Governing public–private partnerships: A systematic review of case study literature

Governance plays a critical role in determining the success and failure of public–private partnerships (PPPs). We conducted a systematic review of case study literature on PPP governance and developed a governance framework consisting of 21 issues in four groups: institutional, organizational, contractual, and managerial. Then, we investigate the dynamics of governance issues, including the relative importance, interrelationships, and connections with PPP success and failure. Results suggest that PPPs should emphasize cooperation, trust, communication, capability, risk allocation and sharing, competition, and transparency in their governance. We also found that the governance practice of emphasizing dominant and direct factors and ignoring recessive and indirect ones has hindered PPPs’ success.     

Hybrid annuity model: Hamming risk allocations in Indian highway public–private partnerships

A new public–private partnership (PPP) model, that is, hybrid annuity model (HAM) was introduced in 2016, to revive investments in the Indian highway infrastructure and to remedy the troubled relationship between the public and private sectors. This model marked a significant policy departure in the management of long‐ and short‐term public interest, which is inherent to public utilities and service delivery. Through a dispassionate lens, this paper critically examines the extent to which HAM has fulfilled its stated objectives. The analysis of project award data provides mixed empirical evidence of HAM's early success. As a positive policy imperative, HAM has been able to attract private participation in highway infrastructure by readjustment of risk allocations, and hence, it is a welcome step forward in improving public affairs. Worryingly though, HAM also brought about extensive de‐risking of the private sector, with evidence of rendering risk retention, that is, “skin‐in‐the‐game” by the less significant private infrastructure investors, and thereby adversely impacting development priorities. We find that HAM has taken the reengagement of private sector two steps back in management of PPP affairs. Recognizing that a true performance assessment is unlikely at this early stage of HAM introduction, the paper adopts a more analytical stance in identifying possible pitfalls based upon the telltale signs presented by project bidding and award data. This study offers fresh insight and course correction on the role of government and other stakeholders in this newly introduced PPP template.     

The political cost of public–private partnerships: Theory and evidence from Colombian infrastructure development

Infrastructure public–private partnerships (PPPs) eschew traditional public management to provide distributive goods worldwide. Yet, in Colombia, the context of our study, both the promise of and voters' experience with PPPs hinder incumbent parties in elections when theories of distributive politics expect otherwise. We argue that negative experiences with PPPs introduce a sociotropic turn in individual voting: bad experience crowds out the possibility that promising a new project will improve a voter's own welfare. Studying what are, to our knowledge, all 109 Colombian PPP projects between 1998 and 2014, and over 8,700 individual survey responses, our evidence shows that vote intention for the incumbent executive or his party decreases as experience with more PPPs in respondents' districts increases. Our analysis and results introduce an important agenda for research into the political significance of these legacies of new public management.     

Responsive regulation in public‐private partnerships: Between deterrence and persuasion

Design‐Build‐Finance‐Maintain‐Operate (DBFMO) contracts are a particular type of public‐private partnership whereby governments transfer the responsibility for the design, construction, financing, maintenance, and operation of a public infrastructure or utility service building to a multi‐headed private consortium through a long‐term performance contract. These arrangements present a typical principal‐agent problem because they incorporate a “carrot and stick” approach in which the agent (consortium) has to fulfill the expectations of the principal (procurer). This article deals with a neglected aspect in the literature related to the actual use of “the sticks or sanctions” in DBFMOs and assesses to what extent and under which conditions contract managers adopt a deterrence‐based enforcement approach or switch to a persuasion‐based approach, specifically when the contract clauses require the use of (automatic) deterrence. An empirical analysis of four DBFMOs in the Netherlands shows that the continuation of service delivery, the need to build trust, and the lack of agreement on output specifications play a role in the willingness of the procurer to apply a more responsive behavior that uses persuasion, even when deterrence should be automatically applied. © 2016 John Wiley & Sons Australia, Ltd     

When new public management fails: Infrastructure public–private partnerships and political constraints in developing and transitional economies

