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Article
Publication date: 24 December 2020

Isaac Akomea-Frimpong, Xiaohua Jin and Robert Osei-Kyei

Globally, the management of financial risks has gained much attention in the public–private partnerships (PPP) market in recent years. Existing studies rank financial…

Abstract

Purpose

Globally, the management of financial risks has gained much attention in the public–private partnerships (PPP) market in recent years. Existing studies rank financial risks among the topmost risk factors that determine the success or failure of a PPP project. As essential for managing financial risks, a systematic review of previous studies on financial risk management of PPP from 1995 to 2019 (inclusive of both years) has been presented in this paper.

Design/methodology/approach

The paper undertakes a systematic analysis of 49 relevant and available studies on financial risk management of PPP projects.

Findings

From the results, high-interest charges, increased construction costs and increased market risks are some of the key financial risks hampering the success of PPP projects. Techniques used to assess financial risks include Monte Carlo Simulation (MCS) and Net Present Value (NPV). Financial risks control adopted by project managers include minimum revenue guarantee and real option pricing. Extremely limited studies on financial risk management in PPP projects in developing economies was revealed.

Practical implications

Project managers in developing financial risk management models may use the outcome of this paper to improve the financial success of PPP projects. Holistically, researchers will be guided to investigate and heighten the pertinent issues on financial risk management of PPP projects in academia.

Originality/value

The results provide a rare guide to project managers in controlling financial risks of PPP projects which is an unexplored topic. It is also the first paper to highlight the issues of financial risk management in PPP projects research.

Details

Engineering, Construction and Architectural Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0969-9988

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Article
Publication date: 13 November 2020

Zhen Hu, Qianmeng Li, Tingting Liu, Lu Wang and Zhe Cheng

Public private partnership (PPP) has gained increasing popularity around the globe. Whether the government needs to participate in the PPP special purpose vehicle (SPV) as…

Abstract

Purpose

Public private partnership (PPP) has gained increasing popularity around the globe. Whether the government needs to participate in the PPP special purpose vehicle (SPV) as an equity coinvestor is a critical issue in PPP development. This research aims to examine the influence of government equity investment on PPP performance by taking public-private communication as an intermediate variable.

Design/methodology/approach

A questionnaire survey was adopted as the main research method. PPP practitioners with extensive experiences from both the public and private sectors were targeted respondents. The survey results were subsequently analyzed using statistical data analysis method.

Findings

Based on the results from the questionnaire survey, this research indicates an inverted U-shaped relationship between the ratio of government equity and performance in PPP projects. In addition, communication plays a mediating role between government equity investment and PPP project performance.

Originality/value

This research explicates the relationship between the equity structure in a PPP SPV and the project performance. It provides important guidance and reference for PPP practitioners to structure the SPV and associated financial and commercial arrangements. It also offers valuable insights into the development of PPP policy, especially regarding the structuring of PPP models in China and elsewhere.

Details

Engineering, Construction and Architectural Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0969-9988

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Book part
Publication date: 6 December 2017

Emelly Mutambatsere

This chapter uses data from the World Bank’s Private Participation in Infrastructure project database, and hand-collected evidence on project performance, to examine how…

Abstract

This chapter uses data from the World Bank’s Private Participation in Infrastructure project database, and hand-collected evidence on project performance, to examine how PPPs are applied to infrastructure development in Africa, and how well they have delivered expected benefits. It has two analytical parts: an investment trend analysis and a meta-analysis of project performance and explanatory factors. The analysis shows growth both in number and volume of PPP investments that is weaker than that observed in other developing regions, and more volatile. The performance of PPP contracts appears to be improving over time with an overall cancelation rate of 7% over the assessment period. Although PPPs have contributed to increasing infrastructure stock, they have not completely met their potential, especially with respect to increasing infrastructure access rates. The main determinants of performance include accuracy of costing and allocation of risks, consistency of macro policies with the objectives and functioning of PPPs, coherence of sector policies and plans and local capacity. Contract cancellations are mainly explained by the misalignment of outcomes with government objectives, in particular, access and investment objectives. These findings suggest that PPP application should be well planned to ensure coherence of a wide range of policies, readiness of institutions and capacity of public sector actors. This chapter contributes to closing information gaps on a relatively novel policy instrument, and provides useful evidence to support prudent policy making at the time of considerable growth in PPP application.

