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Frontiers of Engineering Management

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Front. Eng    2018, Vol. 5 Issue (3) : 347-356    https://doi.org/10.15302/J-FEM-2018020
RESEARCH ARTICLE
Sustainable public-private partnerships: Balancing the multi-actor ecosystem and societal requirements
Pekka Leviäkangas1, Yanbing YE2(), Oluwole Alfred OLATUNJI3
1. Technological Research Centre of Finland Ltd., Finland
2. School of Civil Engineering and Mechanics, Huazhong University of Science and Technology, Wuhan 430074 China
3. Construction Management Discipline, Curtin University, Australia
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Abstract

The funding gap of public infrastructure networks (roads, railways, ports, electricity, and energy lines) can be solved partly by introducing private capital for investments, i.e., public-private partnerships (PPP). This paper introduces an integrated model of a PPP project and investigates its implications on PPP policies and strategies regarding appropriate project appraisal and selection. The model has different resolution levels, namely, project level, business ecosystem level, and market and societal levels. The integrated model suggests that investing in merely financially viable projects is insufficient to realize economically and socially sustainable and acceptable projects.
Keywords public-private partnerships (PPP)      project appraisal and selection      integrated model      socially sustainable     
Corresponding Author(s): Yanbing YE   
Just Accepted Date: 19 June 2018   Online First Date: 20 August 2018    Issue Date: 14 September 2018
 Cite this article:   
Pekka Leviäkangas,Yanbing YE,Oluwole Alfred OLATUNJI. Sustainable public-private partnerships: Balancing the multi-actor ecosystem and societal requirements[J]. Front. Eng, 2018, 5(3): 347-356.
 URL:  
https://academic.hep.com.cn/fem/EN/10.15302/J-FEM-2018020
https://academic.hep.com.cn/fem/EN/Y2018/V5/I3/347
Fig.1  Infrastructure asset ecosystem
Fig.2  Single-project company model
PPP Project Ecosystem Cash and Economic Flow Statement
Debt
investors		 Equity investors Project
company		 Users State Contractors and suppliers Notes and explanations
Equity investment Equity capital Equity investors invest in the project company
Debt investment and return Debt capital and interest on debt Debt investors invest in the project company; the company pays the interest on debt
Construction and operating cost Revenues from construction and operating services Project company constructs the facility and pays the contractors and suppliers
Revenues from users and subsidies from the state Payments for services Subsidies to the project Project company receives revenues from the state or from the users
Taxes paid Taxes collected Corporate taxes after expenses, depreciation, and interest
Benefits received by users plus the external benefits (and costs) State takes benefits of users and third parties into account, that is, the external benefits and external costs
∑ ∑ ∑ ∑ ∑ ∑
Tab.1  PPP project ecosystem economy matrix
Market “layers” Functions
End-user market
(commodity market)		 Consumption and use of produce (goods and services)
Infrastructure user
market		 Use of infrastructure; services ON the infrastructure (e.g., logistics services, public transport, smart mobility services, and so on)
Infrastructure services and infrastructure supply Management and operation of infrastructure; services FOR the infrastructure (e.g., design, maintenance, and so on); construction
Capital market Supply of capital
Regulatory and
administrative system; the society		 Administrative processes, project appraisal, policies, and public and global interests
Tab.2  Layered markets and market contexts of an infrastructure PPP
Ecosystem Actors
Society “Fiscal”
Government		 Debt investors Equity investors Project company Contractors
and
suppliers		 Operators
and
producers		 Private users Consumers of produce,
industries
<= = Transactional flows between actors= =>
Value-adding flow in the economy= =>
Regulatory system, policy Capital market PPP
market		 Infrastructure
supply and services		 Infrastructure users End-user market
Market layers and functions
Tab.3  Integrated PPP model
Fig.3  Changing the perspective: from project business to systemic value creation
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