Critical Success Factors for PPPs in Infrastructure Developments: Chinese Perspective

TLDR

China’s rapid economic growth has created a severe infrastructure demand that outstrips government funding capacity, prompting consideration of public‑private partnerships to alleviate budgetary pressure. This study investigates the feasibility of PPPs in China by identifying the critical success factors required for their implementation. Chinese experts completed a questionnaire rating 18 literature‑derived CSFs, and the responses were subjected to factor analysis. The analysis revealed five underlying factors—stable macroeconomic environment, shared public‑private responsibility, transparent procurement, stable political/social environment, and judicious government control—that collectively determine PPP success.

Abstract

With the rapid growth of the Chinese economy, the desperate demand for infrastructure developments has created bottlenecks in the country’s sustainable development. Infrastructure investment could not be funded completely by the government alone. Taking Beijing as an example, there will be about 2,400 infrastructure projects to be developed during 2006–2010 with a total investment of over RMB 470 billion, which may impose budgetary pressure on the government. As a result, public-private partnership (PPP) could be considered as a favorable option to help provide these rapidly demanded public works and services. In order to investigate the potential for adopting PPPs in the People’s Republic of China, this paper aims to explore the critical success factors (CSFs) necessary to conduct PPP projects. The views from Chinese experts were collected via an empirical questionnaire survey. The respondents were invited to rate a total of 18 CSFs that contribute to the success of PPP projects as gleaned from the contemporary literature. The results of this survey were analyzed by the factor analysis technique. The findings showed that the 18 CSFs could be grouped into five underlying factors including: Factor 1—stable macroeconomic environment; Factor 2—shared responsibility between public and private sectors; Factor 3—transparent and efficient procurement process; Factor 4—stable political and social environment; and Factor 5—judicious government control.