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Are we planning investments to fail? Consequences of traffic forecast effects on PPP contracts: Portuguese and Brazilian cases

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  • Oliveira, Matheus
  • Ribeiro, Joana
  • Macário, Rosário

Abstract

Under Public-Private Partnership (PPP) regulatory framework, governments have found an opportunity window for infrastructure investments beyond the traditional procurement limitations. Nevertheless, success may not be the only destination on this road. Decades after the first initiatives using this procurement method, thousands of failures, renegotiations and adjustments have been pointing pitfalls in PPPs (Macário, Ribeiro, & Costa, 2015). Developed in a complex network of stakeholders, PPPs depend on an efficient tendering process to build a sustainable project. However, decision at such critical moment relies on complex environment of expectations, negotiation and behaviour. Hence, in order to develop the discussion on stakeholders' behaviour, this work presents a game theory model for the effect of financial support on stakeholders' risk appetite during the tendering process. Following the mathematical exposition, the proposed framework is demonstrated in the PPPs experience in Portugal and compared to the incentives' structure in Brazil.

Suggested Citation

  • Oliveira, Matheus & Ribeiro, Joana & Macário, Rosário, 2016. "Are we planning investments to fail? Consequences of traffic forecast effects on PPP contracts: Portuguese and Brazilian cases," Research in Transportation Economics, Elsevier, vol. 59(C), pages 167-174.
    • Handle: RePEc:eee:retrec:v:59:y:2016:i:c:p:167-174
    DOI: 10.1016/j.retrec.2016.04.003
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    Cited by:

    1. Carlos Oliveira Cruz & Joaquim Miranda Sarmento, 2020. "Traffic forecast inaccuracy in transportation: a literature review of roads and railways projects," Transportation, Springer, vol. 47(4), pages 1571-1606, August.
    2. Cruz, Carlos Oliveira & Sarmento, Joaquim Miranda, 2018. "The price of project finance loans for highways," Research in Transportation Economics, Elsevier, vol. 70(C), pages 161-172.
    3. Daniel, Albalate & Germà, Bel & Albert, Gragera, 2019. "Politics, risk, and white elephants in infrastructure PPPs," Utilities Policy, Elsevier, vol. 58(C), pages 158-165.
    4. Zhang, Ailian & Pan, Mengmeng & Liu, Bai & Cao, Xianbin, 2023. "Do high-speed rail (HSR) station and airport affect local government debt risk? Evidence from China," Transport Policy, Elsevier, vol. 134(C), pages 41-51.
    5. Herawati Zetha Rahman & Perdana Miraj & Azaria Andreas, 2019. "Exploring Public–Private Partnership Scheme in Operation and Maintenance Stage of Railway Project," Sustainability, MDPI, vol. 11(22), pages 1-13, November.

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