Critical success factors for public private partnership projects in the Turkish construction industry

Abstract

Public Private Partnership (PPP) has become in both developed and developing countries as an essential procurement method in delivering public services. PPPs could be classified in five main models as service contract partnerships, leasing contracts, public private joint ventures, concession contracts, and privatization. In the construction industry, concession contracting, the private sector is responsible for designing, building, financing and operating a public entity. The study is investigating the critical success factors (CSFs) of PPPs in the procurement of public projects. It defines the factors that make contribution to the successfully delivery of the capital projects. A questionnaire survey is designed and administered to both public and private sector participants. The questionnaire consists of three parts; the first two parts deal with the general information and CSFs and third part with project specific questions. Eighty-two respondents provided valid responses out of 365 sent survey form. Based on the collected data, the relative importance of 23 potential CSFs for PPP construction projects in Turkey is examined. The results show that the three most important factors are: ‘favorable legal framework’, ‘detailed/clear project identification’ and ‘extensive, reasonable cost-benefit assessment’. Factor analysis indicated that proper factor groupings for the 23 CSFs are: project finance, project management, operational factors, procurement and organizational factors. These findings may influence the public entities/Turkish government to solve some legal and bureaucratic issues that enable to make PPP projects more attractive for contractors and financiers. As a consequence, public sector can completely focus on unprofitable public services and public investments, which cannot be done due to the limited funding, can be performed immediately by private sector. From the private sector aspect, construction companies can expand business areas in this way, gain new experiences. Moreover, analysis results may provide contractors insight about their weak and strong points thus what steps should be taken.