ABSTRACT
ABSTRACT
Public–private partnerships (PPPs) have become popular tools to deliver infrastructure and public services around the world. As an innovative public procurement approach, PPPs have drawn considerable attention from academic circles. In order to enhance our knowledge of PPPs, the authors conducted a systematic literature review of articles published in international journals of the Public Administration (PA) discipline. Four main topics in this discipline are identified by means of social network analysis, including PPP concept, risk sharing amongst PPP participants, the drivers of PPP adoption, and PPP performance. Seven propositions about the four topics are summarized. Directions for future research are also considered.
Introduction
Public–private partnerships (PPPs), as cooperative institutional arrangements between public and private sectors, have received considerable attention over the past 40 years. PPP has been widely used in the fields of infrastructure and public services, such as transportation, water and sewage, energy, environment protection, public health, and others. Many countries and regions have been promoting PPP to overcome the traditional drawbacks of public procurement. The UK, Australia, Portugal, Spain, and other developed countries have witnessed a steady growth in the number of PPP projects. Developing countries are also using PPPs to build and operate their own infrastructures. For instance, until 30 September 2016, China had witnessed no fewer than 10,471 PPP projects. The total investment in these projects has amounted to 12.46 trillion Yuan.1
At the same time, the literature addressing PPP has also shown impressive growth. Some authors suggest that the PPP phenomenon has become a new form of governance (Osborne 2000). Many governments around the world are becoming more and more dependent on private actors for the implementation of public policies. However, this means governments need cooperation from various actors (Teisman and Klijn 2002). In this respect, PPP can be seen as a cooperative institutional arrangement between public and private sector actors (Hodge and Greve 2007). PPP might very well be able to deal with the complex policies, projects, and public service issues to be faced. This is because PPP involves joint development and risk sharing between the partners, which are areas the traditional procurement processes failed to address. This finding implies that the PPP phenomenon has transformed into a type of governance scheme or mechanism, rather than just being some sort of language game. However, it is not an easy task to convert a theory or idea into actions. For instance, some research has found that many actors are far too preoccupied with their own procedures and internal issues to be able to act as effective partners (Klijn and Teisman 2003).
Thus, the PPP phenomenon has attracted considerable attention from many scholars and many areas of interest, including disciplines ranging from Economics to Management Science and Public Administration (PA) (Spielman, Hartwich, and Grebmer 2010). The approach to the study of PPPs, particularly when it comes to the disciplines of Economics and Management Science, is from the perspective of PPP being a kind of micro-level partnership. Researchers from these two fields focus on how to design, tender, operate, and maintain PPP projects. For instance, a great deal of the work conducted by economists on PPP has been concerned with the optimality of the bundling of the various tasks (e.g. design, tender, and operations) rather than on how each task can be completed by a single partner (Ross and Yan 2015). Some authors used the papers in the construction journals to show the PPP research topics and trend (Ke et al. 2009). However, we have not yet been able to find any articles which discuss the PPP research process from the PA perspective. In this article, we are trying to fill this gap and understand how scholars from the PA perspective look at PPP. This study addresses the following questions:
What are the prevailing themes of PPP in the PA discipline journals?
What are the main contributions of those themes by combining a subjective and objective judgement?
To answer those questions, this study conducts a systematic literature review (SLR) about PPP in the PA discipline. The main results show that, although PPP has become a popular approach to supply infrastructure and public services, there is no general agreement on their definition, risk management, drivers of adoption of PPP, and performance evaluation. This study offers seven propositions concerning those issues. Besides, the results are useful for both PPP researchers and policymakers to identify the key issues and tendency.
Samples and method
An SLR method differs from traditional narrative methods, because the former has a more explicit selection process for articles (Torchia, Calabro, and Morner 2015). All previously published journal articles in the discipline of PA are identified via the ISI Web of Science Database. This database contains all such articles from all past years, prior to 31 December 2016. Taking the whole sample study could reduce the bias that would be generated from selecting only small samples, thus making our study more reliable and transparent (Ferrer, Thome, and Scavarda forthcoming). Five steps were required to conduct the SLR (see Figure 1), as follows:
Step 1: Planning and formulating the problem. The authors discussed the research questions and understood the main themes of PPP in the PA discipline.
Step 2: Searching the literature. Using ISI Web of Science, we expanded the research period from the earliest available date up to 30 December 2016. The search settings in the database were: Title = Public-Private Partnership or PPP or Private Finance Initiatives or Build Operate Transfer or BOT or Design Build Finance Maintain or DBFM or Transfer Operate Transfer or Build Operate Own Transfer. Time span = all years. Discipline = public administration or political science. Types = articles. This research yielded 186 articles.
Step 3: Data gathering and quality evaluating. After selecting the articles, we made some basic statistic issues like the years of publication, countries of analysis, journal titles, citations per author, and main theories used to study PPP. Then, we selected the keywords and used social network to display the main topics.
