Owusu-Manu, D G; Kukah, A S; Edwards, D J; Pärn, E A; El-Gohary, H and Aigbavboa, C (2018) Causal relationships of moral hazard and adverse selection of Ghanaian public-private-partnership (PPP) construction projects. Journal of Engineering, Design and Technology, 16(3), pp. 439-460. ISSN 1726-0531
Abstract
Purpose: The purpose of this paper was to assess the causal relationship(s) between moral hazard and adverse selection of public–private partnership (PPP) construction projects. Structural equation modelling (SEM) was used to explore the cause and effect relationship between moral hazard and adverse selection problems in PPP construction projects in Ghana. The study produced a framework to predict, estimate and depict the complex causal relationships (i.e. the directionality) between moral hazard and adverse selection. Design/methodology/approach: To test the proposed framework, a quantitative methodology was used, in which, data were collected using research questionnaires that targeted a sample of 280 PPP stakeholders in Ghana. In total, 210 useable questionnaires were retrieved, representing a response rate of 75 per cent. Findings: The interrelationships between the eight causes and the nine effects of moral hazard and adverse selection were established using the model. The tested framework showed the degree of association and isolation of the unobserved variables on the indicator factors. Confirmatory factor analysis (CFA) was used to evaluate the fit of items to latent constructs. Because the fit of each model was good and the item loadings were adequate, it was assumed that the indicators of the different variables factors were fitting. Furthermore, a diagnostic fit analysis was conducted using the robust maximum likelihood method to test the statistical significance of the parameter estimates. Practical implications: This novel research is one of the few studies investigating the causal relationships between moral hazard and adverse selection of PPP construction projects. The research concluded with future studies that seek to validate the model developed in other countries and/or other industries. Originality/value: The research findings will serve as a guide for construction stakeholders in the PPP sector on the causes and effects of adverse selection and moral hazard and how to mitigate these.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | adverse selection; causal relationships; moral hazard; public–private partnership; structural equation modelling |
| Index terms: | Ghana, partnership, adverse selection, future study, loading, estimate, confirmatory factor analysis, structural equation modelling, moral hazard, questionnaire, construction project, methodology |
| Subjects: | research design and methodology, data collection methods, financial and cost management, construction operations, research methods, financial risk, production management, Geography, partnership management, statistical analysis |
| Topics: | Stakeholder Management, Research Practice, Geographical Context, Project Management, Cost Management, Site Management |
| Descriptive scope: | 4 PCTA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here