Amidst calls for more scrutiny of the failure of infrastructure public–private partnerships (PPPs), uncertainty about how we can measure failure remains, and little systematic evidence illuminates its likelihood. Our mixed‐methods design explores the notion of failure and identifies the conditions under which it happens. The first phase of our research employs documentary analysis and semistructured expert interviews, and identifies project cancellation as capturing the most severe occurrences of failure. A second phase statistically analyzes a unique World Bank data set capturing the provisions of over 4,000 infrastructure PPPs launched between 1990 and 2015 in 89 countries. We find robust evidence supporting the theoretical claim that PPPs are less likely to be canceled in countries with more veto points among their political institutions to restrain politicians from intervening in policy implementation. Cancellation is a rare, but valid indicator of failure, and the importance of veto players clarifies how political risk operates in this context.     

Identification of critical success factors for public–private partnership projects

Public–private partnership (PPP) is one of the popular mechanisms for the development of infrastructure worldwide; governments across the globe are engaged in discovering a range of PPP policies and strategies for growth of infrastructure. The growth of infrastructure is imperative of the sustainable development of an economy. Therefore, it is pertinent to identify key success factors for the development of infrastructure through PPP model. The current paper aims to explore significant factors for successful execution and completion of PPP projects in infrastructure. A total of 517 employees who had hand‐on experience on PPP projects located in India were interviewed through a structured questionnaire. Exploratory factor analysis yielded 14 components as a significant factor for the success of PPP in infrastructure. This study highlights that the development of infrastructure would be rapid through PPP if government considers these factors in the implementation phase.     

Madhya Pradesh Housing & Infrastructure Development Board: affordable housing via public–private partnership mode

The Madhya Pradesh Housing & Infrastructure Development Board (MPHIDB) is a state‐owned entity in Madhya Pradesh State of India with the mandate of providing housing for citizens, particularly for those in the low‐income segment. MPHIDB has been constructing houses on its own using the traditional engineering and procurement contract (EPC) model. In July 2015, it was exploring the possibility of creating affordable housing units via public–private partnership (PPP). The advantage of involving private sector is that MPHIDB can tap into creative energy and construction efficiency of the private sector and deliver the best results within the given set of time and resource constraints. The proposed structure of PPP is that the private partner will be given a portion of land in lieu of the affordable housing units that it will build and transfer to MPHIDB. However, there are trade‐offs involved in doing the project in PPP mode instead of EPC mode. The main advantages of a government body like MPHDIB doing the project on its own are as follows: (a) It is able to better manage regulatory risks in terms of getting clearances, land acquisition, and so forth; (b) it can raise finances at lower interest rates than what is charged for private sector entities; and (c) the entire land parcel is available to construct houses, and hence it can get more housing units per unit of land. The Commissioner (CEO) of MPHIDB had to decide whether to go for PPP or EPC model, and if he opted for PPP, how should the PPP be structured?     

Public–private partnerships and developing‐country agriculture: Evidence from the international agricultural research system

This study examines the role of public–private partnerships (PPPs) in promoting pro‐poor productivity‐enhancing technological innovation in the international agricultural research system. The study examines the extent to which PPPs are being used to overcome market and institutional failures that otherwise inhibit the development and dissemination of technologies targeted specifically to small‐scale, resource‐poor farmers in developing countries. Drawing on a survey of 75 PPP projects in the international system, findings suggest that while PPPs are changing the way the system manages its research agenda, few partnerships lead to joint innovation processes with the private sector. This indicates the need for closer examination of organizational practices, cultures, and incentives in the international agricultural research system. Copyright © 2010 John Wiley & Sons, Ltd.     