Step 4: Data analysis and interpretation. We read the entirety of the selected articles, including the aims of the research, framework, method, results, and conclusions. This step used an inductive approach to qualitative content analysis complemented with a quantitative visualization co-word analysis.
Step 5: Presenting the results and addressing the future research direction.
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Figure 1. Summary of the systematic review process
General description
This section presents the results of our SLR, including the years of publication, countries of analysis, journal titles, citations per author, and the main research theories and topics of those articles.
Evolution over time
As shown in Figure 2, current trend shows that the number of articles relating to PPP is steadily increasing. The articles have been indexed by ISI Web of Science since 1983, and the research peak (relating to PPP) appeared in 2016. We can claim that, in recent years, PPP has been a popular topic in the PA discipline.
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Figure 2. Evolution of PPP articles over time
Country of analysis
The countries selected for analysis are scattered all over the world. For the purposes of this study, we only selected countries that were analysed at least by two PPP-related articles. In Figure 3, we see that the majority of PPP articles focus on the UK. This finding is not surprising because the UK was the first country to adopt Private Finance Initiatives (PFIs). Moreover, most of the countries or regions we researched are developed economies. This undoubtedly happened because the developed countries have mature systems of government regulation, as well as normalization market rules. Those regulatory systems and market rules are crucial preconditions for any PPP. In addition, those developed countries have all made a clear policy choice in favour of using PPP. Some developing countries, such as China and India, have also adopted PPP. Since 2014, China’s central government has been promoting the use of PPP for the provision of necessary infrastructure.
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Figure 3. Countries of analysis
Journals
All the analysed articles were published in PA- or Political Science-type journals (in English). These articles were indexed by ISI Web of Science. The 186 articles which we obtained were published in 56 different journals. shows the journals that have published at least two PPP articles in the past. The journal with the highest quantity of publications is ‘Public Money & Management,’ which has published twenty-five papers relating to PPPs.
Table 1. Analysed journals
Cumulative citations per author
Figure 4 shows the cumulative citations per author. The cumulative citations per author statistics could indicate the authors’ academic impact in the PPP field. On the one hand, we found that Klijn (a professor at Erasmus University Rotterdam) published the most papers in the PA- or Political Science-type journals. On the other hand, we found that Hodge, a professor at Monash University, has published three PPP-related papers, and his number of cumulative citations (262) is the highest. Greve (a professor at Copenhagen Business School and coauthor with Hodge) also has a high number of citations. In addition, Klijn, Koppenjan, Teisman, and Edelenbos (all four of whom are professors at Erasmus University Rotterdam), Bovaird (a professor at the University of Birmingham), Bloomfield (vice president of the Clarus Group) and others also have high a cumulatively high number of citations. Moreover, indications are that cooperation between authors significantly increases both their academic output and impact. For example, Hodge and Greve, and Klijn and Teisman cooperated with each other to publish several papers, and all these academics’ papers have a high number of citations.
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Figure 4. Cumulative citations per author (top 20 authors)
Main theories used to study PPP in the journals of PA discipline
Figure 5 shows the main theories to study PPP in the journals of PA discipline. Generally, there are three types of knowledge background to develop theoretical models to discuss about PPP. Firstly, the PPP is analysed in an economics background. For instance, transaction costs theory concerns the optimal governance structure of transactions. Property rights theory deals with the incompleteness of PPP contracts. Principal–agent theory concerns the incentive problems caused by information asymmetry between public and private parties. Secondly, the PPP is analysed in a public management and policy background. For instance, network and governance theories are used to study the cooperation between public and private sectors. Public choice theory and New Public Management concern competition mechanisms for the provision of infrastructure and public service. Thirdly, the PPP is analysed in an organizational management background. For instance, stakeholder theory concerns PPP needs to balance the benefits of stakeholders. Institutional theory takes the PPP as an institution, and they argue that gaining institutional legitimacy is as important as efficiency.
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Figure 5. Main theories used to study PPP
Main PPP issues in the journals of PA discipline
To provide an overview of the main issues addressed in the PA discipline publications, we use social network analysis (SNA) to display the co-occurrence of keywords. Co-occurrence analysis assumes that some keywords co-occur in the same paper. The high frequency of co-occurrence keywords means these keywords are given more attention by scholars. Specifically, we analyse the keywords found in 186 papers, and we constructed a co-occurrence matrix of these keywords.2 Then, we used UCINET software to visualize the co-occurrence (see Figure 6). In Figure 6, the nodes in the network are the keywords while the links show the relationships or flows between the nodes. The numbers in the figure show the co-occurrence frequencies. SNA provides both a visual and a mathematical analysis of keywords relationships. A visual analysis has become a new trend to do the work of literature review, and the SNA is one of the most popular tools (Ferrer, Thome, and Scavarda forthcoming). From Figure 6, we confirm that PPP often co-occurs with keywords types of PPP(frequency = 16), performance (e.g. value for money, benefits, cost, and public value) (frequency = 33), risk (e.g. risk allocation, risk types, and risk sharing) (frequency = 25), drivers of PPP (e.g. motivation of the adoption of PPP policies) (frequency = 15).3
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Figure 6. Network of main PPP issues
Main findings
Defining the PPP concept: what does it look like?