Details

The Emerald Handbook of Public–Private Partnerships in Developing and Emerging Economies
Type: Book
ISBN: 978-1-78714-494-1

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Book part
Publication date: 23 May 2019

Yan Vaslavskiy and Irina Vaslavskaya

The chapter is devoted to the factors aimed at optimizing the partnership of public and private sectors in the sphere of public infrastructure development. In modern…

Abstract

The chapter is devoted to the factors aimed at optimizing the partnership of public and private sectors in the sphere of public infrastructure development. In modern conditions of economic slowdown and budget consolidation in Russia, the infrastructure has become the most important driver of economic growth and public–private partnership (PPP) – the most perspective form of cooperation of public and private investors of infrastructure projects. PPP interpretation as a structural relationship of economic system allows the authors to model optimal combination of formal and informal institutions in order to stimulate long-term economic growth. It becomes promising to model replacement of budget funds by private investment to ensure positive impact on the Russian development despite the budget consolidation. It could only be achieved in the case of formal institutionalization of appropriate conditions for private investors as to low transactional costs and attractive financial parameters. There have been determined some PPP standards connected with public infrastructure projects in order to reduce capital expenditures of the budget funds and increase the inflow of private investment. The authors have managed to obtain model estimates and graphic interpretation of government expenditures’ efficiency increase that could help to structure the fiscal conditions to induce positive multiplier effect as a result of PPP forms improvement in the public infrastructure development.

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Abstract

Details

Public-Private Partnerships, Capital Infrastructure Project Investments and Infrastructure Finance
Type: Book
ISBN: 978-1-83909-654-9

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Article
Publication date: 31 August 2020

Solomon Olusola Babatunde, Damilola Ekundayo, Chika Udeaja and Uthman Olawande Abubakar

Although several studies have been undertaken on sustainability within infrastructure projects, limited attention has paid to the drivers for, and the barriers to, the…

Abstract

Purpose

Although several studies have been undertaken on sustainability within infrastructure projects, limited attention has paid to the drivers for, and the barriers to, the incorporation of sustainability in public–private partnership (PPP) infrastructure projects through empirical study, particularly in Nigeria. Therefore, this study aims to identify and examine the drivers that promote sustainability in Nigerian PPP infrastructure projects and assess the barriers to the full integration of sustainability practices into current Nigerian PPP infrastructure projects.

Design/methodology/approach

Primary data were collected using a questionnaire survey. The questionnaire survey was targeted on four different stakeholders’ organizations. They were public sector authorities, concessionaires, consultants and banks already undertaking PPP infrastructure projects in Lagos State, Nigeria. The obtained data were analyzed using frequency, percentage, mean score, standard deviation and the Kruskal–Wallis test.

Findings

The study identified 17 drivers that promote the incorporation of sustainability in PPP infrastructure projects. The analysis of the total ranking of the drivers in Nigeria revealed the top five ranked drivers to be: consideration of long-term performance; contractual arrangements; incentives for new market penetration; award criteria; and selection criteria, respectively. The study further identified 11 barriers to sustainability integration in PPP infrastructure projects and the top five ranked barriers in Nigeria are as follows: comprehensive sustainability procurement guidelines; no enabling environment; education needs; uncertain economic environment; and a lack of clear government policy, respectively. The results of the Kruskal–Wallis test conducted on both the 17 identified drivers for, and the 11 barriers to, the incorporation of sustainability in Nigerian PPP infrastructure projects revealed that there is no significant statistical difference in both rankings from the perceptions of the aforementioned four different respondents’ groups.