Multilateral development banks,transparency and corporate clients: ‘public–private partnerships’ and public access to information

The multilateral development banks (MDB) recognise and promote transparency as a principle of good governance. Public release of information about policies and projects is a central aspect of this transparency, and the five MDBs studied here each adopted new policies during the 1990s to increase the accessibility of such information. The flow of information to local communities is important to the effectiveness of MDBs' social and environmental safeguards and to securing public support. But MDBs also embrace a second strategy, which sometimes conflicts with transparency: each MDB (or an affiliate) lends to private corporations as well as to member states and each bank modifies its information disclosure rules, giving corporate clients greater discretion than member governments. Environmental and social safeguards apply to corporate borrowers as well as to governments and there is a relatively high level of controversy over corporate projects' environmental and social impact. When subjected to a qualitative review of their disclosure standards, emphasising fullness of disclosure, accessibility of information, timeliness of information and availability of recourse, the disclosure policies of all five MDBs are clearly found to accommodate corporate confidentiality while compromising public demands for information. Copyright © 2003 John Wiley & Sons, Ltd.     

Public waste and private property. An enquiry into the economics of solid waste in Calcutta

Perceptions of solid waste management in India belong to a tradition of thought which dates back to the early nineteenth century. Solid waste is often thought of as a purely municipal problem. The paper examines how far informal systems of solid waste management are a response to a void in property rights. It analyses the variety of local operations in Calcutta, including the informal system. The assumptions that solid waste management is a public good that therefore needs to be municipalized and that in the absence of municipalization there would be greater costs are both questioned. It is hypothesized that there may be no measurable economies of scale in any part of the waste cycle. It may be more worthwhile to improve and expand the informal system of waste management than to collectivize further the traditional system of collection, transportation and disposal.     

The challenges of fractionalized property rights in public‐private hybrid organizations: The good,the bad,and the ugly

Policy designers seeking to harness profit‐driven efficiency for public purposes are increasingly creating organizations with fractionalized property rights that distribute “ownership” among public and private actors. The resulting hybrids are quite diverse, including mixed enterprises, public‐private partnerships, social entrepreneurship organizations, government‐sponsored enterprises, and various other hybrid forms. Marrying public purposes to private sector efficiency and strategic flexibility provides a tempting rationale for mixing public and private owners in hybrid organizations. Because public‐private hybrids involve fractionalized property rights, however, they exhibit tension among owners over both strategy and, more importantly, goals. To understand public‐private hybrids, we assess them in terms of six dimensions of property rights: fragmentation of ownership, clarity of allocation, cost of alienation, security from trespass, credibility of persistence, and autonomy (of both owners and managers). The unclear allocation of fractionalized ownership rights facilitates the appropriation of financial residuals and asset ownership opportunistically. Other weaknesses in the property rights configurations of public‐private hybrids create managerial dissonance or opportunistic behavior that typically leads to a narrowing of goals, but sometimes also to organizational failure.     

Public‐private partnerships in international trade: a lobbying effort from passive to aggressive in the USA?

Public‐private initiatives have been the domain of many governments as they try to shape international trade for their countries. The research presented in this paper indicates that US international businesses are not satisfied with the passive role that has been assumed by the US government and current public‐private partnerships. The evidence suggests that US companies desire a more aggressive role for the federal government in the not too distant future. Public‐private partnerships will be less informational and play an active part in stimulating international trade throughout the world. Copyright © 2002 Henry Stewart Publications     

Democracy in South Asia: Getting beyond the Structure–Agency Dichotomy

With reference to South Asia, we argue that recourse to the conventional structuralist and transition accounts of democratisation sustains an unhelpful dichotomy. Those approaches tend towards either determinism or agent-driven contingency. In contrast, an alternative approach that recognises the relevance of both structure and agency is proposed. In certain circumstances, human agency opens up the possibility of the relatively rapid transformation of structures. In particular, there are periods of political openness when structures are malleable, and individuals, or individuals acting collectively, are able to reshape structures. Decolonisation both constituted a moment of transition and opened up the possibility of structural change in the context of enhanced elite agency. For the purposes of comparison, the discussion covers the three cases of India, Pakistan and Sri Lanka. Particular attention is drawn to political parties and the structure of ethnic diversity as leading explanatory variables.     