Ideas and concepts do not suddenly emerge. It is necessary to look at an idea’s origin before we reflect on the current main topics and discuss the potential future direction of PPPs. The forerunner of the PPP was PFI. The PFI was initiated by Britain’s Conservative government in 1992, at the height of the recession that followed the property speculation bubble of the 1980s (Shaoul 2011). The recession’s origins were associated with planning and urban development problems, where shortfalls in finance were considered to be too great (Sedjari 2004). Although the Conservative government had enough enthusiasm to develop the PFI policy, the initiatives were slow to become popular for many reasons. For example, some people worried that the public service ethos might be undermined by private sector involvement (Ball, Heafey, and King 2007). In 1997, however, the Labour government made the PFI policy famous. At that time, the PFI ‘name’ was re-branded as PPP. At the same time, the use of PPPs became a bipartisan policy. Then, other countries and governments (e.g. the USA, European Commission, and several Asian countries), as well as international organizations also argued for the greater use of PPP to provide badly needed infrastructure, develop local economics, deliver public services, and renew urban areas. Here, PPP refers to the various forms of cooperation between public and private sectors, including design-build-finance-operate, build-own-operate-transfer, build-operate-transfer, as well as PFIs and other forms of public–private cooperation.
In fact, PPP can be defined in various ways. PPP comes in several types and are used in various ways and situations. Bringing the various definitions of PPP together is not easy, but a body of common concepts and assumptions can be identified. We constructed a co-occurrence matrix of the key PPP features in the 186 articles. Then, we used the UCINET software to visualize and illustrate the co-occurrence (see Figure 7). We have identified some key features as follows: firstly, PPP must be a durable cooperation (frequency = 9). PPP project generally involves long-term cooperation and a contractual relationship between public and private sectors of up to 25 or 30 years (Girth 2014; Hodge and Greve 2007). A short-term contract is not an actual PPP. The private sectors in PPP project normally participate in certain phases of that project, including designing, building, operation, and maintenance. These phases often involve large capital expenditure, typically hundreds of millions of dollars or more (Newman and Perl 2014). Thus, a long-term contract permits both partners to benefit from the cooperation (Silvestre and Araujo 2012). At the same time, the long-term contract makes it possible for the private sectors to make a return on their initial investment and indeed to make a profit. Secondly, PPP focuses on the sharing of risks, costs, benefits, resources, and responsibilities (frequency = 9) (Koppenjan 2005). Sharing is at the heart of any PPP partnership. PPP will not transfer all the risks or costs to the private sector partners. Thirdly, PPP is often a complex process (frequency = 6) (Ross and Yan 2015). Because of the long-term nature of the contract and the requisite multi-phase cooperation (in terms of design, build, operation, and maintenance), the goals of the PPP partners and the political environment may be dynamic. These factors bring about a requirement for the partners to negotiate and interact throughout the period of cooperation. This makes the cooperation process in PPP project potentially complex. Additionally, each of the PPP partners has its own strategy and institutionalized background. This can make the decision-making process in PPP projects extremely complex (Klijn and Teisman 2003). Finally, PPP projects have mutual goals (frequency = 3). These mutual goals are what drive the public and private sectors to work together and build a partnership. PPP could be seen as a durable complex cooperation between public and private sectors aiming to supply infrastructure and public service. During the cooperation period, both public and private sectors should share their risks and benefits to achieve their mutual goals.
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Figure 7. Key features of PPP concept
Frequently, PPPs are associated with other government reforms, such as privatization, outsourcing, and collaborative governance. The following concepts should be distinguished: (1) PPP versus privatization. Privatization involves the full or partial transfer of state-owned assets to the private sectors. Privatization means that day-to-day production will be left to private operators, and the government will act as the regulator. Privatization also includes such practices as setting up concessions, franchises, leasing, and other practices. The differences between PPP and privatization (e.g. concessions, franchises, and leasing) are found in the nature and degree of the risk transfer. The degree of risk transfer is very limited (with concessions and franchising) or even non-existent (leasing) in privatization processes (Silvestre and Araujo 2012). There is nothing intrinsic about privatization that requires partnerships (Forrer et al. 2010). (2) PPP versus outsourcing. Outsourcing is one application of a make-buy policy. This involves a temporary and singular principal–agent relationship, in which the relevant government departments make the decisions of what and how, and then the private sectors ensure those things are done (Reynaers 2014). PPP, on the other hand, is suited to a project that is so complex that the relevant government is not able to unilaterally meet the objectives (Ham and Koppenjan 2001). Thus, outsourcing is quite different from PPP. (3) PPP versus collaborative governance. PPP requires collaboration to function, but PPP project’s most important goal is often to achieve coordination, agreement, and joint production, rather than to achieve decision-making consensus. Collective decision-making is therefore of secondary importance in PPP. However, the institutionalization of a collective decision-making process is central to the collaborative governance (Ansell and Gash 2008). PPP requires a lower degree of collective decision-making process than collaborative governance, but higher than privatization or outsourcing.
