Analysis On The Performance-influencing Factors Of PPP Projects

Public Private Partnership (PPP) is an arrangement where public and private sectors cooperate with each other in producing and providing products and service, including sewage treatment and road construction. With the rapid development of China’s economy, people have higher requirements for water resources and the environment. On the one hand, the surging demand for sewage treatment project has brought much pressure to the government budget. On the other hand, the performance of sewage treatment projects led by the government has much room to improve. PPP can better make use of the resource advantage of the government and private sector. It has gained the attention of the public and as a result come into the field of sewage treatment projects. There are more than 180 sewage treatment projects in the PPP project library reported by National Development and Reform Commission. In the first 30 PPP demonstration projects, there are 9 sewage treatment projects. In general, the introduction of PPP into sewage treatment projects, to some extent, helps solve the problem of financing and management. However, there still exit various problems during the operation process, and it needs the close cooperation and attention of both government and private sector.In order to improve the performance of PPP projects in China, this paper, first of all, conducts a literature review on PPP and project performance. Secondly, taken the sewage treatment projects as an example, it conducts several case studies to analyze the performance-influencing factors of PPP projects. Eight factors are identified and they are grouped into four categories, including reasonability of the project, the capability of project partners, the situation of public-private cooperation and the environmental supports. Then, an empirical analysis on the performance-influencing factors of PPP sewage treatment projects is conducted. Twenty factors influencing the performance of PPP sewage treatment projects are identified based on the literature review. But after combining and selecting, this paper chooses fourteen performance-influencing factors to analyze, and put them into four groups as well. Data related to PPP sewage treatment performance-influencing factors is collected through questionnaires targeting at professionals and specialists. According to the results of factor analysis and regression analysis, two categories of critical factors--reasonability of the project and the situation of public-private cooperation--have a significant influence on the performance, while the capability of project partner and environmental supports have no significant influence on the performance. That is to say, with the time and capital limit, optimizing reasonability of the project and the situation of public-private cooperation can help maximize the performance level of PPP sewage treatment projects. Based on the case study and empirical study, concrete suggestions regarding how to improve the performance of PPP sewage treatment projects are put forward. The paper concludes that, in order to improve the project performance, there should be a detailed feasibility analysis before implementing the project, together with a reasonable forecast of the market demand and the operability of the project. Appropriate, mature and stable advanced technologies should be adopted according to the specific characteristics of the project. Combine the PPP sewage treatment projects with other related projects in order to improve the stability of the return-on-investment mechanisms. Besides, during the project implementation, the relationship between government and private sector should be well dealt with. The risks should be distributed according to their own advantages, and the government should also provide the private sector with corresponding supports.