The Impact Of The Behavior Of Public Sector And Private Sector On The Efficiency Of PPP Projects

Public-Private Partnerships(PPPs)has been used for procuring infrastructure assets worldwide,owing to the increasingly limited budgets of the governments.For example,in China,applying PPPs for the delivery of infrastructure projects can be dated back to the 1980s and there has been a sequence of PPPs projects initiated over past five years.PPPs can be beneficial for infrastructure projects through not only the provision of finance but also the expertise of management and advanced technologies from private sector.Healthy and sustainable PPP development is of great significance for implementing the "One Belt and One Road" strategy,promoting urba2ization,and innovating institutional mechanisms.However,in practice,many failed PPP projects have emerged.In order to avoid repeating the same mistakes and for the healthy and sustainable development of the PPPs,this paper focuses on how to improve the efficiency of public projects with the help of the PPPs.In order to implement this study,a theoretical framework of the influence of government behavior and private behavior on the efficiency of PPP projects was constructed.It contains a PPP project efficiency evaluation system consisting of the alloctive efficiency,the process efficiency,the individual efficiency and the transaction costs.It includes a mechanism for improving the efficiency of public projects by the PPP approach consisting of the sources of efficiency advantages and incentives.It includes a path in which government actions affect the efficiency of PPP projects and a path in which the behavior of the private sector affects the efficiency of PPP projects.In the theoretical framework,the key independent variables of the efficiency function of the PPP project is constructed through the source of efficiency advantages of the PPP approach.1n order to give the view an empirical support,and to clarify the correspondence between different types of efficiency and source of efficiency advantages,the first empirical study was carried out.That is,the source of efficiency of the PPP approach was explored under the Chinese scenario.On this basis,the paper carried out the following three studies:(1)The impact of government behaviors on the efficiency of PPP projects.The PPP project is first divided into the project bidding stage and the project implementation stage,and the empirical research is carried out separately.The tendering stage is the period in which the government selects the private sector for public projects.The behaviors of governments during this period are summarized as the pre-discrimination and the biased evaluation.The study shows that:1)The pre-discrimination treatment is negatively correlated with allocation efficiency,negatively correlated with individual efficiency,and has no significant relationship with transaction cost in the PPP project efficiency evaluation system consisting of allocative efficiency,individual efficiency and transaction costs.2)The biased bid evaluation behavior is positively correlated with the allocation efficiency,positively correlated with individual efficiency,and positively correlated with transaction costs.The government therefore faces the dilemma that choosing low transaction costs requires low allocation efficiency and low individual efficiency.And choosing high allocation efficiency and high individual efficiency requires high transaction costs.In the stage of the project implementation,government actions can be summarized as three interventional project behaviors,which are the intervention project financing,the involvement in project design and the tracking project process.The findings are as follows:1)The only impact of intervention financing is the increase in transaction costs and should be circumvented.2)The relationship between intervention design and transaction cost is not significant,but it affects the process efficiency and individual efficiency of the project through indirect mechanism and direct action,and the direction of action is opposite.The direct impact is positive,and the indirect impact is negative.The government will also face a dilemma.3)Tracking project process has led to an increase in transaction costs.The indirect mechanism leads to an increase in process efficiency and individual efficiency,and a direct-action mechanism leads to a decrease in process efficiency.The government faces a double trade-off.(2)The impact of the private sector behaviores on the efficiency of PPP projects.Since the path of private sector behavior affecting the efficiency of PPP projects is different from government behavior,different empirical research methods are used to explore the relationship between private sector behavior and the efficiency of PPP projects.Two case studies of China,s transport megaprojects have been undertaken by using the Social Network Analysis(SNA).The results show that in the private setor-led PPP project,the cooperative behavior is positively related to the process efficiency,and the relationship between self-interested behavior and process efficiency is not significant.Under the government-led PPP project,self-interested behavior,opportunistic behavior and process efficiency are negatively correlated,and cooperative behavior is positively related to process efficiency.(3)The overlapping effect of government and private sector behavior on the efficiency of PPP projects.The principal-agent model was applied in this part.According to these related discussions,the following three criteria should be guaranteed in PPP practice:1)As the main project sponsor,the government should evade all actions that can cause the private sector to make adverse selections(e.g.,pre-treated differently).2)When designing a project contract,the government should bind the payment obtained by the private sector to the quality of public goods(public service),which is the principle of optimal contract.3)The optimal contract only appears in the theory.The project supervision is also needed in the PPP practice.And project supervision is inseparable from tracking project.Combined the whole study,this paper proposes efficiency-oriented recommendations related to the behavioral governance of PPP projects,namely how to achieve higher project efficiency through behavioral govermance.Ideally,the government's role is to select the most competent private sector for public projects,design contracts that encourage the private sector to invest their most effort and monitor the private sector's uncompromising performance.The responsibility of the private sector is to provide public goods or services in a quality and quantity through a series of technical means.Correspondingly,both the government and the private sector should pursue specialization within their respective responsibilities.Behavioral governance in PPP projects is to manage and adjust government behavior and private sector behavior as much as possible to meet the division of labor and specialization required by the PPP approach.The innovation of this thesis is reflected in two aspects:(1)The extension of the efficiency concept of PPP projects was broaden.The efficiency of PPP projects mainly includes two concepts of allocation efficiency and production efficiency in the existing literature.The allocation efficiency is the evaluation of the results of the government's allocation of public resources.And the production efficiency is the evaluation of the results of public goods(or services)provided by the private sector.As a concept of result,neither of these two efficiencies has a certain high or low standard.It is judged by the relative cost among different projects.For the PPP approach,the results are important,but the efficiency of the project implementation process is equally important.In order to better evaluate the efficiency of the PPP project implementation process,the process efficiency concept was introduced into the PPP project efficiency system.The concept of individual efficiency is also introduced in order to incorporate the individual factor into the research process.In the sense of Pareto efficiency,allocation efficiency focuses on the distribution of public resources among different private sectors.Process efficiency focuses on the allocation of specific resources within the project,and individual efficiency focuses on individual factors within the project.A system that includes allocation efficiency,process efficiency,and individual efficiency covers all possible aspects of a PPP project.In addition,transaction cost research is a relatively independent and complete part of PPP research,which is seen as a reduction in project efficiency.Therefore,this thesis expands the efficiency of PPP projects into a system that includes allocation efficiency,process efficiency,individual efficiency,and transaction costs.Furthermore,the existing literatures pay less attention to the relationship between behavioural factors and the efficiency of PPP projects.(2)A new path of PPP project governance was proposed.On the one hand,it realized the leap from paying attention to the interests of the participants to paying attention to the behavior of the participants.On the other hand,it realized a transfornation from the emphasis on the passiveness and objectivity of the participants to the emphasis on the initiative and subjectivity.The research related to PPP project govermance mainly focuses on project contract management,risk management,ownership and so on.This paper takes the behavior which is closer to the origin of the participant as the research entry point and focuses on the behavioral governance of participants in the PPP project.Therefore,the behavior goverance may become a new area of project management and can also provide useful inspiration for PPP practice.