Badawy, M; El-Sheikh, R and Hamdy, K (2025) Sensitivity analysis of key factors influencing concession period estimation in PPP wastewater treatment projects: A system dynamics approach. Construction Economics and Building, 25(3-4), pp. 65-89. ISSN 2204-9029
Abstract
Population growth, combined with a lack of adequate financing, has led to the need for innovative infrastructure financing solutions in developing countries. The mechanism for dealing with these challenges has been, to a certain degree, made viable through the establishment of public–private partnerships (PPPs). This study aims to develop a system dynamics (SD) model using AnyLogic to determine the optimal concession period for wastewater treatment PPPs. The model incorporates construction costs, discount rates, construction duration, and pre-construction expenses to provide an integrative mode of decision-making. This model's application is demonstrated through a case study of the New Cairo Wastewater Treatment Plant, where the optimum concession period turned out to be 19 years. Sensitivity analysis showed that construction costs and discount rates are the most significant factors impacting the estimation of the concession period. The benefits of the SD approach were further validated through comparison with Monte Carlo simulations and agent-based modeling regarding capturing dynamic feedback mechanisms. The paper emphasizes the essence of adaptive governance and flexible contract structures that can help mitigate financial risks and build stakeholder confidence. The study presents practical recommendations to policymakers and practitioners.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | concession period; public–private partnership; risk-decoupled net present value; system dynamics; wastewater treatment |
| Index terms: | duration, construction cost, partnership, pre-construction, Monte Carlo simulation, agent-based modelling, estimation, net present value, contract structure, governance, concession period, case study, financing, system dynamics, population, decision-making, practitioner, discount rates, infrastructure financing, developing country, Cairo, sensitivity analysis |
| Subjects: | contractual arrangements, economic analysis, practitioner, environmental hazards, demography, Geography, development economics, financial risk, financial and cost management, project delivery, modelling and simulation, computing systems, data collection methods, business, partnership management, project controls, decision analysis, contract structure |
| Topics: | Risk Management, Sustainability, Procurement, Project Management, Geographical Context, Time Control, Digital Applications, Urban Studies, International Construction, Roles and Professions, Stakeholder Management, Governance, Business Strategy, Cost Management, Research Practice |
| Descriptive scope: | 5 PCTEA |
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