Risk allocation and the costs and benefits of public‐‐private partnerships

Iossa, Elisabetta; Martimort, David

doi:10.1111/j.1756-2171.2012.00181.x

Cited by 168 publications

(144 citation statements)

References 43 publications

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“…This confirms Panayides et al's findings that the degree of private commitment, firm experience and leading private investors have a positive impact on PPP success [55], and the results of Zhao et al and Jamali also provided some similar evidence for the significance of the expected profitability of the project and finance capacity of the contractor in the sustainability and success of a PPP project [29,44]. Furthermore, according to Meng et al, Levinthal and March, as well as Iossa and Martimort [47,65,66], sufficient project experience will contribute to the partners to predict or assess risks by decreasing the complexity and simplifying the PPP process in the current setting, so as to reduce the total cost and improve the financial or performance sustainability of a PPP project.…”

Section: Private Sector's Characteristicssupporting

confidence: 73%

“…Tiong et al suggested that the private sector must consist of highly qualified professionals with the requisite financial engineering skills [16], sufficient operation experience or adequate investment funding [47]. Moreover, sufficient past experience will inform the parties as to what might or might not happen over a project's life-cycle, and the firm can use its past experience to predict or assess risks so that an efficient risk allocation can be achieved by decreasing the complexity and simplifying the process in the current setting [65][66][67]. Furthermore, appropriate risk allocation will reduce the overall costs of the PPP project, achieve value for the money and ensure the sustainability of PPP [12,28,47].…”

Section: Hypothesesmentioning

confidence: 99%

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Examining the Interrelationship among Critical Success Factors of Public Private Partnership Infrastructure Projects

et al. 2016

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Abstract:Examining the interrelationships among critical success factors (CSFs) for public private partnership (PPP) projects is of importance for improving PPP project performance and maintaining the sustainability of PPP project implementation. Previous studies mostly focused on the identification of the CSFs for PPP projects; limited studies investigated the interrelationships among CSFs. Hence, the research objectives are (a) to determine the interrelationships among CSFs of PPP projects taking into account the public and (b) to identify influence paths contributing to take advantage of CSFs in the process of PPP implementation. A literature review and expert interviews were adopted to construct the CSFs framework; nine hypotheses were constructed and tested by the structural equation modelling (SEM) based on the data collected from a questionnaire survey. This research reveals that the relationship between public and private partners is the leader-follower relationship, not the partnership relationship, in PPP projects, indicating that the responsibilities, power or resources existing among partners are very unequal. It also highlights that public involvement has a negative effect on the process of service provisions, and costs and risks exist in the process of public involvement in PPP projects. The determined interrelationships among CSFs will contribute to the sustainability and success of a PPP project.

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Section: Private Sector's Characteristicssupporting

confidence: 73%

Section: Hypothesesmentioning

confidence: 99%

Examining the Interrelationship among Critical Success Factors of Public Private Partnership Infrastructure Projects

et al. 2016

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“…There is a burgeoning literature on the "boundary of the organization" and how public entities provide services (Hart, Shleifer and Vishny 1997, Lopez de Silanes, Shleifer and Vishny 1997, Nelson 1997, Brown and Potoski 2003, Martimort and Pouyet 2008, David and Chiang 2009, Levin and Tadelis 2010, Iossa and Martimort 2012, but nearly every empirical investigation has focused on one ownership type. These studies cannot address what is essentially "public" or "nonprofit" about choices because they lack a control group of profit maximizers.…”

Section: Introductionmentioning

confidence: 99%

Cost versus control: Understanding ownership through outsourcing in hospitals

Dalton

Warren

2016

Journal of Health Economics

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For-profit hospitals in California contract out services much more intensely than either private nonprofit or public hospitals. To explain why, we build a model in which the outsourcing decision is a trade-off between net revenues and some non-monetary benefit to the manager, or "bias" in the manner of production. Since nonprofit firms must consume profits under restrictions, they trade off bias and income differently than forprofit firms. This difference is exaggerated in services where the benefits of controlling the details of production are particularly important but minimized when firms are hit with a fixed-cost shock. We test these predictions in a panel of California hospitals, finding evidence for each. These results suggest that a model of public or nonprofit make-or-buy decisions should be more than a simple relabeling of a model derived in the for-profit context. JEL Classification: I11, L24, L33

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“…Some literature suggests that PPPs do indeed have the potential to be beneficial for services, particularly when there is sufficient past experience and when the uncertainty is limited (Iossa & Martimort, 2011). One of the most precise arguments favouring PPP/SCAs is the transfer of risk to the private sector within a structure, in which financiers put their own capital at risk.…”

Section: Introductionmentioning

confidence: 99%