The Dilemma of Operator Selection in Urban Rail Transit PPP Project Operations: A LASSO Approach
Publication: Journal of Construction Engineering and Management
Volume 149, Issue 7
Abstract
Public-private partnerships (PPPs) have become an important option for financing urban rail transit (URT) projects. To ensure the effective operation of URT projects and better serve the public, governments must select suitable operators as part of private-sector consortiums to achieve successful PPP implementations, but they often face a dilemma in choosing between local URT groups and nonlocal operators. In this study, we examine the key factors that determine governments’ operator choices for URT PPP (URT3P) projects with a two-stage approach. A four-dimensional (4D) indicator system containing 20 factors was first developed, and least absolute shrinkage and selection operator (LASSO) regression was applied to analyze one of the largest regional URT data sets in China. Five key factors that significantly influence operator selection are identified, including project operation duration, government-business relationships, private-sector entity organization type, private-sector entity ownership type, and whether the private-sector entity owns an operating firm. This study contributes to the body of knowledge on URT3P project management, and this systematic approach can be used by local governments to select suitable operating partners in similar exploratory contexts.
Get full access to this article
View all available purchase options and get full access to this article.
Data Availability Statement
Some or all data, models, or codes that support the findings of this study are available from the corresponding author upon reasonable request.
Acknowledgments
This material is based in part upon work supported by the National Natural Science Foundation of China under Grant Nos. 72001160 and 71901220 and the Fundamental Research Funds for the Central Universities under Grant Nos. 22120200364 and 2722023BY007. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of the funding agencies.
References
Ahmadabadi, A. A., and G. Heravi. 2019. “The effect of critical success factors on project success in public-private partnership projects: A case study of highway projects in Iran.” Transp. Policy 73 (Jan): 152–161. https://doi.org/10.1016/j.tranpol.2018.07.004.
Aladag, H., and Z. Isik. 2020. “The effect of stakeholder-associated risks in mega-engineering projects: A case study of a PPP airport project.” IEEE Trans. Eng. Manage. 67 (1): 174–186. https://doi.org/10.1109/TEM.2018.2866269.
Amini, S., R. Elmore, Ö. Öztekin, and J. Strauss. 2021. “Can machines learn capital structure dynamics?” J. Corporate Finance 70 (Oct): 102073. https://doi.org/10.1016/j.jcorpfin.2021.102073.
Bagherzadeh, M., S. Markovic, and M. Bogers. 2021. “Managing open innovation: A project-level perspective.” IEEE Trans. Eng. Manage. 68 (1): 301–316. https://doi.org/10.1109/TEM.2019.2949714.
Bajari, P., and L. Ye. 2003. “Deciding between competition and collusion.” Rev. Econ. Stat. 85 (4): 971–989. https://doi.org/10.1162/003465303772815871.
Bao, F., I. Martek, C. Chen, Q. Wu, and A. P. Chan. 2022. “Critical risks inherent to the transfer phase of public–private partnership water projects in China.” J. Manage. Eng. 38 (3): 04022006. https://doi.org/10.1061/(ASCE)ME.1943-5479.0001024.
Burke, R., and I. Demirag. 2019. “Risk management by SPV partners in toll road public private partnerships.” Public Manage. Rev. 21 (5): 711–731. https://doi.org/10.1080/14719037.2018.1523450.
Cai, J. N., S. Li, and H. B. Cai. 2019. “Empirical analysis of capital structure determinants in infrastructure projects under public-private partnerships.” J. Constr. Eng. Manage. 145 (5): 04019032. https://doi.org/10.1061/(ASCE)CO.1943-7862.0001658.
Carpintero, S., and O. H. Petersen. 2014. “PPP projects in transport: Evidence from light rail projects in Spain.” Public Money Manage. 34 (1): 43–50. https://doi.org/10.1080/09540962.2014.865935.
