Critical Risks Inherent to the Transfer Phase of Public–Private Partnership Water Projects in China
Publication: Journal of Management in Engineering
Volume 38, Issue 3
Abstract
Public–private partnership (PPP) infrastructure projects progress through separate phases, with each phase subject to unique risks, thereby requiring a phase-based strategy for managing risks. To date, most research on PPP risk has emphasized phases, with an obvious neglect of the final, transfer phase (TP) of PPP projects, in which the project ownership reverts to government. This study identified and evaluated critical risk categories of the TP, using China’s PPP water sector as the context of analysis. A two-stage approach was adopted, including both qualitative and quantitative research methods. Seven critical transfer risk categories (CTRCs) were identified, namely overhaul risks, contract risks, posttransfer operation risks, residual value risks, political risks, information risks, and succeeding operator risks, of which three are unique to the TP. Expert recommendations were presented for the facilitation of a smooth transfer of water PPPs in China. The findings of this study contribute to the body of knowledge in PPP risk management, and the specialized research approach employed may be utilized in similar exploratory studies.
Get full access to this article
View all available purchase options and get full access to this article.
Data Availability Statement
All data, models, and code generated or used during the study appear in the published article.
Acknowledgments
This study is supported by the Regional Innovation Cooperation Programs of Sichuan province, China (2021YFQ0050).
References
Abu-Bader, S. H. 2011. Using statistical methods in social science research: With a complete SPSS guide. Oxford: Oxford University Press.
Alkaf, N., and A. Karim. 2011. “Risk allocation in public-private partnership (PPP) project: A review on risk factors.” Int. J. Sustainable Constr. Eng. Technol. 2 (2): 8–16.
Ameyaw, E. E., and A. P. C. Chan. 2013. “Identifying public-private partnership (PPP) risks in managing water supply projects in Ghana.” J. Facil. Manage. 11 (2): 152–182. https://doi.org/10.1108/14725961311314651.
Babatunde, S. O., A. Opawole, and O. E. Akinsiku. 2012. “Critical success factors in public-private partnership (PPP) on infrastructure delivery in Nigeria.” J. Facil. Manage. 10 (3): 212–225. https://doi.org/10.1108/14725961211246018.
Bao, F., A. P. C. Chan, C. Chen, and A. Darko. 2018a. “Review of public–private partnership literature from a project lifecycle perspective.” J. Infrastruct. Syst. 24 (3): 04018008. https://doi.org/10.1061/(ASCE)IS.1943-555X.0000424.
Bao, F., C. Chen, A. P. C. Chan, I. Martek, and A. Shrestha. 2019. “Dynamic framework transfer model for public–private partnerships: Lessons from a China water sector case study.” Eng. Constr. Archit. Manage. 26 (7): 1218–1239. https://doi.org/10.1108/ECAM-01-2018-0028.
Bao, F., I. Martek, C. Chen, A. P. C. Chan, and Y. Yu. 2018b. “Lifecycle performance measurement of public-private partnerships: A case study in China’s water sector.” Int. J. Strategic Prop. Manage. 22 (6): 516–531. https://doi.org/10.3846/ijspm.2018.6048.
Chan, A. P. C., A. Darko, and E. E. Ameyaw. 2017. “Strategies for promoting green building technologies adoption in the construction industry—An international study.” Sustainability 9 (6): 969. https://doi.org/10.3390/su9060969.
Chan, A. P. C., P. T. I. Lam, D. W. M. Chan, E. Cheung, and Y. Ke. 2009. “Drivers for adopting public private partnerships—Empirical comparison between China and Hong Kong Special Administrative Region.” J. Constr. Eng. Manage. 135 (11): 1115–1124. https://doi.org/10.1061/(ASCE)CO.1943-7862.0000088.
Chan, A. P. C., P. T. I. Lam, D. W. M. Chan, E. Cheung, and Y. Ke. 2010. “Potential obstacles to successful implementation of public-private partnerships in Beijing and the Hong Kong Special Administrative Region.” J. Manage. Eng. 26 (1): 30–40. https://doi.org/10.1061/(ASCE)0742-597X(2010)26:1(30).
