Managing financial risks to improve financial success of public—private partnership projects: a theoretical framework

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Isaac Akomea-Frimpong ◽  
Xiaohua Jin ◽  
Robert Osei-Kyei
Keyword(s):  
Empirical Studies ◽  
Theoretical Framework ◽  
Public Private Partnership ◽  
Empirical Literature ◽  
Financial Risks ◽  
Financial Returns ◽  
Financial Success ◽  
Private Partnership ◽  
Content Type ◽  
Desirable Outcome

Purpose Successful execution of public–private partnership (PPP) projects is the most desirable outcome to all stakeholders. Previous studies show that one of the topmost obstacles to fulfil this desire on the project is financial risks. Nonetheless, inadequate holistic studies exist on linking the management of this challenge to the financial returns of the project. This study aims to develop a theoretical framework interrelating financial risks, financial controls and financial performance of PPP projects. Design/methodology/approach The theoretical framework is informed and supported by existing theories and previous empirical studies from construction management, finance and economics. The underlying theories captured in the framework were chosen for their relevance and applicability to PPP projects. The propositions developed from the analysis of the theories and the empirical literature are summarised in three main hypotheses and 26 operationalised sub-hypotheses. Findings The major elements of the framework include the financial risks and 12 sub-themes which are commonly experienced on PPP projects. Financial policies and procedures on controlling financial losses of the projects are also included in the framework. Lastly, this study creates financial criteria on the projects which are intrinsically embedded in the framework to serve as benchmark to support the measurement of financial success. Research limitations/implications This study is a theoretical review of classical theories and empirical studies, and therefore, not all researches and managerial controls have not been included in this framework due to restricted time and limited studies on the topic. Practical implications This paper would serve as a multidimensional guide to project managers to mitigate financial risks and hopefully enhance the financial success of PPPs. Theoretically, this paper outlines the dimensions of managing financial risks of PPPs that require valid and reliable measurement to test the interrelationships of the constructs by further studies in the construction research community. Originality/value This theoretical framework makes ambitious efforts to embrace multifaceted theories from different disciplines to shed light on holistic mechanisms to mitigate financial risks to improve financial returns of PPP projects.

Barriers to bond financing for public-private partnership infrastructure projects in emerging markets

2017 ◽  
Vol 22 (1) ◽  
pp. 2-19 ◽  
Author(s):  
Solomon Olusola Babatunde ◽  
Srinath Perera
Keyword(s):  
Factor Analysis ◽  
Emerging Markets ◽  
Empirical Studies ◽  
Principal Component ◽  
Public Private Partnership ◽  
Bond Markets ◽  
Infrastructure Projects ◽  
Chi Square ◽  
Private Partnership ◽  
Content Type

Purpose The purpose of this study is to identify and critically assess the barriers to bond financing for public–private partnership (PPP) infrastructure projects in Nigeria using an empirical quantitative analysis. Innovative ways to finance long-term infrastructure projects had been documented. However, there is a dearth of empirical studies on the barriers to bond financing for PPP infrastructure projects. Design/methodology/approach A comprehensive literature review was conducted to identify the barriers to bond financing for infrastructure projects, which were employed to design a questionnaire. A questionnaire survey was carried out which targeted financial experts in the Nigerian financial institutions/local banks. Data collected were analysed using descriptive and inferential statistics to include mean score, chi-square (χ2) test and factor analysis (principal component analysis). Findings The analysis of the ranking in terms of the mean score values for the 12 identified barriers indicated that all the identified barriers are considered by respondents as critical barriers to bond financing for PPP infrastructure projects in Nigeria. The study, through factor analysis, grouped the 12 identified barriers into 5 principal factors. These include governance and institutional capacity issues, higher issuance cost and risk, difficulties in getting approval for changes, the small size of bond markets and stringent disclosure requirements. Practical implications This research is significant by providing the empirical evidence of the barriers to bond financing for PPP infrastructure in emerging markets, especially in Nigeria. Originality/value The findings would enable the policymakers to draw some policy recommendations that will positively influence the development of bond markets in Nigeria and emerging markets at large. These study findings are crucial, as not many empirical studies have been conducted in Nigeria.