Carpintero, S., and O. H. Petersen. 2015. “Bundling and unbundling in public-private partnerships: Implications for risk sharing in urban transport projects.” Project Manage. J. 46 (4): 35–46. https://doi.org/10.1002/pmj.21508.
Carpintero, S., and M. Siemiatycki. 2016. “The politics of delivering light rail transit projects through public-private partnerships in Spain: A case study approach.” Transp. Policy 49 (Jul): 159–167. https://doi.org/10.1016/j.tranpol.2016.05.001.
Casady, C., D. Flannery, R. R. Geddes, D. Palcic, and E. Reeves. 2019. “Understanding PPP tendering periods in Canada: A duration analysis.” Public Perform. Manage. Rev. 42 (6): 1259–1278. https://doi.org/10.1080/15309576.2019.1597739.
Casady, C. B. 2021. “Examining the institutional drivers of public-private partnership (PPP) market performance: A fuzzy set qualitative comparative analysis (fsQCA).” Public Manage. Rev. 23 (7): 981–1005. https://doi.org/10.1080/14719037.2019.1708439.
Castelblanco, G., J. Guevara, H. Mesa, and A. Sanchez. 2021. “Semantic network analysis of literature on public-private partnerships.” J. Constr. Eng. Manage. 147 (5): 04021033. https://doi.org/10.1061/(ASCE)CO.1943-7862.0002041.
Chan, A. P., R. Osei-Kyei, Y. Hu, and L. E. Yun. 2018. “A fuzzy model for assessing the risk exposure of procuring infrastructure mega-projects through public-private partnership: The case of Hong Kong-Zhuhai-Macao Bridge.” Front. Eng. Manage. 5 (1): 64–77. https://doi.org/10.15302/J-FEM-2018067.
Chan, A. P. C., P. T. I. Lam, D. W. M. Chan, E. Cheung, and Y. Ke. 2010. “Critical success factors for PPPs in infrastructure developments: Chinese perspective.” J. Constr. Eng. Manage. 136 (5): 484–494. https://doi.org/10.1061/(ASCE)CO.1943-7862.0000152.
Chang, Z., and S.-Y. Phang. 2017. “Urban rail transit PPPs: Lessons from East Asian cities.” Transp. Res. Part A Policy Pract. 105 (Nov): 106–122. https://doi.org/10.1016/j.tra.2017.08.015.
Charpin, R., E. E. Powell, and A. V. Roth. 2021. “The influence of perceived host country political risk on foreign subunits’ supplier development strategies.” J. Oper. Manage. 67 (3): 329–359. https://doi.org/10.1002/joom.1127.
Chen, H. Q., S. X. Zeng, B. Yu, and H. Xue. 2020. “Complementarity in open innovation and corporate strategy: The moderating effect of ownership and location strategies.” IEEE Trans. Eng. Manage. 67 (3): 754–768. https://doi.org/10.1109/TEM.2018.2889804.
Cherkos, F. D., and K. N. Jha. 2021. “Drivers of road sector public-private partnership adoption in new and inexperienced markets.” J. Constr. Eng. Manage. 147 (3): 04020186. https://doi.org/10.1061/(ASCE)CO.1943-7862.0002004.
CPPPC (China Public Private Partnership Center). 2021. “Policy research and information collection platform related to public-private partnerships.” Accessed December 31, 2021. https://www.cpppc.org/.
Cui, C. Y., Y. Liu, A. Hope, and J. P. Wang. 2018. “Review of studies on the public private partnerships (PPP) for infrastructure projects.” Int. J. Project Manage. 36 (5): 773–794. https://doi.org/10.1016/j.ijproman.2018.03.004.
Cui, H. L., S. Rajagopalan, and A. R. Ward. 2020. “Predicting product return volume using machine learning methods.” Eur. J. Oper. Res. 281 (3): 612–627. https://doi.org/10.1016/j.ejor.2019.05.046.
