Public-Private Partnerships Infrastructure Financing Model: How theoretical perspectives help explain cost-overrun in some select projects.

Jude Chidiebere Anago
University of Nigeria, Department of Banking and Finance, Enugu Campus

Abstract

Despite the rising significance of Public-Private Partnerships as infrastructure financing model in developing countries’, their efficiency is currently undermined by challenges linked to cost overrun. Although studies focusing on this issue have been discussed extensively, little effort has been made to theorise cost-overrun issues bedevilling PPP projects in Africa vis-à-vis Nigeria through the lens of economic theories of transaction cost and agency theories. Following the deployment of a flexible abductive research approach in order to use theory with an immense degree of provenance to explain the propositions surrounding this particular phenomenon and case study to enable the development of context-dependent knowledge, this study investigates the likely triggers of cost-overrun in the case studies of two failed projects in Nigeria and its link to select economic theories. Subsequently, the paper developed a three-phase conceptual framework to improve PPP implementation and provide insulation for cost overruns. The study findings are valuable to the literature as they will deepen the understanding of theoretical linkages to cost-overrun issues in transport infrastructure.

Keywords: Agency theory, transaction cost theory, cost overrun, Infrastructure Financing, Public Private Partnership, Transport Infrastructure,

JEL: R4