Public-private partnership tendering periods: an international comparative analysis

ABSTRACT

PPPs are often characterised by lengthy tendering periods that have the potential to deter bidders for contracts and increase transaction costs. We analyse data on 877 PPP projects in seven countries and find considerable cross-country variation in tendering periods. Using a duration analysis model we find that this variation persists even when we control for observable factors such as capital value. The longest tendering periods are found in the housing, health and defence sectors and tendering periods are positively related to project size. Indicators of institutional quality are not found to be significant.

KEYWORDS:

• Public-private partnerships
• tendering period
• procurement
• duration analysis

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. Although the PPP label can cover a range of public-private collaborations, in the context of this paper it refers to long-term infrastructure contracts between the public and private sector that bundle together various aspects such as the design, build, operation and/or maintenance of an asset, but also critically include an element of private financing and provisions for the sharing of project risks.

2. Ford, J. and G. Plimmer. 2018. “Crossrail: how Europe’s largest transport project stalled.” Financial Times, December. https://www.ft.com/content/0d020876-ffc4-11e8-aebf-99e208d3e521 .

3. The sources for any unreferenced PPP activity data for each country in this section are provided in Appendix 1.

4. For a detailed overview of the national historical context for Australia’s PPP programme and the policy lessons learned to date, see Hodge and Duffield (2010).

5. See Siemiatycki (2015) and Boardman, Siemiatycki, and Vining (2016) for a more detailed discussion on this issue in Canada.

6. See Möpert and Witz (2014) for a detailed overview of the development of Germany’s PPP programme to date.

7. In both Ireland and the UK, one of the principal reasons for utilising PPP has been the scope it provides for achieving off-balance sheet accounting and budgetary treatment. The approach to risk transfer is broadly similar in both countries where the general approach has been to transfer construction, financial, and operating risk to the private sector with provisions in relation to the allocation of demand risk depending on the individual cases.

8. See Appendix 1 for a detailed description of our data sources for PPP projects in each country.

9. While the proportional hazards model (PHM) is more commonly used within DA, we considered the ATF specification to be more appropriate given our research question. For robustness, the PHM was estimated and the proportionality assumption was tested  but the results indicated it was not appropriate for our data.