System Dynamics Model to Determine Concession Period of PPP Infrastructure Projects: Overarching Effects of Critical Success Factors

Abstract

The determination of the concession period (CP) in public–private partnership (PPP) infrastructure projects presents complexities to decision makers because various critical success factors (CSF) are involved which may be overlooked. This paper outlines a system dynamics (SD)-based approach to provide an in-depth understanding of CSFs that determines PPP projects’ CP and models them for localized use. The CSFs are obtained from published literature, duly vetted through a survey of 56 experts, and used to develop a quantitative and qualitative SD model, validated by simulating case studies of five infrastructure projects. A total of 59 concession-affecting CSFs are highlighted that are reduced and compared for localized infrastructure projects. The findings indicate that CP should be dynamic instead of fixed and static, and warrant an extension of the originally proposed concession in three cases and reduction in the remaining two. The decision-making implications of this study target the three key stakeholders: the public body through reduced financial risks, the private organization through increased confidence and reassessment of concession during project life, and the end user through nominal tolls.