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Rybnicek 2020
Rybnicek 2020
To cite this article: Robert Rybnicek, Julia Plakolm & Lisa Baumgartner (2020): Risks
in Public–Private Partnerships: A Systematic Literature Review of Risk Factors, Their
Impact and Risk Mitigation Strategies, Public Performance & Management Review, DOI:
10.1080/15309576.2020.1741406
ABSTRACT KEYWORDS
Public–private partnerships (PPPs) are a popular way to form PPP; public–private
synergies between public and private partners in order to partnership; risk
overcome modern challenges and develop new opportunities. management; risks;
systematic literature review
However, recent research suggests that PPPs entail more risks
than other projects. In this systematic literature review, we
analyze 159 articles published in international journals and
identify eight major risk factors in PPPs. We integrate our
results into a risk management framework and examine how
the risk factors potentially impact PPPs before summarizing
risk mitigation strategies. Our findings offer a cross-sectoral
perspective and bridge the gap between research and prac-
tical implementation. By developing a novel conceptual model
we advance the understanding of risks in PPPs and contribute
to the theoretical foundations.
Introduction
The cross-sectoral cooperation between private and public institutions has
become an important element in facing the increasing demands from soci-
ety (van Ham & Koppenjan, 2001). Today, PPPs enjoy great popularity in
developed as well as developing countries. The OECD (2012), for example,
reports a value of 645 billion USD for PPPs between 1985 and 2009. In the
European Union, 1,184 PPP projects have reached financial close between
2000 and 2015 (Tomasi, 2016). PPPs have become an inevitable part in
realizing projects in many countries (Warsen et al., 2018) and offer several
advantages for both public and private partners. They allow public partners
to increase effectiveness (Pinz et al., 2018), to gain access to private financ-
ing, to import management expertise (Brinkerhoff & Brinkerhoff, 2011) or
to implement cost-saving mechanisms (Kwak et al., 2009). Private partners,
in return, can share or shift risks and get access to public projects they
cases and sectors where concrete experiences are currently missing. Second,
by relating our findings to risk management frameworks our study goes
beyond existing review articles and allows the gap to be bridged between the-
oretical findings in research and the utilization of these findings in the man-
agement of PPPs. In that regard, our findings can serve as a strong basis and
checklist for practitioners in PPPs during the iterative risk management pro-
cess. Third, by developing a novel conceptual model we advance the under-
standing of risks in PPPs and contribute to the theoretical foundations. We
furthermore offer valuable suggestions for a future research agenda.
Theoretical background
Types of PPPs
In this article, we define PPPs as cooperative arrangements between public
and private partners to share resources, risks, responsibilities and rewards
to mutually gain social, economic, or environmental objectives (Kwak
et al., 2009). However, today there exist several types of PPPs and a multi-
plicity of different terms. PPPs can be distinguished by their degree of pri-
vate involvement, such as BOT, DBFO, BOOT, DBFOM, and BOO1 (Kwak
et al., 2009; Roehrich et al., 2014; Sarmento & Renneboog, 2016). We can
also observe country-based forms and terms (Barlow et al., 2010; Ke et al.,
2009) such as “private finance initiative” (e.g., especially used in the UK;
Shaoul, 2005) or “private infrastructure involvement” (e.g., Australia;
Wettenhall, 2003). And we can even identify sector-specific applications
like the “accommodation-only model” for building and managing facilities
and services in the health-care sector (Barlow et al., 2013). Additionally,
the use and definition of these terms have changed over time (Ke et al.,
2009). Therefore, today’s PPP literature is highly ambiguous when it comes
to types and terms and the only constant we have is that most authors
acknowledge and label such partnerships between private and public insti-
tutions with the overall (umbrella) term “PPP.”
Risk management
Some authors assume that PPPs have more and a higher degree of risks
than other projects because they involve many stakeholders, entail complex
project arrangements, may have special rules regarding financing, docu-
mentation and taxation, or lack experienced partners (Bloomfield, 2006;
Carbonara et al., 2015; Grimsey & Lewis, 2002; Wang et al., 2018). In gen-
eral, risk is the “effect of uncertainty on objectives”. This rather technical
definition is provided by the International Organization for Standardization
(2018). In other words, risks are uncertain (expected or unexpected) possi-
bilities, opportunities or threats that might happen (Wang et al., 2018).