Chan, A. P. C., P. T. I. Lam, Y. Wen, E. E. Ameyaw, S. Q. Wang, and Y. J. Ke. 2015. “Cross-sectional analysis of critical risk factors for PPP water projects in China.” J. Infrastruct. Syst. 21 (1): 04014031. https://doi.org/10.1061/(ASCE)IS.1943-555X.0000214.
Chan, A. P. C., J. F. Y. Yeung, C. C. P. Yu, S. Q. Wang, and Y. Ke. 2011. “Empirical study of risk assessment and allocation of public-private partnership projects in China.” J. Manage. Eng. 27 (3): 136–148. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000049.
Chen, C. 2009. “Can the pilot BOT Project provide a template for future projects? A case study of the Chengdu No. 6 Water Plant B Project.” Int. J. Project Manage. 27 (6): 573–583. https://doi.org/10.1016/j.ijproman.2008.10.006.
Cheng, Z., Y. Ke, J. Lin, Z. Yang, and J. Cai. 2016. “Spatio-temporal dynamics of public private partnership projects in China.” Int. J. Project Manage. 34 (7): 1242–1251. https://doi.org/10.1016/j.ijproman.2016.05.006.
Cheung, E., and A. P. C. Chan. 2011. “Risk factors of public-private partnership projects in China: Comparison between the water, power, and transportation sectors.” J. Urban Plann. Dev. 137 (4): 409–415. https://doi.org/10.1061/(ASCE)UP.1943-5444.0000086.
Chou, J.-S., and D. Pramudawardhani. 2015. “Cross-country comparisons of key drivers, critical success factors and risk allocation for public-private partnership projects.” Int. J. Project Manage. 33 (5): 1136–1150. https://doi.org/10.1016/j.ijproman.2014.12.003.
De Schepper, S., M. Dooms, and E. Haezendonck. 2014. “Stakeholder dynamics and responsibilities in Public–Private Partnerships: A mixed experience.” Int. J. Project Manage. 32 (7): 1210–1222. https://doi.org/10.1016/j.ijproman.2014.01.006.
Grimsey, D. L., and K. Mervyn. 2002. “Evaluating the risks of public private partnerships for infrastructure projects.” Int. J. Project Manage. 20 (2): 107–118. https://doi.org/10.1016/S0263-7863(00)00040-5.
Hwang, B.-G., X. Zhao, and M. J. S. Gay. 2013. “Public private partnership projects in Singapore: Factors, critical risks and preferred risk allocation from the perspective of contractors.” Int. J. Project Manage. 31 (3): 424–433. https://doi.org/10.1016/j.ijproman.2012.08.003.
Jin, X.-H. 2012. “Allocating risks in public-private partnerships using a transaction cost economic approach: A case study.” Australas. J. Constr. Econ. Build. 9 (1): 19. https://doi.org/10.5130/AJCEB.v9i1.3011.
Ke, Y., S. Wang, A. P. C. Chan, and P. T. I. Lam. 2010. “Preferred risk allocation in China’s public–private partnership (PPP) projects.” Int. J. Project Manage. 28 (5): 482–492. https://doi.org/10.1016/j.ijproman.2009.08.007.
Li, B., A. Akintoye, P. J. Edwards, and C. Hardcastle. 2005. “The allocation of risk in PPP/PFI construction projects in the UK.” Int. J. Project Manage. 23 (1): 25–35. https://doi.org/10.1016/j.ijproman.2004.04.006.
Likert, R. 1932. “A technique for the measurement of attitudes.” Arch. Psychol. 22: 140.
Lima, S., A. Brochado, and R. C. Marques. 2021. “Public-private partnerships in the water sector: A review.” Util. Policy 69 (Apr): 101182. https://doi.org/10.1016/j.jup.2021.101182.
Liu, T., Y. Wang, and S. Wilkinson. 2016. “Identifying critical factors affecting the effectiveness and efficiency of tendering processes in Public–Private Partnerships (PPPs): A comparative analysis of Australia and China.” Int. J. Project. Manage. 34 (4): 701–716. https://doi.org/10.1016/j.ijproman.2016.01.004.
Ng, A., and M. Loosemore. 2007. “Risk allocation in the private provision of public infrastructure.” Int. J. Project Manage. 25 (1): 66–76. https://doi.org/10.1016/j.ijproman.2006.06.005.