De Biasio, A., and A. Murray. 2017. “The social network of the UK PPP secondary equity market–returns and competition in an emerging market.” Construct. Manage. Econ. 35 (8–9): 468–481. https://doi.org/10.1080/01446193.2017.1324998.
Deng, X. P., S. P. Low, Q. M. Li, and X. B. Zhao. 2014. “Developing competitive advantages in political risk management for international construction enterprises.” J. Constr. Eng. Manage. 140 (9): 04014040. https://doi.org/10.1061/(ASCE)CO.1943-7862.0000836.
Fan, G., X. L. Wang, and L. W. Zhang. 2001. Annual report 2000: Marketization index for China’s provinces. Beijing: Economic Science Press.
Finch, W. H., and M. E. H. Finch. 2016. “Regularization methods for fitting linear models with small sample sizes: Fitting the LASSO estimator using R.” Pract. Assessment Res. Eval. 21 (7): 1–13. https://doi.org/10.7275/jr3d-cq04.
Friedman, J., T. Hastie, and R. Tibshirani. 2010. “Regularization paths for generalized linear models via coordinate descent.” J. Stat. Software 33 (1): 1–22. https://doi.org/10.18637/jss.v033.i01.
Ghemawat, P. 2001. “Distance still matters: The hard reality of global expansion.” Harv. Bus. Rev. 79 (8): 137–162.
Guevara, J., J. Salazar, and M. J. Garvin. 2020. “Social network analysis of road PPP equity markets in Canada, Chile, and the United States.” J. Manage. Eng. 36 (5): 04020058. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000830.
Hong, S. 2016. “When does a public–private partnership (PPP) lead to inefficient cost management? Evidence from South Korea’s urban rail system.” Public Money Manage. 36 (6): 447–454. https://doi.org/10.1080/09540962.2016.1206755.
Hu, Y. P., J. P. Wang, and H. L. Sun. 2018. “Optimisation of pricing and subsidies for urban rail transit PPP projects based on satisfactions of main stakeholders.” J. Environ. Prot. Ecol. 19 (1): 435–449.
Huang, W., B. Shuai, Y. Sun, Y. Wang, and E. Antwi. 2018. “Using entropy-TOPSIS method to evaluate urban rail transit system operation performance: The China case.” Transp. Res. Part A Policy Pract. 111 (May): 292–303. https://doi.org/10.1016/j.tra.2018.03.025.
Hueskes, M., K. Verhoest, and T. Block. 2017. “Governing public-private partnerships for sustainability: An analysis of procurement and governance practices of PPP infrastructure projects.” Int. J. Project Manage. 35 (6): 1184–1195. https://doi.org/10.1016/j.ijproman.2017.02.020.
James, G., D. Witten, T. Hastie, and R. Tibshirani. 2013. An introduction to statistical learning. New York: Springer.
Janeba, E., and M. Todtenhaupt. 2018. “Fiscal competition and public debt.” J. Public Econ. 168 (Dec): 47–61. https://doi.org/10.1016/j.jpubeco.2018.10.001.
Jia, L., D. Y. Lei, Y. G. Zhang, Q. F. Zeng, and J. Wang. 2017. “The model and algorithm of distributing cooperation profits among operators of urban rail transit under PPP pattern.” Cluster Comput. J. Network Software Tools Appl. 20 (4): 3023–3036. https://doi.org/10.1007/s10586-017-0973-6.
Ke, Y. J., W. Y. Hao, H. P. Ding, and Y. Y. Wang. 2017. “Factors influencing the private involvement in urban rail public-private partnership projects in China.” Constr. Econ. Build. 17 (1): 90–106. https://doi.org/10.5130/AJCEB.v17i1.5105.
Kim, Y. W., and T. L. Brown. 2012. “The importance of contract design.” Public Admin. Rev. 72 (5): 687–696. https://doi.org/10.1111/j.1540-6210.2012.02537.x.