They are inherent to all projects and therefore proper management is
required to systematically identify, analyze, and respond to risks throughout
the whole project (Wang et al., 2004). Risk management is defined as a for-
mal process of “coordinated activities to direct and control an organization
with regard to risk” (International Organization for Standardization, 2018)
and is considered as an iterative process (Chinyio & Fergusson, 2003).
A number of authors have established different risk management frame-
works in the context of PPPs. Zou et al. (2008), for example, propose a life-
cycle risk management framework which emphasizes the dynamic process
for allocating and monitoring risks in all stages. Fischer and Porath (2010)
developed an integrated risk management system to cover different perspec-
tives of the stakeholders involved. Wang et al. (2004) identified three main
stages of risk management: (1) risk identification of relevant and potential
risks, (2) risk analysis and evaluation of the potential impact; and (3) risk
response in order to formulate suitable risk treatment strategies or mitigation
measures. Based on Steele (1992), Chinyio and Fergusson (2003) proposed
similar steps in their risk management framework for PPPs:
1. Risk identification: the first step is to identify the risks facing a project.
There are several strategies for risk identification, for example based on
PUBLIC PERFORMANCE & MANAGEMENT REVIEW 5
Method
To answer our research questions, we implemented a systematic literature
review and followed the guidelines of Tranfield et al. (2003) and Denyer
and Tranfield (2010). The authors highlight key aspects for applying a sys-
tematic literature review in the fields of management and organization. The
review process includes several steps, which are described below. A visual
overview is provided in the Supplemental online material (A).
In the first step, the procedure started with a database search in EBSCO
Business Source Premier in January 2017. The time frame for the database
search was determined as 2000 to 2016. Our search included only peer-
reviewed papers published in English. We used the search terms “public
private partner,” “public-private partner,” “PPP,” “private public
partner,” and “private-public partner” and included papers in which
those terms were presented in the title or in keywords. As already discussed
in the previous section, there exists a multiplicity of different terms and
types of PPPs, which change over the course of time or vary between coun-
tries and even sectors. To counteract this ambiguity, we refrained from
considering only a selective choice of PPP subtypes and instead used exclu-
sively the widely recognized umbrella term “PPP.” The result of the data-
base search implied 1,839 papers, after eliminating duplicates 1,331.
Thereafter, we eliminated papers which referred to other topics like
6 RYBNICEK ET AL.
factors and to the addition and deletion of others. To increase the readabil-
ity and enhance the understanding of the nature and substance of the actual
factors, we structured them into subfactors. We derived these subfactors via
an inductive approach. We started by iteratively clustering similar text pas-
sages from our analysis to identify relevant facets and aspects within each
risk factor. Then, we renamed the subfactors, ensuring that each term
reflected the character of the condensed text passages appropriately.
In a fourth step, we synthesized our findings and combined them
with risk management of PPPs. More precisely, we used the synopsis of
our quantitative and qualitative analyses to assess the relevance of the
respective risk factors and then related the most important factors with
the three steps of our risk management framework, namely risk identifi-
cation, risk evaluation, and risk mitigation. Regarding the identification
phase, we provide an overview of the identified generic risk factors, with
respect to the evaluation phase, we report potential consequences if these
risks materialize and in terms of the mitigation phase, we synthesize
risk mitigation strategies.
Results
The analyzed papers were published in 92 different journals; about 60%
of the papers were published in journals with an impact factor (IF). In
the Supplemental online material (B) we provide an overview of the
journals, the number of articles published in these journals and their
impact factors. The key publication outlets are International Journal of
Project Management (10 articles), Journal of Construction Engineering
and Management (9), Public Performance & Management Review (7) and
Public Works Management & Policy (7). Most articles investigate PPPs
based in the United Kingdom (50), the United States (42), Australia
(26), the Netherlands (18), and Canada (11). We assigned an article to a
country according to the origin of the PPP. Our results indicate that
PPPs are particularly popular in Anglophone countries. Of the 159
investigated articles, 76 articles included case studies, which points to
the practical relevance of the topic and the still emerging nature of the
field. Lastly, the number of papers rose over the last decades, which
indicates the increasing relevance of the investigated topic in recent
years. The number of publications per year can be found in the
Supplemental online material (C).
