Early Termination Mechanism of Public–Private Partnership Transportation Projects with Government Guarantee
Publication: Journal of Infrastructure Systems
Volume 28, Issue 4
Abstract
Governments typically provide some form of guarantee to ensure the financial viability of public–private partnership (PPP) projects confronted with traffic demand shortage. Although a number of studies have analyzed the problems associated with the optimal level of guarantee and the pricing mechanism of early termination initiated by private companies or governments, most have ignored the mechanism of early termination of PPP projects with a government guarantee. This paper proposes a government decision-making framework that enables the evaluation of optimal circumstances for the early termination of PPP transportation projects where the actual revenue falls below the minimum revenue guaranteed by the government. In particular, this study analyzes how the government can determine ex-ante whether and when to grant a private company the right to early termination as well as determine ex-post whether to voluntarily terminate the project by considering the tradeoff between social benefit and cost resulting from such a termination. This study sheds light on how to develop an early termination mechanism that can be used in conjunction with the government guarantee to deal with demand risk in PPP transportation projects.
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Data Availability Statement
All of the data and models that support the findings of this study are available from the corresponding author upon reasonable request.
Acknowledgments
This work was supported by the National Natural Science Foundation of China (Grant No. 71672017).
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Published In
Journal of Infrastructure Systems
Volume 28 • Issue 4 • December 2022
Copyright
© 2022 American Society of Civil Engineers.
History
Received: Nov 26, 2020
Accepted: Jun 30, 2022
Published online: Sep 14, 2022
Published in print: Dec 1, 2022
Discussion open until: Feb 14, 2023
ASCE Technical Topics:
- Business management
- Construction engineering
- Construction industry
- Construction management
- Financial management
- Government
- Infrastructure
- Organizations
- Practice and Profession
- Private sector
- Project management
- Public private partnership
- Revenues
- Social factors
- Traffic engineering
- Traffic management
- Transportation engineering
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