Risk management: how to deal with uncertainties?
Risk identification
A risk is seen as an uncertain possibility. Something going wrong can result in increased costs or can cause delays (Johnston and Gudergan 2007). Normally, PPP projects involve more types and higher degrees of risk than conventional public procurement, privatization, and outsourcing projects. While PPP involves the pursuit of multiple agreements, there is an inherent fragmentation in the pursuit of long-term cooperation. Thus, this inherent fragmentation will create risks. In addition, uncontrollable circumstances, the absence of market forces, inadequate expertise, and the high cost of contract enforcement can also lead to additional risks (Bloomfield 2006). Both the public and private sectors must share accountability for these risks (Boase 2000). To some extent, the technical–rational mix of PPP contract requires both sides of the partnership to consider the possible risks from multiple angles. We constructed a co-occurrence matrix of the PPP risks as described in the 186 studied articles. We used the UCINET software to visualize the co-occurrence of PPP risks (see Figure 8). In Figure 8, there are many kinds of risks, including construction risk (frequency = 5), operation and maintenance risk (frequency = 4), financial risk (frequency = 3), political risk (frequency = 3), policy risk (frequency = 2), project risk (frequency = 2), demand risk (frequency = 2), and others. We classify these risks as follows:
Project perspective. These risks are generated by a project’s uncertainty and complexity. The risks broadly cover five areas, namely (a) design and development (e.g. design suitability), (b) construction (e.g. fixed time and cost to complete), (c) finance (e.g. securing finance), (d) operation (e.g. service performance), and (e) ownership (e.g. uninsurable loss or damage to assets) (Hodge 2004). Among these five risks, the design and development risk is borne by the public sector partner. The construction and finance risks are borne by the private contractors. The remaining risks are essentially shared by both the public and private partners.
Market or social perspective. These risks are generated by the market’s (or social) uncertainty and complexity. Due to the necessary public dimension, PPP project often has a greater degree of visibility and hence more easily becomes a target of social protest. This is why PPP has an element of social risk (Ham and Koppenjan 2001). Also, due to the variability of customer demand and preferences over time, a demand risk will also exist. If this risk becomes a reality, the demand for the service will fall short of initial expectations (Athias 2013).
Country perspective. These risks are generated by the PPP country’s uncertainty and complexity (e.g. political or policy changes during concession periods). These risks can also be called global risks. They include legal, environmental, and political risks (Albalate et al. 2015). Because the investment in infrastructure can only be recovered on a long-term basis, private investors are very sensitive to political risks (Koppenjan and Enserink 2009). As such, these global risks may be better managed by public sector partners.
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Figure 8. PPP risk identification
Ke, Wang, and Chan (2013) also classify risks into the three above-named categories. However, Ke’s study further breaks down the risks into sixteen project-level risks (e.g. private investor changes), seven market-level risks (e.g. market demand changes), and fourteen country-level risks (e.g. corruption and intervention of government). Other published studies also argue that PPPs have many risks. These studies’ classification of risks can also be classified and grouped into the three above-named risk categories. For instance, Ni (2012) believes transport-oriented PPP is very complex, with legal risks, political risks, economic risks, commercial risks, project risks, and partnership risks (risk of information asymmetry). A PPP project may involve more risks than conventional public procurement, and these risks are generated on the level of project, market, and country.
Risk allocation strategies
Risk sharing is a key characteristic that distinguishes PPP from traditional procurement projects, in which most of the risks reside with the public sector partners (Reeves 2013). Both the public and private sectors are comprised of rational, economic-minded people. As long as the risks outweigh the benefits, neither side will enter into a partnership. However, if each partner can transfer some of the inherent risks onto the other partner, thus sharing the risks, then a partnership can be built. The goal of risk sharing is to encourage both sides to work closely together. Any deviation from their common targets or commitments will ultimately penalize both parties. Clearly, then, the transfer of risk can have an economic benefit. For instance, Ball, Heafey, and King (2003) noted that risk transfer accounted for 60 per cent of the total cost savings of PFI projects in the UK. Conversely, the allocation of risk must take into consideration the degree of risk affordability. Ke, Wang, and Chan (2013) have shown that the misallocation of risks (by comparing the preferred and actual allocation of risks) caused the failure of PPP projects in China. In addition, these risks cannot be transferred to customers, as doing so would not be in the public interest (Marques and Berg 2011). Therefore, effective risk transfer is seen as a critical element in a successful PPP.
