Exploring Risk Factors Affecting Sustainable Outcomes of Global Public–Private Partnership (PPP) Projects: A Stakeholder Perspective

Abstract

As a model for delivering infrastructure initiatives, public–private partnerships (PPPs) have gained significant popularity in recent years. The globalization of PPP has exposed them to elevated risks emanating from the international real economy and financial market, which can ultimately result in project cancellations or distress. This study analyzes risk factors affecting the sustainable outcomes of global PPP projects from a stakeholder perspective. After identifying the interests of key stakeholders and examining how various risks influence stakeholders’ interests, a two-step binomial probit model is used to investigate domestic and international risk factors in PPP arrangements based on the World Bank PPI database. The empirical results indicate that inflation has a substantially positive effect on project failure, while factors such as PPP experience, central government involvement, exchange rate fluctuations, etc., significantly contribute to PPP success. In addition, the study demonstrates that trade openness and net foreign direct investment (FDI) inflow are crucial for the transmission of global risks. The study also provides policy implications and recommendations from a risk allocation–stakeholder relationship perspective to enhance the resilience of PPP initiatives based on these findings.

Institutional quality, economic development, and the sustainable outcomes of PPP projects: An empirical analysis of failed PPP projects in China from 2014 to 2020

“…Consequently, a multitude of PPP projects may encounter difficulties or require renegotiation simultaneously. To mitigate such risks, a holistic approach should be adopted, ensuring careful consideration of the overall impact and sustained viability of these PPP projects [ 43 ].…”

Riesgo: A Knowledge-Based Qualitative Risk Assessment System for PPP Projects

“…The Suez Canal Project, recognized as the first build-operate-transfer PPP project in the modern world (Levy, 1996) [7], encountered a substantial cost overrun of 1900%, and factors such as the inherently risky structure of the PPP and misinformation about the risks were cited as causes of this adverse impact (Flyvbjerg, 2014) [8]. Similar issues are extensively reported in the literature, for instance, Li and Wang (2023) [9] empirically demonstrated that inflation risk significantly influences project failures. Castelblanco et al (2023) [10] highlighted the intricate correlation between the project risk profile and the concession period, revealing that risk assessment is critical for PPPs.…”

Critical Success Factors of Water and Power Public–Private Partnerships in Developing Countries: A Systematic Review

“…Research revealed that energy projects account for 52% of PPPs in developing countries [8]. The absence of power-focused studies in the corpus hampers the ability to fully explore the unique challenges and success factors inherent in power PPPs.…”