Osei-Kyei, R., A. P. C. Chan, A. A. Javed, and E. E. Ameyaw. 2017. “Critical success criteria for public-private partnership projects: International experts’ opinion.” Int. J. Strategic Prop. Manage. 21 (1): 87–100. https://doi.org/10.3846/1648715X.2016.1246388.
Rindfleisch, A., and J. B. Heide. 1997. “Transaction cost analysis: Past, present, and future applications.” J. Marketing 61 (4): 30–54. https://doi.org/10.1177/002224299706100403.
Robinson, H. S., and J. Scott. 2009. “Service delivery and performance monitoring in PFI/PPP projects.” Construct. Manage. Econ. 27 (2): 181–197. https://doi.org/10.1080/01446190802614163.
Rwelamila, P. D., P. Fewings, and C. Henjewele. 2015. “Addressing the missing link in PPP projects: What constitutes the public?” J. Manage. Eng. 31 (5): 04014085. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000330.
Saurí, D., J. Olcina, and A. Rico. 2007. “The march towards privatisation? Urban water supply and sanitation in Spain.” J. Comp. Soc. Welfare 23 (2): 131–139. https://doi.org/10.1080/17486830701494616.
Shrestha, A., T.-K. Chan, A. A. Aibinu, C. Chen, and I. Martek. 2017. “Risks in PPP water projects in China: Perspective of local governments.” J. Constr. Eng. Manage. 143 (7): 05017006. https://doi.org/10.1061/(ASCE)CO.1943-7862.0001313.
Smith, N. J., T. Merna, and P. Jobling. 2006. Managing risk in construction projects. Oxford: Blackwell.
Van Ham, H., and J. Koppenjan. 2001. “Building public-private partnerships: Assessing and managing risks in port development.” Public Manage. Rev. 3 (4): 593–616. https://doi.org/10.1080/14616670110070622.
Wahdan, M. Y. 1995. An analysis framework for PPP. Vancouver, BC, Canada: Univ. of British Columbia.
Wang, Y., and J. Liu. 2015. “Evaluation of the excess revenue sharing ratio in PPP projects using principal–agent models.” Int. J. Project Manage. 33 (6): 1317–1324. https://doi.org/10.1016/j.ijproman.2015.03.002.
Wibowo, A., and S. Mohamed. 2010. “Risk criticality and allocation in privatised water supply projects in Indonesia.” Int. J. Project Manage. 28 (5): 504–513. https://doi.org/10.1016/j.ijproman.2009.08.003.
Williamson, O. E. 1999. “Public and private bureaucracies: A transaction cost economics perspective.” J. Law Econ. Organ. 15 (1): 306–342. https://doi.org/10.1093/jleo/15.1.306.
World Bank. 2016. The APMG PPP certification program guide. Washington, DC: World Bank Publications.
Xu, Y., Y. Lu, A. P. C. Chan, M. J. Skibniewski, and J. F. Y. Yeung. 2012a. “A computerized risk evaluation model for public-private partnership (PPP) projects and its application.” Int. J. Strategic Prop. Manage. 16 (3): 277–297. https://doi.org/10.3846/1648715X.2012.686928.
Xu, Y., C. Sun, M. J. Skibniewski, A. P. C. Chan, J. F. Y. Yeung, and H. Cheng. 2012b. “System dynamics (SD)-based concession pricing model for PPP highway projects.” Int. J. Project Manage. 30 (2): 240–251. https://doi.org/10.1016/j.ijproman.2011.06.001.
Xu, Y., Y. Yang, A. P. C. Chan, J. F. Y. Yeung, and H. Cheng. 2011. “Identification and allocation of risks associated with PPP water projects in China.” Int. J. Strategic Prop. Manage. 15 (3): 275–294. https://doi.org/10.3846/1648715X.2011.617867.
Xu, Y., J. F. Y. Yeung, A. P. C. Chan, D. W. M. Chan, S. Q. Wang, and Y. Ke. 2010. “Developing a risk assessment model for PPP projects in China—A fuzzy synthetic evaluation approach.” Autom. Constr. 19 (7): 929–943. https://doi.org/10.1016/j.autcon.2010.06.006.
Yescombe, E. R. 2007. Public private partnerships: Principles of policy and finance. Oxford: Butterworth-Heinemann.