Figure 1 depicts how many studies named each of the factors as relevant,
which does not necessarily mean that this factor was the actual focus of the
respective study. The most often named factors are contract (59%), resour-
ces (58%), objectives (45%), structure (40%), commitment (39%),
8 RYBNICEK ET AL.
Contract 59%
Resources 58%
Objecves 45%
Structure 40%
Commitment 39%
Environment 36%
Communicaon 31%
Trust/Monitoring 31%
Process 25%
Outcome/Quality 24%
Risk Awareness 21%
Team Experse 19%
Experience 18%
Controlling 14%
Technology Transfer 13%
Role of Leadership 13%
Culture 12%
Willingness for Changes 11%
Partner Selecon 9%
Knowledge Transfer 9%
Expectaons 8%
Conflicts 6%
Image 3%
Intellectual Property Rights 1%
Geographical Distance 1%
0% 10% 20% 30% 40% 50% 60% 70%
Contract
Contracts are binding agreements between cooperating partners and are an
essential component of any project (Soli~ no & de Santos, 2010). The exam-
ined studies show that issues regarding contracts represent one of the
greatest challenges in PPPs. Our analysis reveals three main contractual
risks, namely negotiation, incompleteness, and contractual design.
Identification: Potential issues in the context of negotiations refer to the
duration of negotiations (Zervos & Siegel, 2008; Zhang, 2005b), insufficient
processes for getting a contractual agreement (Chung, 2016; Zhang, 2005b),
asymmetric information flow and imperfect information (Parker & Hartley,
2003; Sarmento & Renneboog, 2016). Incompleteness poses another major
challenge regarding contracts in PPPs (for example, Alam et al., 2014;
Landow & Ebdon, 2012; Soli~ no & de Santos, 2010). In long-term partner-
ships, contractual arrangements need to cover a long period and it is not
possible to define a “complete” contract considering all relevant aspects
and future incidents (for example, Sarmento & Renneboog, 2016;
PUBLIC PERFORMANCE & MANAGEMENT REVIEW 9
Siemiatycki & Farooqi, 2012; Wang, 2015). Contractual design is the third
critical aspect of PPP contracts (Marques & Berg, 2011; Nisar, 2007b) and
includes contractual ambiguities (Byoun & Xu, 2014), an absence of flexi-
bility to allow changes (Vonortas & Spivack, 2006), lacking details (Soomro
& Zhang, 2016) or missing transparency of contractual contents (Trafford
& Proctor, 2006).
Evaluation: In sum, 94 of the 159 analyzed papers dealt with the risk fac-
tor contract. The probability that issues arise in this context seems high.
Which impacts are discussed in literature? Negotiations and, at a later
stage, renegotiations are time-consuming and result in high costs (Ahadzi
& Bowles, 2004; Siemiatycki & Farooqi, 2012), delays within the project
and conflicts between partners (Zervos & Siegel, 2008). Vague or incom-
plete contracts lead to unclear distribution of tasks and responsibilities
(Soomro & Zhang, 2016), endanger the financial commitment (Bettignies &
Ross, 2009) and often cause renegotiations between partners (Sarmento &
Renneboog, 2016). However, complex and detailed agreements have their
drawbacks too and result in immense contractual conditions with disorgan-
ized and confusing information (Leruth, 2012).
Mitigation: In order to mitigate contractual risks, we found several strat-
egies in the investigated literature. A planned and staged negotiation pro-
cedure can assist in finding suitable partners, identifying and managing
risks, and finalizing an agreement on time (Forrer et al., 2010). Similarly, a
renegotiation procedure for contract extensions or adjustments is advisable
(Xiong & Zhang, 2014). One mitigation strategy to cope with incomplete-
ness and to deal with changing circumstances is contractual flexibility
(Domingues & Zlatkovic, 2015). In this regard, Zheng et al. (2008) suggest
establishing yearly contractual changes because planning too far ahead is
time-consuming. To prevent failure in contract design, the development of
guidelines with formal components for contracts is another mitigation
strategy (for example, Abdel & Ahmed, 2007; Fourie & Burger, 2000). For
instance, the case of a M4 motorway PPP in Australia has demonstrated
that the nonexistence of formal guidance was challenging for the conclu-
sion of the contract and led to contract ambiguities (Chung, 2016).
