Private Capital Rate of Return on Investment in PPP Projects Based on the Perspective of Government Regulation
PPP projects are usually more difficult to implement than other traditional procurement models because of their complexity. Earlier research works on several PPP projects in China showed that a number of problems exist in the project returns and an object
- PDF / 116,461 Bytes
- 10 Pages / 439.37 x 666.142 pts Page_size
- 70 Downloads / 197 Views
Private Capital Rate of Return on Investment in PPP Projects Based on the Perspective of Government Regulation Hui Gao, Yacheng Xiang and Shiqing Xie
Abstract PPP projects are usually more difficult to implement than other traditional procurement models because of their complexity. Earlier research works on several PPP projects in China showed that a number of problems exist in the project returns and an objective, reliable and practical return assessment model for PPP projects is essential to the successful implementation of PPP projects. The related research on many aspects of PPP projects is numerous; however, actual empirical research studies in this research area are rather limited. The decision-making process, based on the established return allocation principles, such as some floating points based on bank interest rates, requires qualitative judgment and experiential knowledge of construction experts, which is partial, subjective, and implicit in actual application. This paper aims to develop a return on investment evaluation model for determining an equitable return allocation between the government and the private sector based on the perspective of the government regulation. The rate of return within a reasonable range was deduced based on making marginal conversion price equal the rate of return from trading. This novel approach can not only assist the government to transform rate of return on investment into a more usable and systematic quantitative-based analysis, substituting only from the perspective of market cost control in the past, but also help PPP participants make a decision whether to participate in this project. Keyword PPP rate of return regulation model
H. Gao Y. Xiang (&) S. Xie College of Economic and Trade Management, Zhejiang University of Technology, Hangzhou, China e-mail: [email protected] © Springer Science+Business Media Singapore 2017 Y. Wu et al. (eds.), Proceedings of the 20th International Symposium on Advancement of Construction Management and Real Estate, DOI 10.1007/978-981-10-0855-9_6
61
62
6.1
H. Gao et al.
Introduction
As an effective way of delivering public infrastructure or services, the Public-private partnership (PPP) form of procurement have been studied and adopted in the last decades in China. More and more governments have acted as a project sponsor and attracted private capital due to public budget constraints and the massive demand for new or upgraded infrastructure. Involving the private sector in infrastructure development is expected to not only have longer-term benefits, such as “value-for-money” [1], but also shorter-term benefits, such as a reduction in cost and time taken to deliver infrastructure services, higher quality service delivery, lower administrative costs, and the transfer of risks to the private sector [2]. In recent years, there have been an increasing market of PPP for the development and operation of infrastructure projects in China. With the fast pace of market-oriented transformation in the economy of China and the severe need
Data Loading...