Research limitations/implications

The study provides empirical insights on the knowledge and awareness of drivers which could lead to a greater uptake in sustainability measures by the stakeholders in Nigerian PPP projects; it also identified barriers to overcome.

Originality/value

The importance of the incorporation of sustainability in public procurement cannot be over-emphasized. It is anticipated that the study will be of great value to PPP stakeholders involved in sustainability decision-making processes when delivering sustainable PPP projects.

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Article
Publication date: 28 November 2019

Shijing Liu, Hongyu Jin, Chunlu Liu, Benzheng Xie and Anthony Mills

The purpose of this paper is to examine public–private partnership (PPP) approaches for the construction of rental retirement villages in Australia and to allocate the…

Abstract

Purpose

The purpose of this paper is to examine public–private partnership (PPP) approaches for the construction of rental retirement villages in Australia and to allocate the investment proportions under a certain project return rate among three investors which are the government, private sectors and pension funds. The apportionment will achieve a minimum overall investment risk for the project.

Design/methodology/approach

Capital structure, particularly determination of investment apportionment proportions, is one of the key factors affecting the success of PPP rental retirement villages. Markowitz mean-variance model was applied to examine the investment allocations with minimum project investment risks under a certain projected return rate among the PPP partners for the construction of rental retirement villages.

Findings

The research findings validate the feasibility of the inclusion of pension funds in the construction of PPP rental retirement villages and demonstrate the existence of relationships between the project return rate and the investment allocation proportions.

Originality/value

This paper provides a quantitative approach for determination of the investment proportions among PPP partners to enrich the theory of PPP in relation to the construction of rental retirement villages. This has implications for PPP partners and can help these stakeholders make vital contributions in developing intellectual wealth in the PPP investment area while providing them with a detailed guide to decision making and negotiation in relation to investment in PPP rental retirement villages.

Details

Built Environment Project and Asset Management, vol. 10 no. 1
Type: Research Article
ISSN: 2044-124X

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Article
Publication date: 8 November 2019

Tharun Dolla and Boeing Laishram

Bundled mode of public–private partnership (PPP) procurement has been a widely advocated governance structure of infrastructure delivery. The purpose of this paper is to…

Abstract

Purpose

Bundled mode of public–private partnership (PPP) procurement has been a widely advocated governance structure of infrastructure delivery. The purpose of this paper is to identify the various aspects of how this bundling phenomenon has to be played out in practice and examines the implications of such decisions.

Design/methodology/approach

A longitudinal case study with an Indian municipal solid waste (MSW) PPP project provides the necessary evidence on the identification of constructs which are deemed important in the decision making of bundling in PPP MSW projects. Transaction cost economics theory, agency theory and auction theory informed the development of theoretical constructs. The longitudinal case study used interviews, observations and documents analysis.

Findings

This study has highlighted the complexity inherent in bundling decision, arising out of the relatively scanty rationale by which stakeholders first developed. Not only they are very different from the practice, but also many assumptions are proved otherwise. Poor sectoral developments, hindrances arguably caused to innovation, increase in transaction cost and a decrease in the competition along with ex post characteristics such as unfavourable transaction attributes made bundling a too early proposition to Guwahati MSW project. This study suggests that strong liability of the bundling phenomenon was the above the rationale of typical PPP bundling benefits envisaged in the extant literature. It also shows that poor practice and decision making by immature clients would lead to project failure.

Research limitations/implications

A cognitive map emerged from the study on the failure of Guwahati project. An empirical generalisation can be attempted using multiple contrasting case studies to make the theory more acceptable.

Practical implications

The case illustrated why naïve clients should not try PPPs in a bundled model. Accordingly, the developed framework would help the governments to create the right projects catalysing the bundling benefits and harness the full potential of private sector participation in future PPP projects.

