between the active and negative behavior among the three stakeholders, the more likely they are to take negative behavior. The private sector tends to act opportunistically under low-risk loss situations. Dynamic rewards are more likely to incentivize the public to supervise than high rewards. Some recommendations to promote active behavioral interactions and cooperation among stakeholders were presented accordingly.

ФІНАНСИ ПУБЛІЧНО-ПРИВАТНОГО ПАРТНЕРСТВА ЯК ВАЖЛИВИЙ НАПРЯМ ПОБУДОВИ «ЗЕЛЕНОЇ» ЕКОНОМІКИ В УКРАЇНІ

The article substantiates the need to use the possibilities of public-private partnership for the “green” development of Ukraine. The purpose of the study is to determine the features of the use of “green” investments in the implementation of public-private partnership projects at all levels of management. In accordance with the goal, the following tasks are set: to find out the structure of “green” investments and their role in the implementation of public-private partnership projects in wartime; explore the types, forms and subjects of public-private partnership in modern conditions; analyze possible risks of international “green” investment in public-private partnership projects in Ukraine during the reconstruction period; identify the existing problems in the use of such forms of public-private partnership in Ukraine as rent and concession for the development of the “green” economy and possible ways to solve them, taking into account the experience of the EU countries.
 In today’s conditions in Ukraine, local self-government bodies, as well as their associations, began to play an increasing role in the process of building a ‘’green’’ economy. In addition, some democratic countries, which are leaders in the use of “green” investments in the EU, began to help actively Ukraine financially. Analyses of the experience of their use of public-private partnership projects will allow our country to achieve quickly the standards of the Green European Course, since Ukraine has received the status of a candidate for joining the European Union.
  The expansion of the subjects of public-private partnership requires the creation of the proper conditions for them by the state, which will enable Ukraine to increase significantly “green’’ investments for the reconstruction of the country. Therefore, it is important to study the experience of stimulating the EU countries “green” projects of public-private partnership in various spheres of the economy, use the best of it in Ukraine.

Evaluating Public-Private Partnership Dynamics: the Kazakhstan Toll Road Case

The holistic collaboration between the government and business through public-private partnerships (PPPs) is crucial in developing economies in transition. With the help of the PPP mechanism, emerging economies realize new and maintain existing social and economic infrastructure projects in education, energy, transportation, and healthcare. This lessens the funding burden on the state budget and attracts private investment and expertise into the economy. However, one of the critical tasks is to engage a suitable private partner with whom a long-term relationship can be built for mutual benefit. The most vital issue in establishing and maintaining the PPP collaboration with such a partner is related to the appropriate management of business risks. This study focuses on the success of an infrastructure project for a private partner by analyzing the critical risks inherent in PPP projects. The research uses system dynamics (SD) modeling, which qualitatively and quantitatively determines how each risk affects the project realization. The study examines the largest PPP project in Central Asia, the Big Almaty Ring Road. This toll road project is taken as a case to demonstrate the impact of the most critical risks on the success of the PPP projects. For the simulation, the “hard tolls” form, which is one of the popular payment mechanisms in the global PPP practice, is considered where the private partner bears most of the risks. The findings show the riskiness of such a payment mechanism in implementing toll road projects with existing traffic and tariffs under conditions of uncertainty typical for Kazakhstan and other similar developing countries.