Research On Government Payment In Public-Private Partnership Projects Based On System Dynamics

The application of PPP(Public-Private Partnership)in China has entered into a new era since the Third Plenary Session of the 18 th Communist Party of China Central Committee in 2013.Government officers,professionals and academicians are paying more and more attention to the Government Payment model,which matches up to the quasi-operating/non-operating infrastructure and public service PPP projects.The core idea of Government Payment is paying for performance,or more exactly,paying for one or more elements of the availability,usage and performance of the facility or service provided by the Private.Government Payment has accounted for about one third of PPP projects in China,it should be systematically studied,so that the government can effectively encourage and guide social capital to provide better infrastructure and public services through the payment system.Firstly,based on the practice and development of PPP in China,the scope of application,characteristics,and classification of the Government Payment model are defined;dynamic arrangement and incentive mechanism of the performance management are proposed;and the PMS(Performance Management System)of Government Payment in PPP projects is constructed.Secondly,among several PPP valuation theories,EVA(Economic Value Added)valuation method is proposed to be applied to the performance management of PPP projects.42 influencing factors for Government Payment are identified from domestic and foreign studies,and additional 7 influencing factors added based on further review,a Government Payment System is then built.The influence mechanisms of the 49 influencing factors are discussed.Thirdly,system dynamics analysis is carried out,and a Government Payment system dynamics model involving 62 variables is built.The system is then divided into three interrelated subsystems;the microstructure is refined;the stock-flow relationship of the elements is analyzed;and the parameters and equations are determined.Finally,a case,i.e.Anqing city outer ring north road PPP project,is studied to demonstrate the validity of the model.The model simulation is carried out by using the Vensim PLE software,with basic data and contract arrangement of the case project.The impacts of 7 key factors,including construction period,construction and operation quality,asset-class and operating-class profit coefficient,asset-class payment period and franchise period,reward and punishment mechanism,profit margin required by SPV,and debt maturity,on the system model and project EVA are obtained by using sensitivity analysis.The conclusions are of usefulness for decision makers in deciding details of Government Payment model of PPP project.