IDEAS home Printed from https://ideas.repec.org/a/eee/trapol/v99y2020icp430-438.html
   My bibliography  Save this article

Do public-private partnerships perform better? A comparative analysis of costs for additional work and reasons for contract changes in Dutch transport infrastructure projects

Author

Listed:
  • Verweij, Stefan
  • Meerkerk, Ingmar van

Abstract

An important reason to procure transport infrastructure projects through Public-Private Partnerships (PPPs) is that they are expected to have a better cost performance compared to regular infrastructure procurement. However, the evidence for this is weak. Therefore, this article analyzes the cost performance (in terms of costs for additional work caused by contract changes during project implementation) of Design-Build-Finance-Maintain (DBFM) projects versus Design and Construct (D&C) projects. DBFM is considered a type of PPP and D&C is not. Data were collected on 58 projects from the Project Database of Rijkswaterstaat and analyzed using non-parametric tests. The results show that DBFM-projects have a significantly better cost performance than D&C-projects, especially concerning costs for additional work due to technical necessities. Because scope adjustments are the main reason for contract changes across the D&C- and DBFM-projects, cost performance can be improved particularly by curbing scope adjustments costs.

Suggested Citation

  • Verweij, Stefan & Meerkerk, Ingmar van, 2020. "Do public-private partnerships perform better? A comparative analysis of costs for additional work and reasons for contract changes in Dutch transport infrastructure projects," Transport Policy, Elsevier, vol. 99(C), pages 430-438.
    • Handle: RePEc:eee:trapol:v:99:y:2020:i:c:p:430-438
    DOI: 10.1016/j.tranpol.2020.09.012
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0967070X20308933
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.tranpol.2020.09.012?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Erik Hans Klijn & Joop Koppenjan, 2016. "The impact of contract characteristics on the performance of public–private partnerships (PPPs)," Public Money & Management, Taylor & Francis Journals, vol. 36(6), pages 455-462, September.
    2. Martimort, David & Pouyet, Jerome, 2008. "To build or not to build: Normative and positive theories of public-private partnerships," International Journal of Industrial Organization, Elsevier, vol. 26(2), pages 393-411, March.
    3. Cantarelli, C.C. & van Wee, B. & Molin, E.J.E. & Flyvbjerg, B., 2012. "Different cost performance: different determinants?," Transport Policy, Elsevier, vol. 22(C), pages 88-95.
    4. Rianne Warsen & José Nederhand & Erik Hans Klijn & Sanne Grotenbreg & Joop Koppenjan, 2018. "What makes public-private partnerships work? Survey research into the outcomes and the quality of cooperation in PPPs," Public Management Review, Taylor & Francis Journals, vol. 20(8), pages 1165-1185, August.
    5. Graeme A. Hodge, 2010. "Reviewing Public–Private Partnerships: Some Thoughts on Evaluation," Chapters, in: Graeme A. Hodge & Carsten Greve & Anthony E. Boardman (ed.), International Handbook on Public–Private Partnerships, chapter 5, Edward Elgar Publishing.
    6. Zhenhua Chen & Nobuhiko Daito & Jonathan L. Gifford, 2016. "Data Review of Transportation Infrastructure Public--Private Partnership: A Meta-Analysis," Transport Reviews, Taylor & Francis Journals, vol. 36(2), pages 228-250, March.
    7. André De Palma & Luc E. Leruth & Guillaume Prunier, 2012. "Towards a Principal-Agent Based Typology of Risks in Public-Private Partnerships," Reflets et perspectives de la vie économique, De Boeck Université, vol. 0(2), pages 57-73.
    8. I. D. Cox & J. P. Morris & J. H. Rogerson & G. E. Jared, 1999. "A quantitative study of post contract award design changes in construction," Construction Management and Economics, Taylor & Francis Journals, vol. 17(4), pages 427-439.
    9. Verweij, Stefan & van Meerkerk, Ingmar & Korthagen, Iris A., 2015. "Reasons for contract changes in implementing Dutch transportation infrastructure projects: An empirical exploration," Transport Policy, Elsevier, vol. 37(C), pages 195-202.
    10. Jan Whittington, 2012. "When to Partner for Public Infrastructure?," Journal of the American Planning Association, Taylor & Francis Journals, vol. 78(3), pages 269-285.
    11. Luc Leruth, 2012. "Public-Private Cooperation in Infrastructure Development: A Principal-Agent Story of Contingent Liabilities, Fiscal Risks, and Other (Un)pleasant Surprises," Networks and Spatial Economics, Springer, vol. 12(2), pages 223-237, June.
    12. Jean-Etienne de Bettignies & Thomas W. Ross, 2004. "The Economics of Public-Private Partnerships," Canadian Public Policy, University of Toronto Press, vol. 30(2), pages 135-154, June.
    13. Demirag, Istemi & Khadaroo, Iqbal & Stapleton, Pamela & Stevenson, Caral, 2011. "Risks and the financing of PPP: Perspectives from the financiers," The British Accounting Review, Elsevier, vol. 43(4), pages 294-310.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mochon, Pablo & Mochon, Asuncion & Saez, Yago, 2022. "Combinatorial versus sequential auctions to allocate PPP highway projects," Transport Policy, Elsevier, vol. 117(C), pages 23-39.
