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Are we planning investments to fail? Consequences of traffic forecast effects on PPP contracts: Portuguese and Brazilian cases ☆

Research paper by Matheus Oliveira, Joana Ribeiro, Rosário Macário

Indexed on: 13 May '16Published on: 12 May '16Published in: Research in Transportation Economics



Abstract

Under Public-Private Partnership (PPP) regulatory framework, governments have found an opportunity window for infrastructure investments beyond the traditional procurement limitations. Nevertheless, success may not be the only destination on this road. Decades after the first initiatives using this procurement method, thousands of failures, renegotiations and adjustments have been pointing pitfalls in PPPs (Macário, Ribeiro, & Costa, 2015). Developed in a complex network of stakeholders, PPPs depend on an efficient tendering process to build a sustainable project. However, decision at such critical moment relies on complex environment of expectations, negotiation and behaviour. Hence, in order to develop the discussion on stakeholders' behaviour, this work presents a game theory model for the effect of financial support on stakeholders' risk appetite during the tendering process. Following the mathematical exposition, the proposed framework is demonstrated in the PPPs experience in Portugal and compared to the incentives' structure in Brazil.

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