Kushwaha, A. K., P. Kumar, and A. K. Kar. 2021. “What impacts customer experience for B2B enterprises on using AI-enabled chatbots? Insights from big data analytics.” Ind. Mark. Manage. 98 (Oct): 207–221. https://doi.org/10.1016/j.indmarman.2021.08.011.
Lang, C. 2018. “Regularization methods for finding the relaxation time spectra of linear polydisperse polymer melts.” Rheol. Acta 57 (4): 339–347. https://doi.org/10.1007/s00397-018-1078-8.
Li, X. J., and P. E. D. Love. 2020. “State-of-the-art review of urban rail transit public-private partnerships.” J. Infrastruct. Syst. 26 (3): 03120002. https://doi.org/10.1061/(ASCE)IS.1943-555X.0000552.
Li, X. J., and P. E. D. Love. 2022. “Procuring urban rail transit infrastructure by integrating land value capture and public-private partnerships: Learning from the cities of Delhi and Hong Kong.” Cities 122 (Mar): 103545. https://doi.org/10.1016/j.cities.2021.103545.
Liao, C. 2016. “The economic effect analysis of PPP model in urban rail transit—Illustrated by the London Underground and Beijing Metro Line 4.” In Proc., Int. Conf. on Industrial Economics System and Industrial Security Engineering (IEIS). New York: IEEE.
Liu, B., J. Q. Shen, Z. J. Meng, and F. H. Sun. 2018. “A survey on the establishment and application of social capital partner selection system for the new profit PPP project.” KSCE J. Civ. Eng. 22 (10): 3726–3737. https://doi.org/10.1007/s12205-018-0489-5.
Liu, T., and S. Wilkinson. 2013. “Can the pilot public-private partnerships project be applied in future urban rail development?: A case study of Beijing Metro Line 4 project.” Built Environ. Project Asset Manage. 3 (2): 250–263. https://doi.org/10.1108/BEPAM-04-2012-0014.
Martinez, A., C. Schmuck, S. C. Pereverzyev Jr., C. Pirker, and M. Haltmeier. 2018. “A machine learning framework for customer purchase prediction in the non-contractual setting.” Eur. J. Oper. Res. 281 (3): 588–596. https://doi.org/10.1016/j.ejor.2018.04.034.
Ng, K. F., H. K. Lo, and Y. Huai. 2017. “Robust public-private partnerships for joint railway and property development.” Front. Eng. Manage. 4 (4): 437–450. https://doi.org/10.15302/J-FEM-2017068.
Osei-Kyei, R., and A. P. C. Chan. 2016. “Developing transport infrastructure in sub-Saharan Africa through public-private partnerships: Policy practice and implications.” Transp. Rev. 36 (2): 170–186. https://doi.org/10.1080/01441647.2015.1077288.
Ouenniche, J., A. Boukouras, and M. Rajabi. 2015. “An ordinal game theory approach to the analysis and selection of partners in public-private partnership projects.” J. Optim. Theory Appl. 169 (1): 314–343. https://doi.org/10.1007/s10957-015-0844-3.
Phang, S. Y. 2007. “Urban rail transit PPPs: Survey and risk assessment of recent strategies.” Transp. Policy 14 (3): 214–231. https://doi.org/10.1016/j.tranpol.2007.02.001.
Pu, W., F. Xu, R. X. Chen, and R. C. Marques. 2020. “PPP project procurement model selection in China: Does it matter?” Construct. Manage. Econ. 38 (2): 126–139. https://doi.org/10.1080/01446193.2019.1596291.
Rahman, H. Z., P. Miraj, and A. Andreas. 2019. “Exploring public-private partnership scheme in operation and maintenance stage of railway project.” Sustainability 11 (22): 6517. https://doi.org/10.3390/su11226517.
Rajaratnam, B., S. Roberts, D. Sparks, and O. Dalal. 2016. “LASSO regression: Estimation and shrinkage via the limit of Gibbs sampling.” J. R. Stat. Soc. B 78 (1): 153–174. https://doi.org/10.1111/rssb.12106.