    2. Xiao, Zengqi & Lam, Jasmine Siu Lee, 2022. "Effects of project-specific government involvement actions on the attractiveness of port public-private partnerships among private investors," Transport Policy, Elsevier, vol. 125(C), pages 59-69.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Besley, Timothy & Ghatak, Maitreesh, 2017. "Public–private partnerships for the provision of public goods: Theory and an application to NGOs," Research in Economics, Elsevier, vol. 71(2), pages 356-371.
    2. Chen, Zhenhua & Daito, Nobuhiko & Gifford, Jonathon L., 2014. "Do State Fiscal Constraints Affect Implementation of Highway Public-Private Partnerships? A Panel Fixed Logit Assessment," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 53(2).
    3. Cavalieri, Marina & Cristaudo, Rossana & Guccio, Calogero, 2019. "On the magnitude of cost overruns throughout the project life-cycle: An assessment for the Italian transport infrastructure projects," Transport Policy, Elsevier, vol. 79(C), pages 21-36.
    4. Nannan Wang & Xiaoyan Chen & Guobin Wu, 2019. "Public Private Partnerships, a Value for Money Solution for Clean Coal District Heating Operations," Sustainability, MDPI, vol. 11(8), pages 1-18, April.
    5. Dejan Makovšek & Marian Moszoro, 2018. "Risk pricing inefficiency in public–private partnerships," Transport Reviews, Taylor & Francis Journals, vol. 38(3), pages 298-321, May.
    6. Dejan Makovšek & Adrian Bridge, 2021. "Procurement Choices and Infrastructure Costs," NBER Chapters, in: Economic Analysis and Infrastructure Investment, pages 277-327, National Bureau of Economic Research, Inc.
    7. Carlos Alberto Barreto Nieto, 2011. "Modelo de asociación pública-privada: un enfoque de teoría de contratos," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 13(25), pages 249-274, July-Dece.
    8. Eva I. Hoppe & Patrick W. Schmitz, 2013. "Public-private partnerships versus traditional procurement: Innovation incentives and information gathering," RAND Journal of Economics, RAND Corporation, vol. 44(1), pages 56-74, March.
    9. Jean-Etienne de Bettignies & Thomas W. Ross, 2010. "The Economics of Public–Private Partnerships: Some Theoretical Contributions," Chapters, in: Graeme A. Hodge & Carsten Greve & Anthony E. Boardman (ed.), International Handbook on Public–Private Partnerships, chapter 7, Edward Elgar Publishing.
    10. Arshad Ali Javed & Patrick T.I. Lam & Albert P.C. Chan, 2014. "Change negotiation in public-private partnership projects through output specifications: an experimental approach based on game theory," Construction Management and Economics, Taylor & Francis Journals, vol. 32(4), pages 323-348, April.
    11. Verweij, Stefan & van Meerkerk, Ingmar & Korthagen, Iris A., 2015. "Reasons for contract changes in implementing Dutch transportation infrastructure projects: An empirical exploration," Transport Policy, Elsevier, vol. 37(C), pages 195-202.
    12. Love, Peter E.D. & Zhou, Jingyang & Edwards, David J. & Irani, Zahir & Sing, Chun-Pong, 2017. "Off the rails: The cost performance of infrastructure rail projects," Transportation Research Part A: Policy and Practice, Elsevier, vol. 99(C), pages 14-29.
    13. Chong, Uven & Hopkins, Omar, 2016. "An international experience on the evolution of road costs during the project life cycle," Transport Policy, Elsevier, vol. 48(C), pages 60-66.
    14. Roehrich, Jens K. & Lewis, Michael A. & George, Gerard, 2014. "Are public–private partnerships a healthy option? A systematic literature review," Social Science & Medicine, Elsevier, vol. 113(C), pages 110-119.
    15. Yingying Ma & Zhuojun Liu & Shuguang Shen, 2020. "Public-Private or Master-Servant? Examining the Implementation of the Serious Disease Insurance Scheme in China," IJERPH, MDPI, vol. 17(5), pages 1-15, February.
    16. Zhe Zhang & Ming Jia & Difang Wan, 2012. "When does a partner’s reputation impact cooperation effects in partnerships?," Asia Pacific Journal of Management, Springer, vol. 29(3), pages 547-571, September.
    17. repec:bla:annpce:v:89:y:2018:i:1:p:25-48 is not listed on IDEAS
    18. Love, Peter E.D. & Ahiaga-Dagbui, Dominic D. & Irani, Zahir, 2016. "Cost overruns in transportation infrastructure projects: Sowing the seeds for a probabilistic theory of causation," Transportation Research Part A: Policy and Practice, Elsevier, vol. 92(C), pages 184-194.
    19. Mengyuan Cheng & Guoliang Liu & Yongshun Xu & Ming Chi, 2021. "Enhancing Trust Between PPP Partners: The Role of Contractual Functions and Information Transparency," SAGE Open, , vol. 11(3), pages 21582440211, August.
    20. Nur, Suardi & Burton, Bruce & Bergmann, Ariel, 2023. "Evidence on optimal risk allocation models for Indonesian geothermal projects under PPP contracts," Utilities Policy, Elsevier, vol. 81(C).
    21. Chen, Zhenhua & Daito, Nobuhiko & Gifford, Jonathan L., 2017. "Socioeconomic impacts of transportation public-private partnerships: A dynamic CGE assessment," Transport Policy, Elsevier, vol. 58(C), pages 80-87.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:trapol:v:99:y:2020:i:c:p:430-438. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/30473/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.