Outcome of Financial Conflicts in the Operation Phase of Public–Private Partnership Contracts
Publication: Journal of Construction Engineering and Management
Volume 147, Issue 6
Abstract
Deviation from expected revenues is a common occurrence in the operational phase of public–private partnership (PPP) contracts. In these cases, the financial dispute must be resolved by key stakeholders such as the government, private investors, and end users; otherwise, the project will terminate early. Despite numerous reports of financial disputes, the literature lacks a comprehensive model for analyzing stakeholder strategies and examining the outcomes of PPP projects. In order to fill this research gap, this paper uses a three-player non-zero-sum game to extract the potential results of interactions among them. Then, using the concepts of game theory, the expected payoff players are calculated in the best individual strategy and cooperation terms, and the optimal outcomes are presented. The proposed model, on the one hand, examines the impacts of early termination, including the compensation mechanism of the government, the investment value of the private investor, and alternative services for users. On the other hand, it measures the expected payoff of players from participation in the project rescue. Applying this model can support strategic renegotiations and provide a fair and optimal structure to readjust contract variables (concession period, tolls, and government subsidy), which will facilitate and expedite the decision-making process in resolving financial conflicts.
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Data Availability Statement
All data, models, and code generated or used during the study appear in the published article.
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Published In
Journal of Construction Engineering and Management
Volume 147 • Issue 6 • June 2021
Copyright
© 2021 American Society of Civil Engineers.
History
Received: Jan 4, 2020
Accepted: Oct 22, 2020
Published online: Apr 9, 2021
Published in print: Jun 1, 2021
Discussion open until: Sep 9, 2021
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