Determination of government guarantee and revenue cap in public–private partnership contracts

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Hongyu Jin ◽  
Shijing Liu ◽  
Jun Li ◽  
Chunlu Liu
Keyword(s):  
Financial Risk ◽  
Public Private Partnership ◽  
Risk Allocation ◽  
Financial Risks ◽  
Private Partnership ◽  
Content Type ◽  
Government Guarantee ◽  
Determination Process ◽  
The Government ◽  
Private Investors

PurposeConsidering there is a lack of research in determining the optimal levels of government guarantee and revenue cap, the objective of this research is to determine their optimal levels to achieve a reasonable financial risk allocation between governments and private investors while avoiding overly lucrative conditions for private investors.Design/methodology/approachExpanded net present value (NPV) analysis and bargaining game theory are employed to construct the core of the determination process. The risk gap between governments and private investors is assessed via an expanded NPV analysis to see if the financial risk has been shared reasonably, based on which the range of the government guarantee is decided. A bargaining model is then created to help locate the optimal level of the government guarantee. Finally, a revenue cap, often combined with the government guarantee in public–private partnership (PPP) agreements, will be determined if overly lucrative conditions for private investors are observed or governments suffer a risk spillover.FindingsReferring to a real PPP project in Australia, Project BA is created to validate the applicability of the proposed determination process. The outcome shows that the proposed determination process in this paper is capable of determining the optimal levels of government guarantee and revenue cap. The government preferences towards risk allocation will influence the values of the optimal levels. Governments may also consider to alleviate the control over investors' net profits to mobilise private investors into PPP projects.Research limitations/implicationsThere is a potential possibility that the revenue cap fails to control the financial risk for governments or the overly lucrative condition for private investors. In other words, even though the revenue cap is set at the minimal level, the financial risk for governments still beyond their tolerance range or the overly lucrative condition for private investors still occurs. Future research may focus on other financial protective schemes which help to better control the financial risks for governments and profits for private investors.Originality/valueGovernment guarantees are frequently used as an investment incentive to reduce the probabilities of suffering loss for private investors. Nevertheless, the financial risks for governments may increase after providing guarantees and, as a result, revenue cap is required by governments to avoid placing themselves in an unprotected situation. By recognising the importance of the two contractual parameters, many scholars dig into their option values. However, there are very rare research works focussing on the method of determining the specific levels of government guarantee and revenue cap. To overcome the limitations of existing models and enrich the methodology for government guarantee and revenue cap determination, this paper contributes to the body of knowledge by developing a government guarantee and revenue cap determination process which contributes to a reasonable allocation of financial risks between governments and private investors.

scholarly journals The public-private partnership (PPP) disaster of a new hospital – expected political and existing business interaction patterns

2019 ◽  
Vol 34 (5) ◽  
pp. 1119-1130 ◽  
Author(s):  
Alexandra Waluszewski ◽  
Hakan Hakansson ◽  
Ivan Snehota
Keyword(s):  
Empirical Studies ◽  
Public Private Partnership ◽  
Interaction Pattern ◽  
The Political ◽  
Private Partnership ◽  
Content Type ◽  
The Public ◽  
Political View ◽  
Competitive Forces ◽  
Private Setting

Purpose One of the most salient contemporary societal trends is the increasing amount of public–private collaborations. In spite of the increasing awareness of the need to scrutinise the promises of public–private partnership (PPP), there is an important but seldom-asked question: How does the assumed interaction pattern behind PPP correspond with the interaction pattern appearing in empirical studies of the content of business exchange? The purpose of this paper is to shed light on the discrepancy between the expected and actual pattern of interactions in PPPs. Design/methodology/approach The paper presents a specific PPP concerning the construction of a Nya Karolinska (NKS) hospital building, which ended up as an economic and functional disaster. With an interactive approach as point of departure (Håkansson et al. 2009; Waluszewski, Håkansson, Snehota, 2017), this paper investigates a) the interaction pattern of the business landscape expected by policy/politicians in the NKS construction case and b) how the assumed interaction pattern appears in relation to the interaction pattern of the business landscape outlined in empirical studies of exchange, in the business landscape in general and of the construction setting in particular. Findings Given that the public side is neglecting the interactivity and interdependency of the private business setting, the disappointment with the NKS PPP project does not appear as an odd deviation. Rather, as a natural consequence of a public side expecting autonomous actors able to deliver innovation, quality and cost control just because they are exposed to competitive forces – but in reality interfacing with private actors which interests are directed to interdependent investments in place; own and related suppliers’. Research limitations/implications The investigation of the political expectations behind the NKS PPP case was concentrated on two types of data. Original reports expressing the political view of the interaction pattern of the private setting have been used. Four published studies focussing on different aspects of the NKS process, which discuss the political view of the private setting, was also used. Practical implications Be it private–private or public–private, to be beneficial for both sides of the exchange interface, both sides have to engage in the exchange – with representatives with knowledge and experiences of all direct and indirect related social and material resources that will be affected. The need to mobilise and involve representatives with extensive experiences of specific resource combinations of both sides of the exchange interface; the public as well as the private, does not disappear simply because it is assumed away. Social implications The competitive forces of the private setting are by politicians and policy assumed to function in an automatic way; breeding cost efficiency, quality and innovation. Furthermore, there is also an assumption of speed and ease of change. With the trust in these characteristic sof the private setting at hand, politicians have a “cart blanche” to withdraw from direct involvement in the creation of producer-user interfaces. Originality/value The paper underlines that as soon as the public-private exchange concerns goods that cannot be transformed to or treated as homogeneous ‘commodities’, as most often is the case of in this type of processes, there are reasons to be extremely careful in the design of the interaction interface. There are differences both in resource and activity structures between the two sides of the exchange interface and these differences have to be actively dealt with.