Albalate et al. (2015) examined the distribution of the various risks in motorway concession PPP contracts in many countries (Spain, France, Chile, and Latin American countries). Albalate concluded that construction risks should be transferred to the private partners, while how to allocate the other risks may depend on factors such as macroeconomic and institutional stability, past experiences, and the abiding regulation environment. Athias (2013) focused on the demand risk. This study finds that there is a lower degree of matching with consumer preferences over time when the public sector bears this risk. If the private sector does not have to worry about demand risk, they have no real incentive to improve quality and thereby increase the number of consumers. This finding suggests that the allocation of demand risk is a function of and based upon the likelihood of customer preferences changing.
From the above studies, we cannot identify all the risks. Nor can we identify all the allocation risk strategies. The evidence, however, indicates that the risks (and the transfer of those risks) may be affected by many factors, such as the type of project, the market environment, and the institutions of the country. Risk sharing is a critical element for a successful PPP. Institutional stability, regulation environment, and types of project will affect the allocation of risks.
Drivers of using PPP: what gives rise to the adoption of PPP strategy?
The initiatives to use PPP are mainly those of lower associated costs, lower risks, lower budget deficits, higher efficiency, and greater effectiveness and equity. PPP is an effective way to provide much-needed and expensive infrastructure, public services, and urban renewal, without increasing public sector borrowing (Willems and Dooren 2016). These basic explanations provide a foundation for discovering the drivers of PPP adoption. During more than 30 years of development, what other factors have led to the innovation and diffusion of PPP adoption policies? Another question is, why do some countries or regions prefer this policy? For instance, the UK, Australia, Portugal, Spain, and the Netherlands have all experienced steady growth in the number of signed PPP projects, while Scandinavian countries and some central and eastern European countries have shown a far greater reluctance to move towards the use of PPPs (Petersen 2010). Many cases and studies can answer these questions. We constructed a co-occurrence matrix of the drivers of PPP adoption, as listed in the 186 articles. We then used the UCINET software to visualize these drivers (see Figure 9).
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Figure 9. The drivers of PPP adoption
In Figure 9, the main drivers include risk transfer (frequency = 4), fiscal problems (frequency = 5), earlier experience (frequency = 2), and cost reduction (frequency = 4). As mentioned by Bovaird (2004), there have been several reasons behind the adoption of PPP, and these reasons are often country-specific. For instance, in the UK, Glaister (1999) listed several motives for PPP adoption. The motivations include the transfer of risk, the advantage of using market tests of economic viability in place of bureaucratic planning, the fact that is for the political authorities to meddle in PPP, and the measurement of service quality by a public audit process. In the USA, except for the fiscal pressures, Wang and Zhao (2014) showed that the probability of using PPPs in highway tolling projects during the period from 1985 to 2010 was significantly affected by factors such as traffic demands, liberal political ideology, state PPP legislation, and earlier experiences of PPP adoption in the relevant state and elsewhere. Current political conditions are also important for decisions to use PPPs. Girth (2014) concluded that the US municipalities with higher degrees of political-administrative autonomy are more likely to enter partnerships. Albalate et al. (2013) also used the US water industry as an example. This study found that the risk of recovering investment costs and the ratio of government wages to private sector wages are positively related to private involvement. The former (risk of recovering investment costs) means that the higher possibility there is of private partners recovering their costs, the greater the degree of private participation in the PPP will be (estimate potential risk and investment returns). The latter (ratio of government wages to private sector wages) means that the level of private sector participation will be higher when the salaries in the public sector are higher than the salaries in the private sectors (reduce costs). In Portugal, Simoes, Cavalho, and Marques (2013) examined the existence of economies of scope in local public services (waste, water, and wastewater treatment). This study found that economies of scope favour higher degrees of aggregation of service (e.g. integration of design with project build, execution, and maintenance), thus making the use of PPPs more favourable. In Canada, the wave of PPP use from the 1990s onwards was mainly motivated by the evidence of being able to build high-quality public infrastructure without adding to public debt. Another motivation was that the administrative processes were not meeting policymakers’ expectations (Siemiatycki 2015). However, in Denmark, a lack of regulations is seen as the reason why PPP use has not gotten off the ground (Petersen 2010).
