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Investment Analysis in Public-Private-Partnership Projects: Any Common Ground for Public and Private Investors?

Listed author(s):
  • Pekka Leviakangas

    (University of Oulu, Finland)

  • Pekka Kess

    (University of Oulu, Finland)

  • Jaakko Kujala

    (University of Oulu, Finland)

Registered author(s):

    Purpose (mandatory): The purpose of this paper is to show analytically that cash flow –based project analysis of private investors and cost-benefit analysis of the public sector conflict in many points in public-private partnership projects. Design/methodology/approach (mandatory): The method of analysis is based on cash flow accounting and cost benefit analysis. A single-project company is used as a demonstrating case. The flows of cash (private investors) and flows of costs and benefits (public investors) are integrated in a single analytical framework. Findings (mandatory): The findings show that the investors’ (public vs. private) social, economic and financial targets are not necessarily coinciding. Prospecting of common ground and win-win situations becomes a crucial success factor for any public-private partnership project. Research limitations/implications (if applicable): The current research on public-private partnerships is much focused on project delivery methods, contractual issues and discussion on the need of public-financed comparator. This paper will clarify the real problems faced. Practical implications (if applicable): The paper will set some guidelines how to find the common ground for successful PPPs. It also points out potential conflict areas. Social implications (if applicable): The paper in itself contains an element of socio-economic appraisal of projects that will increase the wealth and well-being of people. Originality/value (mandatory): The originality of the paper lies on its generic approach to single-project valuation problem, combining the both sides of valuation aspects: private and public investors.

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    This chapter was published in: Pekka Leviakangas & Pekka Kess & Jaakko Kujala , , pages S2_65-78, 2013.
    This item is provided by ToKnowPress in its series Diversity, Technology, and Innovation for Operational Competitiveness: Proceedings of the 2013 International Conference on Technology Innovation and Industrial Management with number s2_65-78.
    Handle: RePEc:tkp:tiim13:s2_65-78
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    1. Bitsch, Florian & Buchner, Axel & Kaserer, Christoph, 2010. "Risk, return and cash flow characteristics of infrastructure fund investments," EIB Papers 4/2010, European Investment Bank, Economics Department.
    2. Uppenberg, Kristian & Strauss, Hubert & Wagenvoort, Rien, 2011. "Financing infrastructure," EIB Economic Surveys, European Investment Bank, number 3.
    3. Eduardo Engel & Ronald Fischer & Alexander Galetovic, 2010. "The economics of infrastructure finance: Public-private partnerships versus public provision," Documentos de Trabajo 276, Centro de Economía Aplicada, Universidad de Chile.
    4. Richard A. Brealey & Ian A. Cooper & Michel A. Habib, 1996. "Using Project Finance To Fund Infrastructure Investments," Journal of Applied Corporate Finance, Morgan Stanley, vol. 9(3), pages 25-39.
    5. Wagenvoort, Rien & de Nicola, Carlo & Kappeler, Andreas, 2010. "Infrastructure finance in Europe: Composition, evolution and crisis impact," EIB Papers 1/2010, European Investment Bank, Economics Department.
    6. Inderst, Georg, 2010. "Infrastructure as an asset class," EIB Papers 3/2010, European Investment Bank, Economics Department.
    7. Sónia Araújo & Douglas Sutherland, 2010. "Public-Private Partnerships and Investment in Infrastructure," OECD Economics Department Working Papers 803, OECD Publishing.
    8. Paul L. Posner & Shin Kue Ryu & Ann Tkachenko, 2009. "Public-private partnerships: The relevance of budgeting," OECD Journal on Budgeting, OECD Publishing, vol. 9(1), pages 1-26.
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