Furthermore, the design of contracts requires detailed information regard-
ing the expectations of partners (Forrer et al., 2010), clarified responsibil-
ities (Landow & Ebdon, 2012), space for flexibility (Forrer et al., 2010;
Parker & Hartley, 2003), clear lines of communication between partners
(Liu & Wilkinson, 2014), cost transparency and risk allocation (Nisar,
2007b; Zhang, 2005a), renegotiation clauses (Domingues & Zlatkovic,
2015), and procedures for conflicting situations as well as exit strategies
(Parker & Hartley, 2003).
10 RYBNICEK ET AL.
Resources
Resources in PPPs are assets that are essential for cooperation in forming
synergies between partners to overcome challenges and develop new oppor-
tunities that neither of them could create alone (Alam et al., 2014;
Brinkerhoff & Brinkerhoff, 2011). In our analysis, we identified three main
resource-based risks, namely finance, staff and time issues.
Identification: According to financial issues, cost overrun due to poor ini-
tial cost estimates is one of the main challenges (for example, Nisar, 2007a;
Roumboutsos & Anagnostopoulos, 2008; Zhang & Soomro, 2016). Potential
reasons might lie in the financial complexity of PPPs (Zhang, 2005b). The
availability of resources is another challenging point due to the fact that
private partners are often left alone to deal with the capital procurement
and other resource acquisitions (Wang, 2015). Regarding staff, the quality
and availability of staff is an important risk for PPPs (for example,
Roumboutsos & Anagnostopoulos, 2008; Wojewnik-Filipkowska &
Trojanowski, 2013). Staff without experience of a certain type of work or of
working together as a team can harm a project (Waring et al., 2013). With
regard to time, public and private partners’ different time horizons can cre-
ate problems in PPPs (Ruuska & Teigland, 2009; van Ham & Koppenjan,
2001), e.g., private partners often focus on short-term perspectives with
profit maximization, whereas public partners are more interested in long-
term investments rather than fast cash creation (van Ham &
Koppenjan, 2001).
Evaluation: In our analysis, 93 of 159 articles dealt with the risk factor
resources and its sub facets. This result indicates that incidents regarding
resources are likely to occur. Insufficient cost estimates, for example,
endanger those parties who provide financial resources when the predicted
revenues do not materialize (Grimsey & Lewis, 2002). Control mechanisms
to monitor the allocation of resources restrict the freedom and autonomy
of partners in managing their own assets (Kakabadse et al., 2007).
Unqualified staff can induce poor-quality outcomes and may lead to staff
crises (Bing et al., 2005). Different time horizons perhaps result in delays
due to complex planning and negotiation processes (Nisar, 2013).
Mitigation: We identified different mitigation strategies for resource risks.
Regarding financial issues, it is important to pay attention to the early
stages of a partnership, where financial analysis and administration are dis-
cussed in detail (Kakabadse et al., 2007). A regular control according to the
standards of the OECD and other organizations for economic collaboration
ensures the reliability and transparency of resource management in PPPs
(Biginas & Sindakis, 2015). In this vein, Vining and Boardman (2008) claim
that only clear and consistent budget reporting can increase transparency
concerning financial resources. With regard to staff, partners can support
PUBLIC PERFORMANCE & MANAGEMENT REVIEW 11
Objectives
Objectives refer to the strategies, visions, goals or plans of the PPPs and
their expectations about the quality of the project outcome. We identified
conflicting goals, problems with strategy and a lack of clarity as important
risks in terms of objectives.
