Fuzzy synthetic evaluation of moral hazard and adverse selection of public private partnership projects

Abstract

Moral hazards and adverse selection (MHAS) lead to failure in public-private partnership (PPP) projects and delay in delivery outputs’ requirements. This research developed a fuzzy synthetic evaluation model (FSEM) to measure cause and effect level of MHAS of PPP construction projects. Mean score ranking and principal component factor analysis (PCFA) evaluated the causal factors. FSEM calculated overall cause and effect (OCE) level. PCFA analysis yielded three components: party and risk factors, incentives and contractual obligations and contract and project conditions while FSEM determined the OCE level to be 3.92. Party and risk factors; incentives and contractual obligations; contract and project conditions had cause and effect levels of 3.99, 3.99 and 3.79. Findings will enhance knowledge on MHAS risk levels of PPP construction projects thereby prompting project stakeholders to reduce the risks. Further research recommends using computer-based systems to minimize complexities and human errors during manual computation of fuzzy analysis.

Keywords:

• Moral hazard
• adverse selection
• public-private-partnership
• construction projects
• fuzzy synthetic evaluation model

Acknowledgement

This paper forms part of an MPhil research project, from which other deliverables have been produced with different objectives but sharing common background and methodology.

Disclosure statement

No potential conflict of interest was reported by the authors.

Data availability statement

Some or all data, models, or code generated or used during the study are available from the corresponding author by request.