The above-named experiences were all in developed countries. We also made some findings related to developing countries. For instance, Yang, Hou, and Wang (2013) compared PPP development in four transition countries (China, Russia, Poland, and Ukraine) and eight advanced economies (including the USA, UK, and Germany). Advanced economies are more favourable in terms of providing institutional guarantees and with regard to government credibility than are transition countries. Zhang (2015) analysed the reasons why 333 Chinese cities (cities at prefecture level and above) adopted PPP projects. The adoption of PPP projects in the focal cities was affected by neighbouring cities’ adoption of PPPs, provincial pressure, peer pressure, and expert influence. Besides China, Russia is also actively pursuing PPP deployment in many sectors, mostly in transportation and urban infrastructure projects. Many factors have contributed to the rapid expansion of PPP use in Russia. Those factors include the government’s broad treatment of the partnership meaning (PPP includes all types of collaboration between public and private sectors), a lack of standards and consistency in PPP approval procedures, excessive government financial support to partnerships, and several other factors (Mouraviev and Kakabadse 2014). The nature of PPP in Russia departs from the partnerships in western academic literature and government practices. This departure may induce a greater risk of policy failure. Thus, the potential additional risk may explain why scholars and practitioners in developing countries should spend more time conducting theoretical research work on PPPs. The answers found in various countries and sectors could have implications for some governments in their determination of whether or not to adopt the use of PPPs. The main reasons of adoption PPP in developed countries focus on fiscal pressure, efficiency, and political environment. While, using PPP in developing countries is mainly affected by higher-level government’s pressure, peer pressure, and government’s broad treatment of PPP.
Performance and its influence factors: what are the outcomes of PPP?
PPP performance
Ultimately, both scholarly and practical interest in PPP is driven by whether or not the adoption of PPP use will have a win–win balance between the public and private sectors. However, evaluating PPP performance is not easy. One of the reasons for this difficulty is that many actors are involved in PPP, and each actor may have a different definition of success. However, our review of the preliminary literatures about performance was interesting. Generally speaking, the performance of PPP can be distinguished between a ‘narrow’ and ‘broad’ concept (Jeffares, Sullivan, and Bovaird 2013; Gestel et al. 2014). The narrow concept of PPP performance focuses on the achievement of particular outcomes and targets as set out in the PPP agreement. The main consideration centres around what level of return on the investment the PPP has made. We know that PPP can encompass at least five families of arrangements, including (1) institutional cooperation for joint production, (2) long-term infrastructure contracts, (3) public policy networks, (4) civil society and community development, and (5) urban renewal economic development (Hodge and Greve 2007). If PPP is all about the infrastructure design, build, finance, and operation/maintenance (DBFO/DBFM), then the narrow concept refers to that project’s performance. For instance, the construction period, construction quality, construction cost, contract disputes, overall efficiency, and other factors can be used to test the project’s performance (Ke, Wang, and Chan 2013). In addition, the internal rate of return and net present value may also be used to measure project performance (Vecchi, Hellowell, and Longo 2010).
The broad concept of PPP performance focuses on a wider range of contents and scopes. This measurement of success takes into consideration the project’s wider benefits for the partner organizations, citizens, and service users (beyond the project or programme itself). ‘Value for Money (VfM)’ belongs to this ‘broad’ performance assessment. VfM is seen as a prerequisite and pervasive rationale for establishing PPP (Santandrea, Bailey, and Giorgino 2016). For instance, London City’s government has said that proposed London underground PPP contracts will only go ahead if the projects can show that they will provide superior VfM (Shaoul 2002). Normally, VfM methodology will include cost and the availability of finance, risk allocation, time and budget, flexibility, and so on. Although VfM provides a reasonable basis upon which to assess performance, VfM can be a nebulous concept (Hodge and Greve 2010; Reeves 2015). For instance, the inflexibility of a contract could be seen as a positive factor, because demand changes are often a significant cause of cost overruns. However, inflexibility is also a major constraint. PPP can be seen as a network for governance and/or a governance scheme (Teisman and Klijn 2002; Farah and Rizvi 2007). Therefore, PPP performance should be viewed from the perspective of network performance. For instance, some published studies consider two outcome dimensions to evaluate PPP performance by using more than one criterion. These two dimensions are content outcomes (focus on the final result, i.e. innovative character and cost efficiency) and process outcomes (focus on the quality of the decision-making processes, i.e. managerial effort and support of the stakeholders involved) (Steijn, Klijn, and Edelenbos 2011). These outcome indicators include stakeholder involvement and democratic anchorage, which have been emphasized by the governance network theory. These distinctions are also in keeping with the fact that PPP performance should be evaluated from an overall process perspective. PPP performance should be viewed as a network performance. Focusing on the outcome indicators not only evaluates the PPP from a ‘technical’ point of view, such as cost, efficiency, but also assesses ‘governance’ questions, such as engagement and accountability.