Chav-spotting in Britain: the representation of social class as private choice

The word chav is a relatively new one in British English, used to describe a supposed social group defined in the Oxford English Dictionary as “a young person of a type characterised by brash and loutish behaviour and the wearing of designer-style clothes … usually with connotations of a low social status”. Discourse on chavs in contemporary Britain has been widely implicated in the reinforcement of social inequalities. This article argues that a central element of such discourse is the representation of “everyday” British public experience as a practice of chav-spotting, of reading materials as signs of the private characteristics of those with which they are associated. This means reading class as a privately motivated phenomenon, as the product of the “choice incompetence” of chavs. This chav-spotting practice is viewed from two perspectives: (1) as a recontextualisation of class as the result of private choice; and (2) as a practice of sign-making by which meanings are articulated for publicly observable materials in accordance with (1).     

The private stake in public goods: overcoming the illogic of collective action

Conclusion According to the Logic of Collective Action, most actions in the service of common interests are either not logical or not collective. In a large group, the argument goes, individual action counts for so little in the realization of common interests that it makes no sense for a person to consider group interests when choosing a course of personal conduct. Only private interests are decisive. Their fulfillment, at least, depends in a substantial way on one's own behavior. Individual actions designed to achieve private advantage are therefore rational. Actions aimed at collective goods are a waste of time and effort. Occasionally, of course, a person acting on the basis of private interests may inadvertently provide some collective good from which many other people derive benefit. This is what happens in the case of the Greek shipping tycoon. But it occurs only because one person's private good fortuitously coincides with the collective good of a larger group. From the tycoon's perspective, there are no collective interests at stake in the sponsorship of an opera broadcast, only his own private interests. Nor does his decision to underwrite a broadcast take account of the other people who will listen to it. His action is a solitary one designed to serve a private interest, and it is perfectly consistent with Olson's argument concerning the illogic of collective action, because it is not grounded in collective interest and is not a case of collective behavior. Olson's theory permits people to share collective interests but not to act upon them voluntarily. The only acknowledged exception occurs in the case of very small groups, where each member's contribution to the common good represents such a large share of the total that any person's default becomes noticeable to others and may lead them to reduce or cancel their own contributions. In this instance, at least, one person's actions can make a perceptible difference for the chance of realizing collective interests, and it is therefore sensible for each person to consider these collective interests (and one another's conduct) when deciding whether or not to support group efforts. Outside of small groups, however, Olson finds no circumstances in which voluntary collective action is rational. But in fact the conditions that make collective action rational are broader than this and perhaps more fundamental to Olson's theory. They are inherent in the very ‘collectiveness’ of collective goods - their status as social or group artifacts. In the absence of a group, there can be no such thing as a collective good. But in the absence of mutual awareness and interdependence, it becomes extremely difficult to conceive of a social group. The assumption that group members are uninfluenced by one another's contributions to a collective good is no mere theoretical simplification. It may be a logical impossibility. Being a member of a group, even a very large one, implies at the very least that one's own conduct takes place against a background of group behavior. Olson's assumptions do not acknowledge this minimal connection between individual and group behavior, and they inhibit recognition of the elementary social processes that explain why slovenly conduct attracts special attention on clean streets, or why the initial violations of group norms are more momentous than later violations. It may be argued, of course, that the groups of Olson's theory are not functioning social groups with a collective existence, but only categories or classes of people who happen to share a collective interest. The logic of collective action is intended precisely to show why these ‘potential’ groups are prevented from converting themselves into organized social groups whose members act in a coordinated way. In such latent groups, perhaps, members are unaware of one another, and Olson's assumption that they are uninfluenced by one another's conduct becomes a reasonable one. Another implication, however, is that Olson's theory is subject to unacknowledged restrictions. The logic of the free ride is for potential groups. It may not hold for actual ones. The distinction is exemplified, in the case of public