Shang, L (2019) Achieving public agency goals in public-private partnerships using innovative payment mechanisms. PhD thesis, University of Washington, USA.
Abstract
Public-Private Partnership (PPP), as an innovative project delivery method, is increasingly used due to its advantages in relieving the capital pressures on project development and involving more life-cycle considerations in project early planning stage. Under a PPP concession contract, the achievement of public agencies' goals can be facilitated through linking the contractor's compensation, referred to as payment mechanism, to the realization of stated project performance and achievement of government goals. Payment mechanism lies at the heart of PPP contracts. A good design of the payment mechanism should consider public agencies' goals in the project, allocate risks appropriately to stakeholders, and assure satisfactory performance through providing reasonable compensation to the private developer. While the procedures and recommendations for the design of payment mechanisms have been widely discussed in publications, guidance on how to link the achievement of project objectives with the concessionaire's payment is relatively scarce. As such, the concessionaire would be getting compensation without being subject to scrutiny over the achievement of project objectives. In this case, the public agency's goals (e.g.improve roadway safety and availability) may not be fully achieved through PPP. Additionally, the design of payment mechanisms in the existing PPP projects heavily relies on the subjective judgment of decision makers, which is hard to guarantee the trustability of the payment mechanism. To deal with the these deficiencies as well as to provide a systematic understanding of the design of payment mechanism, this study undertook an in depth literature review on the design of payment mechanisms, conducted a content analysis of several guidance documents regarding payment design from different countries, analyzed the payment-related contractual terms of more than 89 PPP projects and conducted questionnaire surveys to PPP experts from both academia and industry. Based on such works, a practical explanatory framework was developed to assist public owners in designing proper payment mechanisms for transport PPPs. The framework helps in (1) identifying the key considerations, (2) prioritizing project goals, and (3) deciding proper payment schemes and payment type(s). This study further proposed a Stackelberg game theory-based model to determine the optimal amount of payments assigned to each goal. The model searches for solutions that maximize the overall project performance for the sake of social welfare while simultaneously maximize the return for the sake of private investment. A case study based on a real PPP project was discussed to validate the effectiveness of the proposed model. Public agencies would use the framework as a reference to revisit and improve their design of payment mechanisms for their PPP project. Also, the solution provided by the model revealed that the optimal payment mechanism structure could be reached such that it would satisfy the owner's requirements for the overall project performance while optimizing the project total payments to the contractor.
| Item Type: | Thesis (Doctoral) |
|---|---|
| Thesis advisor: | Abdel Aziz, A |
| Uncontrolled Keywords: | concession; contractual term; delivery method; government; investment; partnership; payment; project delivery; public-private partnership; safety; developer; owner; stakeholder; content analysis; project performance; case study; questionnaire survey |
| Index terms: | questionnaire, documents, contractual term, agency, concession contract, publication, guarantee, concessionaire, payment type, literature review, content analysis, public owner, survey, game theory, project performance, academia, effectiveness, compensation, project development, heart, private investment, payment mechanism, project delivery, case study, prioritizing, judgment, partnership, delivery method, owner |
| Subjects: | medical science and clinical practice, economic analysis, contract type, research dissemination and communication, sociology, decision analysis, educational institutions, partnership management, delivery method, professional development, project management theory and practice, performance management, contract structure, project delivery, decision models, data analysis and analytics, dispute resolution, data collection methods |
| Topics: | Health and Safety, Project Management, Risk Management, Procurement, Legal Issues, Quality Management, Education, Business Strategy, Research Practice, Information Management, Stakeholder Management, Contract Administration |
| Descriptive scope: | 5 PCTEA |
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