Factors for a successful PPP
Evaluating PPP performance is an important job for PPP initiators. A thorough evaluation can help identify what should be noted in the implementation of PPP (by policymakers and practitioners). Various arguments have been put forward about why some PPP projects would be more effective than others. We constructed a co-occurrence matrix of the factors for a successful PPP, as listed in the 186 studied articles. We then used the UCINET software to visualize the co-occurrence of these factors (see Figure 10). A large number of factors lead to a successful PPP, such as contract management (frequency = 3), process management (frequency = 3), management strategies (frequency = 3), organizational forms (frequency = 3), and political support (frequency = 2). We would delineate them as follows:
Published online:
12 April 2017![]({"type":"image","src":"/na101/home/literatum/publisher/tandf/journals/content/rpxm20/2018/rpxm20.v020.i02/14719037.2017.1313445/20210330/images/medium/rpxm_a_1313445_f0010_oc.jpg"})
Figure 10. Factors for success
Some Netherlands scholars believed the arguments relating to what leads to a successful PPP come from two theoretical perspectives. One perspective favours the organizational forms that stem from the resource dependency theory and contract theory. The second perspective favours management strategies that are rooted in the governance network theory (Kort, Verweij, and Klijn 2016; Steijn, Klijn, and Edelenbos 2011). The organizational forms of PPP can be a spectrum ranging from strongly contractual arrangements (e.g. standard contract and transactional/relational contracts) to informal arrangements, such as loosely formed consortiums. This body of literature emphasizes competition and monitoring. For instance, the important advantage of standard contracts is that they encourage competition by enlarging the field of potential bidders and therefore lower transaction costs (Van, Den. Hurk and Verhoest 2016). Management strategies focus on process management (i.e. dialogue, negotiation, and leadership) and the strategies’ implementation during the collaboration period (Edelenbos and Klijn 2009). Which of the above is more important for PPP performance? Steijn, Klijn, and Edelenbos (2011) argued that network management strategies have a greater impact on the outcome of PPP, and that the organizational form of the partnership has relatively little impact. Klijn and Koppenjan (2016) also found that contract features (e.g. the contract’s flexibility, complexity, and whether or not renegotiation is possible) do not necessarily secure good performance and innovation. In other words, a good contract is probably a necessary or at least an important condition of PPP, but not a sufficient condition to ensure PPP performance. However, Kort, Verweij, and Klijn (2016) use the same data as Steijn, Klijn, and Edelenbos (2011), but Kort et al. then use a different method to show that combinations of organizational forms and network management strategies can produce a good PPP performance. This result means that the relationships between organizational forms and management strategies may not be ‘either/or,’ but ‘and.’ For example, Murphy (2008) argues that the success of PPP rests on three variables, namely (1) the nature of the project itself, (2) a government that exercises effective project and contract management skills, and (3) clear and effective risk allocation. Of these three variables, contract management and risk allocation are required to design an effective organization form, and government exercise is about process management.
In addition, other published studies also discuss how to create an effective PPP. The suggestions include the following: developing local human resources to take on management responsibilities (Mistarihi, Hutchings, and Shacklock 2013), taking on the project management techniques (e.g. deciding upon, announcing, and defending communication strategies) during periods when there was general community agreement over the direction of the project plan (Roberts and Siemiatycki 2015), interaction between the partners (Koppenjan 2005), maintaining political support for the partnership (especially when there is a government leadership change) (Girth 2014; Velotti, Botti, and Vesci 2012), encouraging public involvement and deliberation (Boyer, Van, Slyke, and Rogers 2016; Chen, Hubbard, and Liao 2013), fair competition, the use of private skills and expertise (Silvestre and Araujo 2012), the use of standardized tender documents and procurement procedures (Carpintero and Siemiatycki 2015), setting fair public and private investment levels and using institutional and operational knowledge (Bland and Overton 2016), and strong management capacity (Andrews and Entwistle 2015).
The above findings represent the worldwide experience with PPP policy reforms over the past number of decades. The effect of these experiences has been to reduce the uncertainties and risks in PPP reforms going forward. However, it would be wrong to think of the above as the best experiences that can simply be transplanted to other countries and regions. The success of an experience depends on a specific context, and this context will not automatically match other projects with different sets of actors, preferences, and capabilities (Koppenjan and Enserink 2009). The role of these findings is to offer an academic framework which explicitly demonstrates PPP performance all around the world. Various factors may affect PPP performance. It is necessary to construct a comprehensive framework to show which factors may impact PPP performance in given conditions.
Discussion and conclusion
In the discipline of PA, PPPs have already been discussed by many scholars. This study contributes to the expansion of those PA researchers’ debates and viewpoints. The systematic review of the past articles relating to PPP has given us the opportunity to understand the state of the art and judge the research trends. Our review of 186 published papers was further synthesized and grouped into four major issues in PA area. Those issues are: (1) PPP can be seen as a complex and durable cooperation between public and private sectors. (2) Risks in PPP may originate from project level, market level, and country level and should be allocated appropriately with full consideration of institutional environment, regulation mechanisms, and project types. (3) The enabling factors for the adoption of PPP in developed countries focus on fiscal pressure, efficiency, and political environment, while in developing countries focus on a higher-level government’s pressure and a broad treatment of PPP. (4) PPP performance should be seen as a network performance.