Identification: Several studies (for example, Paez-Perez & Sanchez-Silva,
2016; Rangel & Manuel Vassallo, 2015) claim that conflicting goals are main
risks of PPPs. The private sector aims to maximize profit, create short-term
revenues, and decrease costs for firms and individual shareholders, while
the public sector aims to create jobs and increase public services from a
long-term perspective (Ruuska & Teigland, 2009). A second stream of risks
refers to the strategy of public and private partners. Due to partners’ differ-
ent perspectives on attaining their individual goals, the approach to reach-
ing mutual goals is diverse (for example, Tuncikien_e et al., 2014). The
partners’ heterogeneous background makes it often challenging to achieve a
good balance of interests (Brinkerhoff & Brinkerhoff, 2011). Another prob-
lem concerning objectives is the lack of clarity about goals and strategies
(Weihe, 2008). This aspect refers to the uncertainty about the expected out-
come (Cruz & Marques, 2013), unclear goal setting (Trafford & Proctor,
2006) or unclear policies (Sarmento & Renneboog, 2016).
Evaluation: In our systematic literature review, 71 out of 159 papers dealt
with the risk factor objectives. Different and diverging goals can lead to
conflicts between partners, misinterpretations, asymmetric flows of infor-
mation and a lack of commitment (Robinson & Scott, 2009; Vining &
Boardman, 2008). PPPs may face a standstill or even fail when project goals
are not mutually agreed upon or partners have a different prioritization of
objectives (Koppenjan, 2005; Meidute & Paliulis, 2011). Different mindsets,
perspectives, and cultures of the collaborating partners (Liu & Wilkinson,
12 RYBNICEK ET AL.
2014) lead to conflicts and result in partners following their own strategy
(Trafford & Proctor, 2006).
Mitigation: We observed three main mitigation strategies. One of the
most frequently mentioned is simply to be aware of conflicting goals and
to understand that different goals, interests, and perspectives may arise
(Trafford & Proctor, 2006; Vining & Boardman, 2008). In this regard, it is
important to understand the individual goals of each partner by “forcing”
them to clearly communicate their goals (Ruuska & Teigland, 2009). A
second mitigation strategy is to avoid strategy conflicts by making sure that
a common vision is communicated and maintained by the partners and by
setting milestones and assuring regular negotiations (Vonortas & Spivack,
2006). A strategic development model supports setting up an agreement of
all goals, values, assets and management activities (Grossman, 2010). This
leads us to the third mitigation strategy. Contracts play an important role
in mitigating problems regarding objectives and their clarity. A proper con-
tractual agreement, in which all goals and the strategy on how to achieve
these goals are clearly stated, helps to prevent conflicts (Domingues &
Zlatkovic, 2015; Rangel & Manuel Vassallo, 2015).
Structure
Structural aspects refer to the question of how PPPs are organized and built
and how partners work together in an efficient way. Regarding structure,
we identified three main risks: roles and responsibilities, decision-making,
and coordination.
Identification: Unclear or insufficient allocation of roles and responsibil-
ities between cooperating partners is a major risk for PPPs (for example,
Chou & Pramudawardhani, 2015; Dubini et al., 2012; Jacobson & Choi,
2008). Project partners have to carry out different roles and responsibilities
at the same time, which can create difficulties (van Ham & Koppenjan,
2001), especially when some of those roles are not clearly defined
(Anderson et al., 2012; Becker & Patterson, 2005). Several authors empha-
size that decision-making in PPPs is a problematic issue (Chou &
Pramudawardhani, 2015; Klijn & Teisman, 2003; Torchia et al., 2015). This
includes the complexity or insufficient advancement of decision-making
processes (Roumboutsos & Anagnostopoulos, 2008), different strategies or
divergent expectations of partners, the lack of a harmonized process
(Petersen, 2011) and the inadequate integration of project members in
these processes (Vonortas & Spivack, 2006). Coordination risks refer to
poor coordination of partners (Zhang, 2005b), a lack of coordination
(Zhang & Soomro, 2016), a lack of transparent structures (Bloomfield,
PUBLIC PERFORMANCE & MANAGEMENT REVIEW 13
Commitment
Commitment refers to the question of how much individuals identify with
the PPP and its goals, how loyal these individuals are to the PPP and
whether they are willing to put sufficient effort into it. In our analysis we
recognized risk factors concerning the identification with the project and
regarding the engagement of the partners.