Ramos-Santiago, L. E., J. R. Brown, and H. Nixon. 2016. “Streetcar resurgence in the United States transit strategy, growth machine tactic, or some of both?” Transp. Res. Rec. 2540 (1): 30–38. https://doi.org/10.3141/2540-04.
Salazar, J., J. Guevara, and K. Verhoest. 2021. “Inferential analysis of road infrastructure PPP sponsor networks.” J. Manage. Eng. 37 (6): 04021069. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000971.
Shen, H. W., H. Chai, L. Y. Xia, S. B. Wu, W. Qu, Y. Liang, and X. T. Liu. 2020. “A greedy screening test strategy to accelerate solving LASSO problems with small regularization parameters.” Soft Comput. 24 (7): 5245–5253. https://doi.org/10.1007/s00500-019-04275-x.
Shum, W. Y., N. Ma, X. Lin, and T. Han. 2021. “The major driving factors of carbon emissions in China and their relative importance: An application of the LASSO model.” Front. Energy Res. 9 (Aug): 726127. https://doi.org/10.3389/fenrg.2021.726127.
Song, J. B., Y. B. Hu, and Z. Feng. 2018. “Factors influencing early termination of PPP projects in China.” J. Manage. Eng. 34 (1): 05017008. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000572.
Soomro, M. A., Y. Li, and Y. Han. 2020. “Socioeconomic and political issues in transportation public-private partnership failures.” IEEE Trans. Eng. Manage. 69 (5): 2073–2087. https://doi.org/10.1109/TEM.2020.2997361.
Spisak, B. R., P. A. van der Laken, and B. M. Doornenbal. 2019. “Finding the right fuel for the analytical engine: Expanding the leader trait paradigm through machine learning?” Leadersh. Q. 30 (4): 417–426. https://doi.org/10.1016/j.leaqua.2019.05.005.
Sun, C. W., W. Y. Zhang, Y. Luo, and Y. H. Xu. 2019. “The improvement and substitution effect of transportation infrastructure on air quality: An empirical evidence from China’s rail transit construction.” Energy Policy 129 (Jun): 949–957. https://doi.org/10.1016/j.enpol.2019.03.005.
Tan, J., and J. Z. Zhao. 2021. “Explaining the adoption rate of public-private partnerships in Chinese provinces: A transaction cost perspective.” Public Manage. Rev. 23 (4): 590–609. https://doi.org/10.1080/14719037.2019.1699947.
Tang, Y. X., G. B. Wang, H. Li, and D. P. Cao. 2018. “Dynamics of collaborative networks between contractors and subcontractors in the construction industry: Evidence from national quality award projects in China.” J. Constr. Eng. Manage. 144 (9): 05018009. https://doi.org/10.1061/(ASCE)CO.1943-7862.0001555.
Tibshirani, R. 1996. “Regression shrinkage and selection via the LASSO.” J. R. Stat. Soc. B 58 (1): 267–288. https://doi.org/10.1111/j.2517-6161.1996.tb02080.x.
Tong, B., J. J. Guo, and S. Fang. 2021. “Predicting budgetary estimate of highway construction projects in China based on GRA-LASSO.” J. Manage. Eng. 37 (3): 04021012. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000890.
Wang, H. M., and L. Ma. 2019. “Ownership, corruption, and revenue regimes for infrastructure partnerships: Evidence from China.” Util. Policy 60 (Oct): 100942. https://doi.org/10.1016/j.jup.2019.100942.
Wang, H. S., G. D. Li, and G. H. Jiang. 2007. “Robust regression shrinkage and consistent variable selection through the LAD-LASSO.” J. Bus. Econ. Stat. 25 (3): 347–355. https://doi.org/10.1198/073500106000000251.
Wang, X. L., G. Fan, and L. P. Hu. 2019. Annual report 2018: Marketization index for China’s provinces. [In Chinese.] Beijing: Social Sciences Academic Press.
