Mechanisms for protecting returns on private investments in public infrastructure projects

Demirel, H.C.; Leendertse, Wim; Volker, Leentje

doi:10.1016/j.ijproman.2021.11.008

Mechanisms for protecting returns on private investments in public infrastructure projects

Title

Mechanisms for protecting returns on private investments in public infrastructure projects

Author

Demirel, H.C. (TU Delft Integral Design & Management)
Leendertse, Wim (Rijksuniversiteit Groningen; Rijkswaterstaat)
Volker, Leentje (University of Twente)

Date

2022

Abstract

Despite the widespread attention for the private financing of infrastructure projects, actual empirical work on financing public-private partnerships remains limited. Especially the topics of return on equity and lenders’ cash flow control in relation to uncertainty are under-researched. The aim of this paper is to investigate and discuss the mechanisms applied by private financiers of infrastructure projects to protect their returns on investment. Using semi-structured interviews, the qualitative viewpoints of infrastructure financiers and their consultants on infrastructure investment are examined. The findings identify nine control mechanisms that financiers apply, including a range of asset and risk diversification portfolio strategies for their infrastructure investments, and reveal that they depend on governance mechanisms relating to the project environment, relations, knowledge and expertise. Hence, this study provides a better understanding of the actions and mechanisms applied to protect a return on infrastructure investments that leverage partnering strategies between public authorities and private investors in public infrastructure projects. This contributes to the debate on project financing under uncertainty and its implications for project governance in public private partnerships.

Subject

Control mechanisms
Governance
Infrastructure projects
Project finance
Public private partnerships
Return protection

To reference this document use:

http://resolver.tudelft.nl/uuid:fc08d331-d9fa-4d87-83ef-8aac3a398ecd

DOI

https://doi.org/10.1016/j.ijproman.2021.11.008

ISSN

0263-7863

Source

International Journal of Project Management, 40 (3), 155-166

Part of collection

Institutional Repository