Identification: When partners do not identify themselves with the PPP,
major challenges can arise and a negative attitude or pessimistic behavior
14 RYBNICEK ET AL.
might be the consequence (Soomro & Zhang, 2016; Wang, 2015; Weihe,
2008). Fourie and Burger (2000) also argue, partners may have an incentive
to run a PPP only to serve their own interests before meeting the stated
mutual objectives. Our second subfactor refers to the engagement of the
partners. Risks regarding this aspect are, for example, a lack of motivation
(Parker & Hartley, 2003), an unwillingness to collaborate (Monios &
Lambert, 2013; Zhang, 2005b), or a reluctance to take risks or to invest
(Monios & Lambert, 2013). The involvement and participation in the stra-
tegic process and during the whole project are important in this context
(Koppenjan, 2005) and a lack of commitment will have an immense nega-
tive influence on the whole project.
Evaluation: In sum, the risk factor commitment is discussed by 62 out of
159 papers. Even when both partners are committed to the PPP at the
beginning, they may feel distant after a while and unwilling to collaborate
further (Klijn & Teisman, 2003). During the course of the project, motiv-
ation can decrease if partners use benefits only for their own purposes
(Wang, 2015). A lack of trust and commitment in a PPP can also impede
knowledge transfer, innovation, or the development of new skills
(Fischbacher & Beaumont, 2003). Furthermore, partners tend to follow
their own strategies and pay less or no attention to the other partners’ busi-
ness if they are not in some way involved (Edelenbos & Klijn, 2007).
Another impact of missing commitment is uncertainty about the partners
interests and preferences (Ni, 2012).
Mitigation: To mitigate commitment issues in a PPP, partners should
establish stable framework conditions that offer enough freedom for both
partners and determine incentives and rules for collaboration (Brinkerhoff
& Brinkerhoff, 2011; Weiermair et al., 2008). A high willingness to com-
promise and to collaborate is essential to enhance commitment and should
be guaranteed through shared values and goals along with open communi-
cation (Jacobson & Choi, 2008). Within the contract, rewards and even
penalties can be appropriate and function as incentives for services to be
delivered on time (Nisar, 2013). Additionally, given the complex nature of
a PPP, managers have to work together collaboratively, especially when cer-
tain circumstances change (Heurkens & Hobma, 2014).
Environment
The definition of environment in our analysis is based on factors externally
influencing PPPs. These risks cannot—or can only partially—be influenced
by the PPP partners. We identified the following environmental risks: polit-
ical risks, demand/revenue risks, risks related to a competitive environment
and unpredictable incidents.
PUBLIC PERFORMANCE & MANAGEMENT REVIEW 15
that include the economic, financial, legal and political complexities of such
events (Caselli et al., 2009). Nevertheless, partners will never foresee all
possible situations and stakeholder actions.
Communication
Communication is the act of transmitting the right information to the right
person at the right time. We identified three main risks regarding commu-
nication, namely the interaction between partners, shared information, and
communication at the right time.
Identification: Interaction barriers include the lack of communication
(Anderson et al., 2012; Koppenjan, 2005), the intensity of interaction
(Weihe, 2008), the complexity of communication processes (Paez-Perez &
Sanchez-Silva, 2016) and the lack of interpersonal communication
(Trafford & Proctor, 2006). Risks regarding shared information refer to
information asymmetry (Ni, 2012), the handling of confidential information
(Vonortas & Spivack, 2006) and the quality of information flow
(Wojewnik-Filipkowska & Trojanowski, 2013; Zheng et al., 2008).
Moreover, differences in language, culture or power may pose the risk of
the right information not being at the right place for the right person
(Trafford & Proctor, 2006). Risks concerning communication at the right
time often refer to the initial phase of a PPP. Especially at the beginning,
before the contracts are signed and the working phase starts, partners
might not focus sufficiently on communication (Murphy et al., 2016).
Evaluation: Of the analyzed papers, 50 of 159 articles referred to commu-
nication as a risk factor. Communication risks have several negative
impacts. A lack of communication and close interaction with strong links
between the partners can impede knowledge sharing (Nissen et al., 2014).