According to our results, we could discover that the topics, perspective, and methodology of PPP research in PA discipline are different from other disciplines. Firstly, the research topics in the PA discipline focus on the above four issues. While, the Construction Management and Economics disciplines focus on investment environment, procurement, economics viability, financial package, and the boundaries of organizations (Ke et al. 2009). Secondly, the studies of above four issues in the PA discipline are more a kind of macro-level partnership perspective. This perspective focuses on how to enable the cooperating agents build a partnership in order to achieve public policy goals. While, other disciplines focus on the projects’ performance and governance, which are a micro-level analysis. Thirdly, the studies of above four issues in the PA discipline focus on empirical methodology. Some papers use qualitative methods to do case studies, and some other papers use quantitative methods to explore and test the relationship among variables. While, other disciplines use methodology of normative analysis or combining cases to study PPP.
The above issues could be further discussed in the PA discipline. PA concerns about values, behaviour, and institution (Wright 2015). The discussion of these three problems helps highlight PPP issues within PA discipline in the future.
Value-how to evaluate PPP values. PPP can be seen as a network. The network performance can stand for its values (e.g. cost, efficiency, equity, quality, and satisfaction). Provan and Milward (1995) have proposed a preliminary and classic theory of network effectiveness. Their network effectiveness is based on balancing multiple stakeholder values (principals, agents, and clients). However, this network effectiveness does not consider the value conflicts between different levels of government. For example, a central government may care about whether PPP projects help to achieve sustainability development, while local governments may concern whether PPP projects relieve their financial burden and boost economic growth. Thus, how to identify, understand, and resolve the network actors’ value conflicts, and how to integrate the existing network effectiveness model and the existing PPP performance method require careful consideration.
Behaviour-how to establish actors’ behaviour principles to reduce the risk of cooperation failure. Existing behaviour research mainly focuses on motivation of using PPP and PPP risk management strategies. However, the behaviour is variable. We could not always be able to predict how an actor behaves. Thus, it is necessary to establish universal principles of behaviour to help understand and predict how actors under certain circumstances are often likely to behave (Wright 2015). For example, how to construct a negotiation procedure during the cooperation process to reduce conflicts, and how to establish a renegotiation principle to avoid opportunistic behaviour.
Institution-how to make PPP successful in transition economies in terms of institutions. Western countries have mature institutions and practices relating to PPP. Meanwhile, in some transition economies (e.g. Russian and Chinese), PPPs are being promoted in many sectors. For example, PPP has become a very popular term in China because the Chinese central government pushed the adoption of PPPs in the delivery of infrastructure and public services since 2014. However, local governments in these developing countries do not have a professional, independent, and fair legal environment. Specifically, how do these formal institutions affect the adoption and success of PPP? Besides, the informal institutions (e.g. culture and custom) may also have impact, so the interaction of the formal and informal institutions should also be studied.
This study has provided a general overview of the PPP studies in the PA field, and has formed a platform for PPP scholars to continue to build from. Understanding of PPP in this field may enable PPP policymakers and practitioners to cooperate better. Besides, lists of the journals and highly cited authors may be useful for practitioners to read and consult.
| Journal | No. of articles | % | |
|---|---|---|---|
| 1 | Public Money & Management | 25 | 13.441 |
| 2 | Public Performance & Management Review | 14 | 7.527 |
| 3 | Public Management Review | 11 | 5.914 |
| 4 | Local Government Studies | 10 | 5.376 |
| 5 | Public Administration Review | 9 | 4.839 |
| 6 | Public Administration | 8 | 4.301 |
| 7 | Canadian Public Administration | 8 | 4.301 |
| 8 | International Review of Administrative Sciences | 8 | 4.301 |
| 9 | Environment and Planning C: Government and Policy | 8 | 4.301 |
| 10 | Public Administration and Development | 7 | 3.763 |
| 11 | Australian Journal of Public Administration | 5 | 2.688 |
| 12 | Lex Local-Journal of Local Self-Government | 5 | 2.688 |
| 13 | Policy and Politics | 5 | 2.688 |
| 14 | International Public Management Journal | 4 | 2.151 |
| 15 | Policy and Society | 4 | 2.151 |
| 16 | Journal of Comparative Policy Analysis | 3 | 1.613 |
| 17 | Transylvanian Review of Administrative Sciences | 3 | 1.613 |
| 18 | Administration & Society | 2 | 1.075 |
| 19 | Policy Sciences | 2 | 1.075 |
| 20 | Policy Study | 2 | 1.075 |
| 21 | Studies in American Political Development | 2 | 1.075 |
| 22 | Social Policy Administration | 2 | 1.075 |
Only journals that published at least two papers about PPP were selected.
Related Research Data
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
1. http://www.cpppc.org/zh/pppjb/4167.jhtml
2. Some journals do not display keywords. Thus, we read their abstracts and full papers, and we summarized the abstracts for them.
3. We have grouped some keywords into a single, larger classification. For example, ‘value for money, benefit, and cost’ are all grouped into the classification of ‘performance.’