Inferential Analysis of Road Infrastructure PPP Sponsor Networks

Abstract

In the road infrastructure sector, public-private partnership (PPP) projects involve the implementation of project finance principles through the signing of a long-term contract between the public authority and a group of sponsors assembled in a Special Purpose Vehicle (SPV). However, although PPP sponsors play a very important role in SPV formation, the literature does not provide ample evidence to understand such creation processes. Therefore, this study gains insight into the mechanisms associated with the way PPP sponsors establish relationships among themselves in order to form SPVs. The approach employs social network concepts and Exponential Random Graph Model (ERGM) techniques. The analysis is focused on tie-formation processes in sponsor networks across the bidding and financial close stages of road PPP projects in Canada, Chile, and the US between 1993 and 2019. Results show that, despite some differences in the studied jurisdictions, dyadic (i.e., repeated relationships) and structural (i.e., transitivity) factors are the most influential properties driving bidding consortium and SPV creation procedures. Conclusions indicate that sponsors' behavioral patterns are highly influenced by trust-based mechanisms. Further research is required to continue understanding the role of other PPP players and the effect of the external institutional environment on PPP networks.

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