Challenges and lessons learnt in the financing of public infrastructure in South Africa, Czech and Slovak Republics: a comparative study
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Date
2017
Authors
Xhala, Ncedo Cameron
Journal Title
Journal ISSN
Volume Title
Publisher
University of the Free State
Abstract
English: The aim was to explore how to optimize public-private partnerships in public infrastructure
investment and development as an alternative financing instrument by identifying and developing
core success factors and establishing key lessons learnt from failed projects. The study,
underpinned by a constructionist epistemological viewpoint, used the case study approach and
expert interviews to undertake an empirical study in South Africa and the Czech Republic.
Purposive sampling was used to identify the interviewees as well as two case studies that fitted
the context of the study. Semi structured interviews and documents were utilized as means of
collecting data. Being exploratory and qualitative in nature, the study applied qualitative data
analysis techniques comprising a 3-step coding process and theme building. The findings
revealed that economic, financial and social factors were predominantly the main factors which
constrain public finance in public infrastructure investment. Implications of constrained public
finance in public infrastructure were classified as having social, economic, investment and fiscal
consequences. Findings further revealed that optimization of public-private partnerships requires
improved comprehensive knowledge, methodology and implementation as key strategies.
Further, the study developed five core success factors of public-private partnerships
implementation ranked as follows: 1st ranked core factors were legal and regulatory frameworks,
technical feasibility studies and public servant’s readiness. The 2nd ranked factors were risk
allocation, monitoring and evaluation. The 3rd ranked factors were decision-making, project
procurement, cost benefit analysis, public institution readiness and in-house technical skills. The
4th ranked factors were risk management, good partnerships, methodological support, clear vision
and competition. The 5th ranked factors were ownership, governance, project benefits, capacity
building, financing capacity, project management, land acquisition, environmental impact analysis
and contract management. Another significant finding was establishing core lessons from failed
public-private partnerships projects. Among these critical lessons, project management lessons
were found to be predominant. Other key lessons centred on institutional structure, lessons from
failure, socio-economic purpose, shared vision, methodological support, legislative and regulatory
framework, knowledge management and avoidance of financial losses. The findings showed that
public decision makers require comprehensive public-private partnerships knowledge, because
these arrangements are characterized by inherent conflicts and opportunistic behaviours, which
require to be well managed and/or mitigated in order to optimize their implementation. The
findings revealed that conflicts in public-private partnerships are primarily caused by asymmetrical
information which leads to adverse selection strategies and moral-hazard problems due to agents’ opportunistic behaviour. Overall, the findings suggested that if the public sector did not effectively
monitor construction firms in a well-structured project framework, the agents would maximize
profits, increase transactional costs and undermine the potential of public-private partnerships.
Results inferred that when public-private partnerships are appropriately structured with
reasonable incentives, they can contribute to economic, financial, social, environmental and
technological benefits. This study provides an overview of challenges associated with the
implementation of public-private partnerships. It highlights useful lessons and makes a
contribution by identifying and examining core success and failure factors which can improve
public-private partnerships implementation. Rather than re-invent the wheel, key lessons can be
learnt from failed projects and applied in practice to improve successful implementation. The study
concludes that public-private partnerships are an alternative financing instrument in public
infrastructure investment and development with long-term suitability.
Description
Keywords
Construction, Infrastructure development, Infrastructure investment, Moral-hazard problems, Public finance, Project implementation, Public-private partnerships, Transactional cost, Thesis (Ph.D. (Quantity Surveying and Construction Management))--University of the Free State, 2017