Bid Variability in Public–Private Partnerships: Lessons from Asset Monetization through the Toll-Operate-Transfer Model in India
Publication: Journal of Construction Engineering and Management
Volume 150, Issue 12
Abstract
Public–private partnerships are an important tool for infrastructure development, but variability in bids can undermine value for money. This study investigated bid variability in India’s initial two auction road assets under the Toll-Operate-Transfer (TOT) model. A comparative case study research design was utilized involving an in-depth analysis of the TOT I and TOT II auctions. Data was gathered from project reports, guidelines, news articles, stakeholder interviews, and then thematically analyzed. The analysis revealed substantial bid variability within and between the auctions. The findings showed bid variability within the auctions depended on the information gaps owing to the timing and quality of the information released by the auctioneer, the tender conditions and tender process, potential value enhancement and securitization of assets by the bidders, heterogeneous bidder objectives across asset types, and strategic bidding assumptions. The bid variability between the TOT I and TOT II auctions depended on asset quality, declared reserve price, sociopolitical factors, and the prevailing business conditions. While TOT I road quality and growth prospects encouraged strong bidding, overpricing, shifting business scenarios, and political uncertainty in TOT II states depressed bids below expectations. Results indicated that transparency around asset characteristics and traffic forecasts enables realistic bid assessments to control variability. It can inform bid rationalization and pricing mechanisms for future auctions of public infrastructure. Setting reserve prices reflecting project specifics also helped anchor bid ranges. Attracting larger bidder pools countered the influence of overly optimistic/pessimistic valuations. Gradual expansion into new geographies allowed adaptive policy learning.
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Data Availability Statement
Some or all data, models, or code that support the findings of this study are available from the corresponding author upon reasonable request. These include anonymized interview transcripts, auction documents and reports, bidding data and descriptive statistics, and qualitative data analysis files (NVivo).
Acknowledgments
This paper was written based on an awarded Ph.D. degree with the Ph.D. thesis titled “Political Deals and Bid Variability in Monetization of Indian Toll Road Assets” supported by the National University of Singapore (NUS) Research Scholarship. The authors would like to express their gratitude to NUS for providing the financial support and research facilities that made this study possible. We also thank the anonymous reviewers for their valuable comments and suggestions, which have significantly improved the quality of this manuscript.
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Published In
Journal of Construction Engineering and Management
Volume 150 • Issue 12 • December 2024
Copyright
© 2024 American Society of Civil Engineers.
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Received: Feb 22, 2024
Accepted: Jul 17, 2024
Published online: Sep 30, 2024
Published in print: Dec 1, 2024
Discussion open until: Feb 28, 2025
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