Performance of Public–Private Partnerships and the Influence of Contractual Arrangements

ABSTRACT

This article seeks to answer two research questions: does public-private partnerships (ppp) live up to its promises to government? How do contractual arrangements affect ppp performance? We propose a conceptual framework to evaluate ppp performance by comparing actual project outcomes to government goals in initiating the partnerships, and to explore how a set of contractual arrangements affect the ppp performance on each identified goal. The framework is applied to a comparative case analysis of highway ppp experiences in the commonwealth of virginia (us) since the 1990s. The results show that these ppp cases were successful in accessing innovative finance, but their performance was mixed on reducing construction risk and transferring revenue risk. Generally improved over time with later projects, the ppp performance was affected not only by interaction among contractual arrangements –private partner selection, financial arrangements, role division, risk allocation, and project characteristics – but also by authorizing and supportive legislation in the policy domain.

KEYWORDS:

• contractual arrangements
• highway development
• performance evaluation
• public-private partnerships

Acknowledgment

We are grateful to Professor Joop Koppenjan and Professor Carsten Greve for their helpful suggestions. We thank the Center for Comparative Politics and Policy, Shanghai University of Finance and Economics, for providing research assistance. We would also like to thank the anonymous reviewers for their excellent suggestions.

Notes

For details, please refer to the website of the Federal Highway Administration (https://www.fhwa.dot.gov/ipd/p3/project_profiles).

Project information can be found on the website of the Virginia Office of Public–Private Partnerships (http://www.p3virginia.org).

Interview questionnaires are available upon request.

Additional information

Funding

This work was supported by a Special Project Grant to cultivate the PhD program in Public Administration at Shanghai University of Finance and Economics.

Notes on contributors

Yin Wang

Yin Wang is an associate professor in the School of Public Economics and Administration at Shanghai University of Finance and Economics, Shanghai, China.

Zhirong Jerry Zhao

Zhirong Jerry Zhao is an associate professor in the Hubert H. Humphrey School of Public Affairs at the University of Minnesota, Minneapolis, MN.