scholarly journals The job demands-resources model and the international work context – a systematic review

2014 ◽  
Vol 2 (3) ◽  
pp. 260-279 ◽  
Author(s):  
Lucy T.B. Rattrie ◽  
Markus G. Kittler
Keyword(s):  
Systematic Review ◽  
Empirical Studies ◽  
Domestic Work ◽  
Job Demands ◽  
Empirical Literature ◽  
Future Research ◽  
Content Type ◽  
International Work ◽  
Work Related ◽  
Work Contexts

Purpose – The purpose of this paper is to provide a synthesis and evaluation of literature surrounding the job demands-resources (JD-R) model (Demerouti et al., 2001) in the first decade since its inception, with particular emphasis on establishing an evidence-based universal application towards different national and international work contexts. Design/methodology/approach – The study uses a systematic review approach following the stages suggested by Tranfield et al. (2003). Based on empirical data from 62 studies, the authors systematically analyse the application of the JD-R model and queries whether it is applicable outside merely domestic work contexts. Findings – The authors find convincing support for the JD-R model in different national contexts. However, the authors also found an absence of studies employing the JD-R model in cross-national settings. None of the empirical studies in the sample had explicitly considered the international context of today’s work environment or had clearly associated JD-R research with the IHRM literature. Research limitations/implications – Based on the wide acceptance of the JD-R model in domestic work contexts and the increased interest in work-related outcomes such as burnout and engagement in the IHRM literature, the study identifies a gap and suggests future research applying the JD-R model to international work and global mobility contexts. Originality/value – This study is the first to systematically assess the application of the JD-R model in domestic and international work contexts based on a systematic review of empirical literature in the first decade since the inception of the model. The study identifies a lack of internationally focussed JD-R studies and invites further empirical research and theoretical extensions.

Transforming the scope of the bank through fintechs: toward a modularized network governance

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Piotr Łasak ◽  
Marta Gancarczyk
Keyword(s):  
Organizational Design ◽  
Banking Sector ◽  
Transaction Cost Economics ◽  
Empirical Studies ◽  
Theoretical Framework ◽  
Network Governance ◽  
Content Type ◽  
Ict Adoption ◽  
Conceptual Foundations ◽  
Practical Implications

PurposeThe aim of this paper is to develop a theoretical framework of the transformation of the bank's scope driven by fintechs.Design/methodology/approachThe conceptual foundations for a comprehensive transformation of the bank governance through financial technologies (fintechs) are underexplored. In order to develop such foundations, the authors adopt transaction cost economics (TCE), the concepts of external enablers and a modular organizational design, as well as a systematic literature review.FindingsThe results point to three scenarios of the banks' scope, depending on the adopted technological mechanisms and related effects that change the characteristics of organizational activities, justifying new bank boundaries. The most advanced application of fintechs results in a modularized network scenario leading to the emergence of financial ecosystems.Research limitations/implicationsThe proposed micro-perspective of decisional rules in an individual organization is unique in the current literature that predominantly focuses on the banking sector at large. The identified scenarios are valuable for solid theoretical and empirical grounding and can be further exploited in decision simulations and empirical studies.Practical implicationsThe proposed theoretical framework points to the rationales and consequences of adopted technologies for the boundaries of a bank organization.Originality/valueThis paper provides three contributions to the literature on technology-driven transformations of organizations with a focus on banks. First, the authors elaborate a theoretical framework for establishing the bank's boundaries in response to the expansion of financial technologies. Second, the authors add to the knowledge accumulation in the area of organizational transformations based on the ICT adoption, in particular, to the literature on the modular organizational design. Third, the authors contribute to the decision-maker practice by proposing the alternative options of banks' scope transformed through fintechs.