If there is no open communication between the partners, difficulties in
understanding each other and problems in reaching a satisfying agreement
may arise (Jacobson & Choi, 2008). If communication rules are not
embedded in the organizational structure, the consequences can be unstruc-
tured information with conflicting ideas and expectations (Koppenjan,
2005). Moreover, poor communication can negatively influence trust
(Fischbacher & Beaumont, 2003), hinder the ability to react adequately to
unforeseen situations or impact the commitment to the PPP (Domingues &
Zlatkovic, 2015).
Mitigation: One mitigation strategy to foster the sharing of information
and the interaction between partners is to establish frequent communica-
tion, for example, through weekly meetings or regular exchange (Monios &
Lambert, 2013; Nisar, 2007b). In the early stage of a partnership, the goals
of a project are usually not clearly defined; therefore extensive interaction
PUBLIC PERFORMANCE & MANAGEMENT REVIEW 17
Trust
Trust is of particular interest to organizations because it can influence the
business performance between partners (Lane & Bachmann, 1998). It is
defined as an expectation by one partner of the acceptable behavior of the
other partner (e.g., neither party will be exploited; Lane & Bachmann,
1998). In this analysis, three main risks related to trust could be found,
namely monitoring, trust building and transparency.
Identification: We identified monitoring respectively control mechanisms
as one of the most discussed issues regarding trust in PPPs (for example,
Boyer, 2016; Chung, 2016; Fourie & Burger, 2000; Nisar, 2007a; Reynaers
& Grimmelikhuijsen, 2015; Robinson & Scott, 2009; Soomro & Zhang,
2016). In this context, some authors claim that the public sector does not
always have enough monitoring capacity to ensure the right quality output
(Nisar, 2007a). Another important issue refers to trust building. Trust
building between public and private partners needs to be carefully imple-
mented over time and is a long-developing process (Dubini et al., 2012;
Kakabadse et al., 2007). However, too much trust can also be critical for
the partnership if the relaxed attitude of partners is predominant and leads
to situations in which trust turns into distrust (Edelenbos & Klijn, 2007).
The third issue refers to a lack of transparency. Loosemore and Cheung
(2015), for example, state that if there is no trust established in a PPP pro-
ject, confidential information exchange is not going to happen and there-
fore holistic thinking is absent (Loosemore & Cheung, 2015).
Evaluation: Our results show that 49 out of 159 papers covered the risk
factor trust. Too much monitoring can erode trust and therefore put the
18 RYBNICEK ET AL.
(Re)negotiation
duration of negotiation time-consuming detailed (re)negotiation procedure
insufficient process agreement high costs
asymmetric and imperfect information delays
personal conflicts
Incompleteness
impossibility of completing contract unclear distribution of tasks and responsibilities contractual flexibility
unforeseen risks endangered financial commitment regular contractual changes
RYBNICEK ET AL.
Unpredictable incidents
geotechnical conditions no financial support any more due to financial crisis good preparation
extreme weather conditions
natural catastrophes
terrorism/war
force majeure
Communication: Identification Evaluation Mitigation
Interaction
lack of communication impedes knowledge sharing high frequency of information (e.g., weekly meetings)
intensity of interaction waste of resources different channels
complexity of communication processes time-consuming and cost-intensive renegotiation clear structure
lack of interpersonal communication difficulties understanding each other open and transparent communication
building trust
Information
quality of information flow unstructured communication processes if not stable framework
information asymmetry firmly embedded communication skills
handling of confidential information negative influence on trust and commitment understand partners’ ambitions and interest
language/cultural/power differences
availability of information
Trust: Identification Evaluation Mitigation
Monitoring
insufficient monitoring capacity negative effects on the whole project legal safeguarding
too much monitoring unnecessarily burden experts in financial and transaction processes
unsuitable monitoring methods probability of project failure
Trust-building
time-consuming lack of willingness to share information careful auditing of contracts
long-term process ineffective cooperation formal and informal meetings
trend to distrust reliable actions
Lack of transparency
insufficient exchange of information complex parameters open and honest communication
absence of comprehensive thinking clear roles and responsibilities
honesty between cooperation partners
PUBLIC PERFORMANCE & MANAGEMENT REVIEW 23
Conceptual model
Based on the above-mentioned considerations, we derived a conceptual
model to enhance the understanding of risks in PPPs (please see Figure 2).