sanitation, by the difference between what is rational on a clean street and what is rational on a dirty one. The logic of the free ride does not make sense for the members of an ongoing group that is already operating to produce collective goods such as public order or public sanitation. While this represents a notable limitation upon the scope of Olson's theory, it apparently leaves the logic of collective action undisturbed where potential or latent groups are concerned. But suppose that a member of an unmobilized group wants her colleagues to contribute to the support of a collective good that she particularly values. Her problem is to create a situation in which such contributions make sense to her fellow members. As we have already seen in the case of the neighborhood street-sweeper, one possible solution is to provide the collective good herself. If it has the appropriate characteristics, its very existence may induce other members of the latent group to contribute to its maintenance. This is not one of those cases in which one person's private interest fortuitously coincides with the collective interest of a larger group. The neighborhood street-sweeper is acting on behalf of an interest that she is conscious of sharing with her neighbors. Her aim is to arouse collective action in support of that interest. She does not expect to pay for public cleanliness all by herself, or to enjoy its benefits all by herself. Her role bears a general resemblance to the one that some analysts have defined for the political entrepreneur who seeks to profit personally by supplying a collective good to the members of a large group (Frohlich, Oppenheimer, and Young 1971). Like the neighborhood street-sweeper, the entrepreneur finds it advantageous to confer a collective benefit on others. But the similarity does not extend to the nature of the advantage or the manner in which it is secured. The entrepreneur induces people to contribute toward the cost of a collective good by creating an organizational apparatus through which group members can pool their resources. The existence of this collection mechanism can also strengthen individual members' confidence that their colleagues' contributions are forthcoming. What the entrepreneur gains is private profit - the difference between the actual cost of a collective good and the total amount that group members are prepared to pay for it. By contrast, the neighborhood street-sweeper induces support for a collective good, not by facilitating contributions, but by increasing the costs that come from the failure to contribute. As a result of her efforts, she gains a clean street whose benefits (and costs) she shares with her fellow residents. She takes her profit in the form of collective betterment rather than private gain, and her conduct, along with the behavior of her neighbors, demonstrates that effective selfinterest can extend beyond private interest. Self-interest can also give rise to continuing cooperative relationships. The street-sweeper, acting in her own interest, brings into being a cooperative enterprise in which she and her fellow residents jointly contribute to the production of a collective good. Cooperation in this case does not come about through negotiation or exchange among equal parties. It can be the work of a single actor who contributes the lion's share of the resources needed to establish a collective good, in the expectation that its existence will induce others to join in maintaining it. The tactic is commonplace as a means of eliciting voluntary collective action, and it operates on a scale far larger than the street or the neighborhood. Government, paradoxically, probably relies on it more than most institutions With its superior power and resources, it may be society's most frequent originator of voluntary collective action. Its policies, imposed through coercion and financed by compulsory taxation, generate a penumbra of cooperation without which coercion might become ineffectual. By providing certain collective goods, government authorities can move citizens to make voluntary contributions to the maintenance of these goods. The stark dichotomy between private voluntary action and public coercion - one of the mainstays of American political rhetoric - may be as misleading as the identification of self-interest with selfishness. There is more at stake here than the voluntary production of collective goods. Continuing cooperative behavior can have other results as well. Once group members begin to expect cooperation from one another, norms of cooperation and fairness are likely to develop. Axelrod (1986) has suggested that modes of conduct which have favorable outcomes for the people who pursue them tend to evolve into group norms. Public-spirited action that serves self-interest could therefore engender a principled attachment to the common good, undermining the assumption of self-interestedness that gives the logic of collective action its bite. Laboratory studies of cooperative behavior have already demonstrated that experimental subjects have far less regard for narrow self-interest than rational choice theory requires (Dawes 1980). In one extended series of collective action experiments, however, Marwell and Ames (1981) found a single group of subjects who approximated the self-interested free-riders of Olson's theory. They were graduate students in economics.