Stakeholders’ expectations in utilising financial models for public-private partnership projects

Abstract

Purpose – The purpose of this paper is to explore stakeholders’ expectations in utilising PPP financial models in order to ensure that each stakeholder understands the expectations of others before negotiating and reaching contract agreement by all the stakeholders. Design/methodology/approach – Five common sets of 40 expectations have been identified through a systematic research approach, and their relative significances were verified based on pilot studies in India and the UK and expert opinion solicited worldwide through a structured questionnaire survey. The survey responses were evaluated by using statistical analyses. Findings – The most important stakeholders’ expectations in utilising PPP financial models were identified at five different stages in a project. They are bankable (at the pre-proposal stage), assessment of project's ability to carry senior debt (at the contract negotiation stage), sensitivity analysis for key commercial issues (at the finance-raising stage), debt service evaluation towards cost overrun and other adverse events (at the construction stage), and assurance of secure operational cash flow (at the operation stage). Although some of the most important expectations are agreed on by all stakeholders, the disagreement of most important expectations should also be considered by the other stakeholder(s) in order to achieve effective and efficient negotiations. Originality/value – The paper draws attention to stakeholders’ expectations in utilising a financial model that is arguably overlooked in evaluating PPP projects. It does so in order to speed up the negotiation process as a means of minimising cost and time expenditures on PPP contract negotiation.

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Identifying Critical Bankability Criteria for PPP Projects: The Case of China

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“…e main or sole source to meet financial obligations is the cash flows of a PPP project. In addition, the banks have no recourse or limited recourse to the private sector's corporate assets [6,7].…”

“…In addition, funding is a major problem for PFI projects especially launched by small-or medium-sized companies [17]. e difficulty in raising the finance, the high cost of financing, and even being unable to close financing within the time frame stipulated in the concession agreement all could lead to the failure of financial close [7,19].…”

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