In the development of this model, we first identified the main foci of all
risk factors and then depicted the interrelations between and dynamics of
different risk factors to obtain a more sophisticated understanding about
the scope, links and temporal relevance of each factor. In a second step, we
strived to abstract and generalize our findings to allow a more holistic
perspective as stated by the research goals. This model considers the fol-
lowing elements:
Firstly, we introduce so-called risk layers in our framework. This idea is
based on our analysis, in which we repeatedly noted that the identified fac-
tors refer to different aspects within a PPP. Some of the factors mainly
refer to issues and challenges within the actual project (e.g., objectives or
commitment), while others relate to threats attributed to the participating
partners (e.g., structure or resources). Further factors concern the relation-
ship between the partners (e.g., communication or trust) and yet others
refer to issues induced by the overall framework in which a PPP takes place
(e.g., contracts or environment).
Secondly, building on our assumption that the importance of factors may
vary over time, we suggest a top-down approach regarding these layers when
identifying, evaluating or mitigating risks in the earlier stages of a PPP such
as exploration and planning. Here, management is mainly guided by the
objectives to be achieved. For example, based on certain objectives (risk layer:
project), partners with the required resources are sought (risk layer: partners),
initial communication channels are established (risk layer: relationship) in
order to finally agree on a contract (risk layer: framework). Conversely, in the
later stages of a PPP, such as realization and operationalization, we suggest a
bottom-up approach. In these stages, management is mainly focused on the
contract the partners have agreed on. For example, based on a certain con-
tract (risk layer: framework), formal and informal communication takes place
(risk layer: relationship), which positively or negatively influences the willing-
ness to share certain resources (risk layer: partners) to eventually achieve con-
tractually defined objectives (risk layer: project).
Thirdly, based on our finding that the factor contract as well as the rela-
tionship factors are strongly interrelated to all other factors, we assume
that this is because they play an important role in the coordination of the
project (Caldwell et al., 2017). Therefore, we determine the framework layer
and the relationship layer as the base of our model, where the coordination
between partners takes place and other layers build upon it. In fact, it is
one of the most important tasks for all participating parties to ensure the
functionality of this coordination base as issues here can impact the whole
project and all other factors.
Finally, we assign some of the most relevant theories to the particular
risk layers. In this context, it is important to acknowledge that each layer
and each factor might have a different theoretical background as discussed
in the previous section on the connection between our findings and the
existing theories.
Summing up, our model provides a compact overview about the identi-
fied risk factors, assigns them to risk layers with different foci and relates
26 RYBNICEK ET AL.
Conclusions
Although a vast body of literature is already available, to date there exists
no overarching overview that synthesizes risk factors that are relevant to all
PPPs regardless of the actual project or sector. The findings of our study
contribute to the existing literature by providing a cross-sectoral under-
standing of risks in PPPs and relating our insights to elements of current
risk management frameworks. Practitioners can use our results as an aid to
build awareness and to identify, evaluate and mitigate actual risks when
implementing a PPP. The conceptual model we developed shows different
risk layers and suggests that the importance of risks might vary over time.
We recommend that future research investigates the relationship between
different factors and different phases of PPPs. Risk management will
become more effective when partners better understand what they need to
keep their eye on during the PPP.
Note
1. BTO—build, operate and transfer; DBFO—design, build, finance and operate; BOOT—
build, own, operate and transfer; DBFOM—design, build, finance, operate and manage;
BOO—build, own, operate.
Notes on contributors
Robert Rybnicek is associate professor at the Department of Corporate Leadership and
Entrepreneurship at the University of Graz, Austria. He specialized in public and strategic
management. Recent research includes collaboration management and leadership.
Julia Plakolm is a research assistant at the Department of Corporate Leadership and
Entrepreneurship at the University of Graz, Austria. Her research interests include public
management and cross sector collaboration, entrepreneurship and leadership.
Lisa Baumgartner is a former research assistant at the Department of Corporate Leadership
and Entrepreneurship at the University of Graz, Austria. Her research interests include public
management and leadership development.
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