The influence of internal and external factors impacting the duration of the concession period in Public-Private Partnerships (PPPs) is essential for project outcomes considering its implications on operational expenses, payback periods in project finance and long-term uncertainties. In this context, this research analyzes a set of key factors that may influence the duration of the concession period of PPP transport projects.
A triangulation approach combining both quantitative and qualitative methods was employed. This mixed-method approach incorporates an in-depth literature review to identify the factors that potentially affect the public sector decision on concession periods within transportation PPP programs. The information from all the transportation PPP projects (roads, ports, rails and airports) procured in 58 countries in Europe, Africa and Asia was retrieved from public databases, official records in each of the countries and academic papers. The information retrieved from each of the identified parameters was further examined through analysis of variance and linear regression to test the hypotheses.
Results demonstrate that user-pay PPPs should restrict minimum concession periods to prevent excessive user tariffs, which could result in societal resistance and potential long-term traffic underperformance. Additionally, PPP market’s willingness to accept longer concession periods depends on country’s risk profile and regulatory framework transparency. Conversely, high-risk countries may seek longer concession periods by utilizing payment mechanisms that allocate demand risk to the public sector.
This study provides relevant insights for better negotiating the concession duration to increase the value for money associated with the PPP project.
