The public-private partnership (PPP) model has been increasingly popular in recent decades as a mechanism to support infrastructure related investment activity. PPPs creates many advantages for countries such as releasing from financial burden of high cost infrastructure investments, bringing high quality of public service and increasing efficiency of operations through transfer of private sector expertise. However, these benefits are not guaranteed for every PPP project since successful implementations are subject to several factors. This chapter aims to review the different aspects of PPPs in detail and examine the factors which play crucial roles for successful PPP implementation.
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Many countries whether they are categorized as developed, developing or low income confront with difficulties to finance particularly their high cost infrastructure investments. Thus, countries seek to find alternative methods to finance their investment needs, achieve development goals and catch up with technological advances on the way of increasing their competitiveness in international markets (Fu & Guo, 2020; Amos & Zanhouo, 2019). Generally, “infrastructure projects are complex, politically contentious, and difficult to execute” (Casady et al., 2020, p. 161). Different methods are used by governments to finance infrastructure projects. In recent years, Public Private Partnership (PPP) has become a popular alternative financing model. Public Private Partnership (PPP) is defined as “a long-term contract between a private party and a government entity, for providing a public asset or service, in which the private party bears significant risk and management responsibility, and remuneration is linked to performance” (World Bank, 2018).
PPP may be utilized to promote the private participation in the infrastructure investment for increasing the available funding or for integrating project management know-how of the private actors, both local and international, to the infrastructure projects (Bajwa et al., 2018; Kim & Choi, 2018; Serdaroglu, 2016). From this point of view, PPP can be considered as a way to by-pass the financial constraints of the public sector (Arezki et al., 2017; Teller & Kock, 2013). Yet, the benefits of PPP may not only be evaluated from a cost-accounting perspective. The benefits of PPP can also be assessed from different perspectives such as risk management (Keers & van Fenema, 2018), relationship management (Smyth & Edkins, 2007) and procurement (Välilä, 2020).
Considering the benefit approach, PPP can be seen as a catalyst for the development of private sector, technology transfer and foreign direct investment (FDI) (Aarseth et al., 2017; Hammami, Ruhashyankiko & Yehoue, 2006). PPP model may bring vast benefits to the sustainable development of the country, well-being of the citizens and competitiveness and agility of firms such as climbing the technology ladder, changing the business model of private sector where firms can position themselves as efficient service providers, and stimulating national and regional development (Ansari, 2020; Hodge & Greve, 2007; Canning & Bennathan, 2000)
Against the various potential benefits of PPP in several areas of economic and social life, without well-designed PPP systems, the probability of failure might be higher than the probability of success (Meng, Dang & Gao, 2020; Mohd Som et al., 2020). Therefore, the aforementioned benefits of PPP can only be realized through sophisticated project designs and an effective integration of institutional structure, legal framework and financial instruments. The actors involved in the PPP process are financiers, investors, public firms and government authorities. A successful management of PPP project cycle which includes the selection of project, motivation of investors, realization of technology transfer, and pass the facilities to government at the end of the contract requires a comprehensive understanding of the PPP models (Casady et al., 2020; Lam & Yang, 2020; Mu, de Jong & Koppenjan, 2011) in the world as well as in Turkey. It might be important and informative to understand the PPP processes from finance to procurement and construction to operation.
So, in order to provide thorough information on the implementation for infrastructure-based PPP projects, this chapter examines the PPP experiences of different countries which use both international and local data. The chapter continues with different definitions to introduce several aspects of PPP. Then, a historical background of PPP is provided and a number of PPP projects which yielded successful and unsuccessful outcomes are reviewed. Finally, some suggestions regarding effective and efficient implementations of PPP is offered at the end of the chapter.