scholarly journals Serendipity and its study

2014 ◽  
Vol 70 (6) ◽  
pp. 1015-1038 ◽  
Author(s):  
Allen Edward Foster ◽  
David Ellis
Keyword(s):  
Information Seeking ◽  
Process Model ◽  
Empirical Studies ◽  
Science Research ◽  
Empirical Literature ◽  
Future Research ◽  
Content Type ◽  
Information Studies ◽  
Information Encountering ◽  
Citation Classics

Purpose – The purpose of this paper is to explore the concept of serendipity and approaches to its study particularly in relation to information studies. Design/methodology/approach – The origins of the term serendipity are described and its elaboration as an exploratory and explanatory concept in science and the social sciences are outlined. The distinction between serendipity and serendipity pattern is explained and theoretical and empirical studies of both serendipity and the serendipity patterns are explored. The relationship between information encountering is described. Empirical studies of serendipity using Citation Classics and other research approaches in information studies are described. Findings – The discrepancy between occurrences of serendipity in studies using Citation Classics and reported serendipity in philosophy of science, research anecdotes, information encountering and information seeking by inter-disciplinary researchers is highlighted. A comparison between a process model of serendipity and serendipity as an emergent behavioural characteristic are indicates directions for future research. Originality/value – The paper provides and original synthesis of the theoretical and empirical literature on serendipity with particular reference to work in information studies and an indication of the methodological difficulties involved in its study.

Another failed M&A: misaligned business models as culprit

2017 ◽  
Vol 38 (5) ◽  
pp. 18-26
Author(s):  
Gaël Le Floc’h ◽  
Laurent Scaringella
Keyword(s):  
Customer Value ◽  
Multinational Enterprises ◽  
Business Models ◽  
Small And Medium Enterprises ◽  
Empirical Studies ◽  
Empirical Literature ◽  
Content Type ◽  
Recent Debate ◽  
Definition Of ◽  
Medium Enterprises

Purpose Literature on business models (BMs) has grown ve ry rapidly since the beginning of the twenty-first century, and although the theoretical and empirical literature has developed significantly, the number of practical and management-oriented studies remains relatively low. A recent debate in the field has focused on the definition of BM invariants: sensing customer needs, creating customer value, sustaining value creation and monetizing value. Extant empirical studies have mainly focused on multinational enterprises (MNEs) and successful BMs; however, this study concentrates on the failure of BMs in the case of small and medium enterprises (SMEs). An important source of a BM’s failure is the misalignment between MNE and SME involved in an acquisition. Design/methodology/approach Looking through the lens of the four BM constants, the aim of this study is to examine the case of the acquisition Domestic Heating (an SME) by Ventilair (an MNE). Findings Although both separate entities were achieving good results and each had a specific BM, the acquisition produced poor results mainly due to the misalignment of the two BMs. The findings lead the authors to make recommendations to practitioners on avoiding BM misalignment during an acquisition. Originality/value The authors encourage practitioners to enhance communication, promote organizational experiments, acknowledge specificities of both entities, foster employee commitment and ensure homogeneity in IT system usage.

scholarly journals Public-Private Partnership for achieving sustainable development goals: a case study of Khulna, Bangladesh

2020 ◽  
Vol 23 (3) ◽  
pp. 283-298
Author(s):  
Md. Nazmul Haque ◽  
Mustafa Saroar ◽  
Md. Abdul Fattah ◽  
Syed Riad Morshed
Keyword(s):  
Sustainable Development ◽  
Sustainable Development Goals ◽  
Public Private Partnership ◽  
Private Partnership ◽  
Content Type ◽  
The Public ◽  
The Road ◽  
Development Goals ◽  
On The Road