Yuan, J., A. P. C. Chan, B. Xia, M. J. Skibniewski, W. Xiong, and C. Ji. 2016. “Cumulative effects on the change of residual value in PPP projects: A comparative case study.” J. Infrastruct. Syst. 22 (2): 05015006. https://doi.org/10.1061/(ASCE)IS.1943-555X.0000272.
Yuan, J., A. P. C. Chan, W. Xiong, M. J. Skibniewski, and Q. Li. 2015. “Perception of residual value risk in public private partnership projects: Critical review.” J. Manage. Eng. 31 (3): 04014041. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000256.
Zhang, S., A. P. C. Chan, Y. Feng, H. Duan, and Y. Ke. 2016. “Critical review on PPP Research—A search from the Chinese and International Journals.” Int. J. Project Manage. 34 (4): 597–612. https://doi.org/10.1016/j.ijproman.2016.02.008.
Zhang, S., Y. Gao, Z. Feng, and W. Sun. 2015. “PPP application in infrastructure development in China: Institutional analysis and implications.” Int. J. Project Manage. 33 (3): 497–509. https://doi.org/10.1016/j.ijproman.2014.06.006.
Zhang, W. R., S. Q. Wang, R. L. K. Tiong, S. K. Ting, and D. Ashley. 1998. “Risk management of Shanghai’s privately financed Yan’an Donglu tunnels.” Eng. Constr. Archit. Manage. 5 (4): 399. https://doi.org/10.1108/eb021092.
Zhong, L., A. P. J. Mol, and T. Fu. 2008. “Public-private partnerships in China’s urban water sector.” Environ. Manage. 41 (6): 863–877. https://doi.org/10.1007/s00267-008-9070-1.
Zhou, L., T. Xianglai, K. Jiaojiao, S. Perera, and C. Udeaja. 2013. “PPP infrastructure development in China: Challenges and future trends.” In Proc., PPP13: PPP Int. Conf. in Preston. Newcastle upon Tyne, UK: Northumbria Univ.
Information & Authors
Information
Published In
Journal of Management in Engineering
Volume 38 • Issue 3 • May 2022
Copyright
© 2022 American Society of Civil Engineers.
History
Received: Aug 24, 2021
Accepted: Nov 29, 2021
Published online: Jan 31, 2022
Published in print: May 1, 2022
Discussion open until: Jun 30, 2022
Authors
Metrics & Citations
Metrics
Citations
Download citation
If you have the appropriate software installed, you can download article citation data to the citation manager of your choice. Simply select your manager software from the list below and click Download.
Cited by
- Kerim Koc, Role of Shapley Additive Explanations and Resampling Algorithms for Contract Failure Prediction of Public–Private Partnership Projects, Journal of Management in Engineering, 10.1061/JMENEA.MEENG-5492, 39, 5, (2023).
- Yubo Guo, Xiaoli Wang, Linlin Liu, Chuan Chen, Igor Martek, Xiaowei Luo, Dynamic Assessment of the Transfer Risks in China’s Public–Private Partnership Water Projects: A System Dynamics Approach, Journal of Infrastructure Systems, 10.1061/JITSE4.ISENG-2302, 29, 4, (2023).
- Fengyu Bao, Chuan Chen, Igor Martek, Albert P. C. Chan, Weiling Jiang, Factors Underpinning the Successful Return of Public–Private Partnership Projects to Public Authority: Assessing the Critical Success Factors of the Transfer Phase of Chinese Water Projects, Journal of Infrastructure Systems, 10.1061/JITSE4.ISENG-2084, 29, 2, (2023).
- Xian Zheng, Rui Li, Yilong Han, Rui Xue, Ju Bai, The Dilemma of Operator Selection in Urban Rail Transit PPP Project Operations: A LASSO Approach, Journal of Construction Engineering and Management, 10.1061/JCEMD4.COENG-12378, 149, 7, (2023).
- Fengyu Bao, Igor Martek, Albert P.C. Chan, Chuan Chen, Yang Yang, Heng Yu, Assessing the public-private partnership handover: Experience from China's water sector, Utilities Policy, 10.1016/j.jup.2022.101469, 80, (101469), (2023).
- Weiling Jiang, Qianying Yang, Jie Jiang, Igor Martek, Fanjie Gao, Operational Risk Management of Public–Private Partnership Infrastructure Projects: A Bibliometric Literature Review, Buildings, 10.3390/buildings12111905, 12, 11, (1905), (2022).