Framework for improving the operation and maintenance of PublicPrivate Partnership (PPP) project in China

The study described in this thesis investigates how the operation and maintenance (O&M) period performance of Public-Private Partnership (PPP) projects can be improved in the Chinese context. It achieves this goal through exploring the Chinese PPP characteristics in applications, identifying the problems confronted in the PPP O&M process and the associate factors affecting PPPs in service delivery, and proposing activities contributing to improvements of the PPP O&M performance.

PPP is one of the main approaches to procure the public infrastructure and service using the technologies and skills from the private entities, and reduce heavy financial burden of the governments, especially in developing countries. However, due to insufficient passion of many private operators, it is not unusual for PPP projects to fail to achieve the expected performance level, particularly during the lengthy O&M period. This has given rise to the so-called 'gap' between the expected and actual outcomes of many PPP models in applications in the Chinese context. In addition, the lack of guidelines and the inappropriateness of project management of the government body expose the projects' operating outcomes to suffering uncertainties. These knowledge gaps and practical deficiencies have continuously prevented practitioners from achieving performance-based PPP O&M goals. Therefore, a systematic study should be undertaken to improve the O&M performance of Chinese PPP projects.

To satisfy the primary aim aforementioned, a comprehensive research methodology was structured in three distinct phases to support the exploratory research. In phase one, an in-depth literature review was conducted to identify a significant knowledge 'gap' of PPPs. And then an exploratory study of the round-one interviews was undertaken to interpret and gain an understanding of the characteristics of Chinese PPPs, followed with a questionnaire survey to investigate the problems in Chinese PPPs O&M and the associate affecting factors. As a consequence of the round-one interviews, four characteristics of Chinese PPP arrangement were revealed, then 18 potential key problems in the O&M stage and 31 affecting factors that would cause and/or exacerbate the O&M problems were identified to be built into the questionnaire survey.

In phase two, the questionnaire survey data analysis reveals that the private sector, as the main responsible party in the service delivery, behaves vulnerably in the O&M of PPPs. Four categories of problems, namely financial viability and continuity, contract ambiguity and management, SPV's inability in managing O&M and stakeholders' interest were identified through the factor analysis, together with six clusters of affecting factors. The ANOVA analysis indicates that the private sector is worried about the government behaviours such as government support change, payment delay and the excessive risk undertaken by them. And they are more vulnerable with regard to the factors relating to the macro environment in O&M and how to cooperate with the authorities, such as the policy stability, financial risk, government intervention, and the distribution of risks. And the relationship is formulated between the four categories of problems and the affecting factors through performing correlation analysis.

After this, the phase-three study was initiated with the aims of validation of the data analysis results and discussion of the practical solutions, to facilitate the construction of a conceptual framework for improving the Chinese PPP O&M performance. The Analytic Network Process (ANP) method and the round-two interviews acted as dominant instruments in this phase. The results of ANP recognise the statistical analysis results on the top affecting factors, such as immaturity of legal system, high risk of policy stability and financial risk.  Additionally, the ANP results highlight the importance of affecting factors such as unfavourable price changes during O&M and lack of adequate measurement of project revenue in early stages, which also reflect the findings from the round-one interviews. The round-two interviews reinforce the criticality of the financial viability and continuity problems category in Chinese PPP O&M; address the weaker position of the private sector in PPP O&M leading to their reluctances in fulfilling O&M obligations; and verify the relationship between the O&M stage problems and affecting factors. To enhance the applicability of the research, a series of practical solutions were also derived through the round-two interviews empirically to improve the performance in O&M.

Based on the findings derived from the qualitative and quantitative studies, further investigation led to the formulation of a conceptual framework, with a total of 18 activities and 44 sub-activities presented for improving the Chinese PPP O&M performance. Findings in this study provide a valuable reference for practitioners to conduct PPP projects in China. Besides, governments could propose relevant policies taking the private operators' expectations and concerns into consideration to support the future PPP model application.