PurposePublic-Private Partnership (PPP) is a common practice in both the public and private sectors. PPP has been an important instrument to achieve Sustainable Development Goals (SDGs) at the national level. However, the role of PPP at the subnational level is often scarcely studied. Using Khulna city of Bangladesh as a case, this paper aims to assess the role of PPP projects in the attainment of SDGs.Design/methodology/approachThe research was conducted in the Central Business District (CBD) of Khulna, on a total of 4.6 kilometers stretches of road medians in the CBD where landscaping was done through the PPP approach. Besides the collection of secondary data from official records, primary data were collected through site visits, field surveys and interviews of PPP project partners.FindingsThe result shows that 89 percent of the respondents (road users) were pleased with the landscaping done on the road medians. Similarly, about 86 percent of the respondents felt more comfortable and safer to use the roads. Well-maintained road medians allow road-crossing at a regular interval which reduces the chance of an accident. The private parties have installed promotional billboards on the road medians and saved BDT 10.82 million a year. The public authority saves the maintenance budget amounting to BDT 23 million a year. The project achieves a triple-win situation. Despite some limitations, this PPP project has taken Khulna a step forward to achieve SDGs.Originality/valueThe findings have policy implications as the PPP project has enhanced the resilience of Khulna by addressing the relevant SDGs.

Motivations for adopting unsolicited proposals for public-private partnership project implementation

2018 ◽  
Vol 23 (2) ◽  
pp. 221-238 ◽  
Author(s):  
Robert Osei-Kyei ◽  
Albert P.C. Chan ◽  
Ayirebi Dansoh ◽  
Joseph Kwame Ofori-Kuragu ◽  
Emmanuel Kingsford Owusu
Keyword(s):  
Public Sector ◽  
Developed Countries ◽  
Public Private Partnership ◽  
Project Implementation ◽  
Private Partnership ◽  
Content Type ◽  
The Public ◽  
Private Investors ◽  
Push And Pull ◽  
Specific Country

Purpose The purpose of this study is to explore the motivations of governments for adopting unsolicited proposals for public–private partnership (PPP) project implementation. Design/methodology/approach A comprehensive review of literature was conducted to derive a list of motivations for adopting unsolicited PPPs. Subsequently, an empirical questionnaire survey was conducted with international PPP experts. Inter-rater agreement analysis, mean significance index and independent two-sample t-test were used for data analysis. Findings Results reveal four very critical motivations for governments’ interest in unsolicited PPPs; these include: “enhanced private sector innovation and creativity in PPPs”; “lack of public sector capacity to identify, prioritise and procure projects”; “lack of private investors’/developers’ interest in projects at remote areas”; and “rapid implementation of PPP projects”. Further analysis shows that developing and developed countries view the significance of three motivations differently. Research limitations/implications The major limitation lies in the fact that this study only focused on the general motivations/rationale for using unsolicited PPP proposals and did not thoroughly examine and consider the inherent property of motivations (i.e. push and pull theories). Therefore, future studies should explore the “pull and push” motivations for adopting unsolicited PPPs within a specific country or region. Originality/value The research outputs inform international private developers of the key expectations of governments/public departments when submitting unsolicited PPP proposals for consideration by the public sector. Furthermore, the outputs will enable governments/public departments and private proponents to derive performance objectives and standards for unsolicited PPP projects.

scholarly journals Social networks and unemployment exit in Great Britain

2018 ◽  
Vol 45 (8) ◽  
pp. 1205-1226
Author(s):  
Panos Sousounis ◽  
Gauthier Lanot
Keyword(s):  
Social Networks ◽  
Social Interactions ◽  
Empirical Studies ◽  
Unemployment Duration ◽  
Empirical Literature ◽  
Job Seekers ◽  
Content Type ◽  
Job Attainment ◽  
Discrete Time Hazard Model ◽  
Direct Measures

Purpose The purpose of this paper is to examine the effect employed friends have on the probability of exiting unemployment of an unemployed worker according to his/her educational (skill) level. Design/methodology/approach In common with studies on unemployment duration, this paper uses a discrete-time hazard model. Findings The paper finds that the conditional probability of finding work is between 24 and 34 per cent higher per period for each additional employed friend for job seekers with intermediate skills. Social implications These results are of interest since they suggest that the reach of national employment agencies could extend beyond individuals in direct contact with first-line employment support bureaus. Originality/value Because of the lack of appropriate longitudinal information, the majority of empirical studies in the area assess the influence of social networks on employment status using proxy measures of social interactions. The current study contributes to the very limited empirical literature of the influence of social networks on job attainment using direct measures of social structures.

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