Wang, Y. 2015. “Evolution of public-private partnership models in American toll road development: Learning based on public institutions’ risk management.” Int. J. Project Manage. 33 (3): 684–696. https://doi.org/10.1016/j.ijproman.2014.10.006.
Wang, Y. H., H. W. Lee, W. Z. Tang, J. Whittington, and M. S. Qiang. 2021. “Structural equation modeling for the determinants of international infrastructure investment: Evidence from Chinese contractors.” J. Manage. Eng. 37 (4): 04021033. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000933.
Wong, C. H. 2004. “Contractor performance prediction model for the United Kingdom construction contractor: Study of logistic regression approach.” J. Constr. Eng. Manage. 130 (5): 691–698. https://doi.org/10.1061/(ASCE)0733-9364(2004)130:5(691).
Xiong, W., B. Chen, H. M. Wang, and D. J. Zhu. 2019. “Governing public-private partnerships: A systematic review of case study literature.” Aust. J. Public Administration 78 (1): 95–112. https://doi.org/10.1111/1467-8500.12343.
Xiong, W., and Y. Han. 2021. “Incentives of early termination compensation in public-private partnership projects.” IEEE Trans. Eng. Manage. 70 (6): 2220–2232. https://doi.org/10.1109/TEM.2021.3074662.
Xue, R., A. Gepp, T. J. O’Neill, S. Stern, and B. J. Vanstone. 2019. “Financial literacy amongst elderly Australians.” Accounting Finance 59 (Apr): 887–918. https://doi.org/10.1111/acfi.12362.
Yang, T., R. Y. Long, X. T. Cui, D. D. Zhu, and H. Chen. 2017. “Application of the public-private partnership model to urban sewage treatment.” J. Cleaner Prod. 142 (Jan): 1065–1074. https://doi.org/10.1016/j.jclepro.2016.04.152.
Yuan, J. F., M. J. Skibniewski, Q. M. Li, and J. Shan. 2010. “The driving factors of China’s public private partnership projects in metropolitian transportation systems: Public sector’s viewpoint.” J. Civ. Eng. Manage. 16 (1): 5–18. https://doi.org/10.3846/jcem.2010.01.
Zhang, L. H., Z. L. Zhao, and Z. N. Kan. 2019a. “Private-sector partner selection for public-private partnership projects of electric vehicle charging infrastructure.” Energy Sci. Eng. 7 (5): 1469–1484. https://doi.org/10.1002/ese3.367.
Zhang, N., X. P. Deng, X. B. Zhao, and T. Y. Chang. 2019b. “Exploring the sources of contractors’ competitive advantage on international HSR construction projects.” Int. J. Civ. Eng. 17 (7A): 1115–1129. https://doi.org/10.1007/s40999-018-0373-1.
Zhang, X. Q. 2004. “Concessionaire selection: Methods and criteria.” J. Constr. Eng. Manage. 130 (2): 235–244. https://doi.org/10.1061/(ASCE)0733-9364(2004)130:2(235).
Zhang, Y. X., R. E. Minchin Jr., and D. Agdas. 2017. “Forecasting completed cost of highway construction projects using LASSO regularized regression.” J. Constr. Eng. Manage. 143 (10): 04017071. https://doi.org/10.1061/(ASCE)CO.1943-7862.0001378.
Zubair, M. U., and X. Zhang. 2022. “Investigation and improvements of the existing best-value selection criteria for elevator maintenance contractors.” J. Manage. Eng. 38 (1): 04021083. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000987.
Information & Authors
Information
Published In
Journal of Construction Engineering and Management
Volume 149 • Issue 7 • July 2023
Copyright
© 2023 American Society of Civil Engineers.
History
Received: Feb 17, 2022
Accepted: Feb 8, 2023
Published online: Apr 25, 2023
Published in print: Jul 1, 2023
Discussion open until: Sep 25, 2023
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.