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When might a project company break up? The perspective of risk-bearing capacity

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  • Chen-Yu Chang

Abstract

Public-private partnerships (PPPs) have developed into a mainstream alternative procurement solution for the provision of public services. The aim is to explore a crucial but hitherto ignored issue in the study of PPPs: at what point a project company might break up. The project company's two-stage break-up in the National Physical Laboratory PFI project inspired this research in which a formal model is developed to demonstrate that contract break-up decisions can be plausibly explained through quasi-rent changes. This finding brings to the foreground the importance of taking into account risk-bearing capability in the design of project governance. How to achieve a level of risk-bearing capacity through the optimal use of financial, organizational and contractual means is a research area worthy of future exploration.

Suggested Citation

  • Chen-Yu Chang, 2013. "When might a project company break up? The perspective of risk-bearing capacity," Construction Management and Economics, Taylor & Francis Journals, vol. 31(12), pages 1186-1198, December.
    • Handle: RePEc:taf:conmgt:v:31:y:2013:i:12:p:1186-1198
    DOI: 10.1080/01446193.2013.868015
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    1. Ian Alexander & Timothy Irwin, 1997. "Price Caps, Rate-of-Return Regulation, and the Cost of Capital," World Bank Publications - Reports 11575, The World Bank Group.
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    Cited by:

    1. Ceric Anita & Ivic Ivona, 2021. "Network analysis of interconnections between theoretical concepts associated with principal–agent theory concerning construction projects," Organization, Technology and Management in Construction, Sciendo, vol. 13(1), pages 2450-2464, January.

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