Originality/value

The current study would be novel in advancing the theory of bundling in PPP projects. This would be of interest to academia and to industrial practice and policy.

Details

International Journal of Managing Projects in Business, vol. 14 no. 2
Type: Research Article
ISSN: 1753-8378

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Article
Publication date: 6 June 2017

Nilesh Agarchand and Boeing Laishram

Infrastructure development through public-private partnership (PPP) route in India has exhibited concerns about not promoting progress toward sustainable development…

Abstract

Purpose

Infrastructure development through public-private partnership (PPP) route in India has exhibited concerns about not promoting progress toward sustainable development goals, particularly social and environmental perspectives. The purpose of this paper is, therefore, to identify the shortcomings in the Indian PPP procurement process using the key principles of sustainability.

Design/methodology/approach

Qualitative research inquiry through grounded theory approach by using the literature and interview source was used to identify the challenges encountered in sustainable infrastructure development of PPP projects. These challenges were, first, reviewed from the perspectives of key sustainability principles and then discussed with the key stakeholders through focused interviews. Furthermore, micro-interlocutor analysis was carried to get an insight on the extent of consensus amongst the experts regarding these identified shortfalls.

Findings

The key shortfalls identified from the study that adversely affect progress toward sustainable development include incomprehensive environmental impact assessment and social impact assessment studies; lack of stakeholder and local participation; high bidding and transaction cost; high user charges; improper risk allocation; lack of transparency and accountability; goal conflicts between public and private sector; and lack of skill and knowledge about sustainability.

Practical implications

The study findings will help in devising appropriate strategies for enhancing the mechanisms, policies, and governance structure of PPP process in order to overcome these shortfalls and help in accomplishing the goals of sustainability while developing infrastructure even through PPP route.

Originality/value

The paper presents different insights into PPP from sustainability perspective which has not been the focus of the current studies on PPPs. Sustainability assessment of PPP procurement is an area of research which is in a nascent stage.

Details

International Journal of Managing Projects in Business, vol. 10 no. 3
Type: Research Article
ISSN: 1753-8378

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Article
Publication date: 7 May 2019

Neema Kavishe and Nicholas Chileshe

The purpose of this paper is to identify the critical success factors (CSFs) and key areas for improvement for public–private partnerships (PPP) in affordable housing…

Abstract

Purpose

The purpose of this paper is to identify the critical success factors (CSFs) and key areas for improvement for public–private partnerships (PPP) in affordable housing schemes (AHS) projects, using Tanzania as a case study.

Design/methodology/approach

Semi-structured interviews were conducted with 10 public and private sector practitioners in Tanzania. The collected data and the interview transcripts were analysed using the standard qualitative analysis technique of content analysis.

Findings

The findings show the six most important CSFs as: a dedicated team of professionals to oversee the PPP projects, official and unofficial site visits and inspection, government support and guarantees, undertaking checks and balance from the design stage to construction stage, scrutiny of PPP project proposal and trust and integrity. The mapping of the CSFs across the PPP project lifecycle highlighted a higher incidence across the following phases: building (n = 11), preparation (n = 10) and operational (n = 9).

Practical implications

The identification of these CSFs would support PPP practitioners in successfully implementing PPP in AHS; besides, there is potential for their inclusion in the future development of the affordable housing PPP conceptual framework. Therefore, based on the identified CSFs, both the government and policy makers could use the findings as the basis for re-examining the existing PPP policy and regulations and reflecting on the existing situation with a view to improving the delivery of future PPP projects.

Originality/value

This paper provides the first empirical study by applying direct content analysis to identify and understand the CSFs and key areas for improvement for PPPs in AHS within the Tanzanian housing sector. This is rather an under researched subject around CSFs for PPPs from developing countries such as Tanzania.

Details

Journal of Facilities Management, vol. 17 no. 2
Type: Research Article
ISSN: 1472-5967

Keywords

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