Critical Success Factors for Ensuring Bankable Completion Risk in PFI/PPP Megaprojects

Abstract

This study investigates project financiers' perspectives on the bankability of completion risk in private finance initiative and public–private partnership (PFI/PPP) megaprojects. Using a mixed methodology approach, focus group discussions with financier stakeholders in the UK's PFI/PPP industry were used to identify 23 criteria relevant for evaluating completion risk in funding applications. These criteria were put in a questionnaire survey to wider audiences of financiers of PFI/PPP projects in the UK. A series of statistical tests were performed, including reliability analysis, Kruskal-Wallis nonparametric test, descriptive statistics, principal rank agreement factor (PRAF), and regression analysis. After identifying 21 reliable criteria influencing the bankability of completion risk, the general agreement of three major financier stakeholders (senior lenders, equity financiers, and infrastructure financiers) on all criteria were examined through the Kruskal-Wallis test and PRAF. A regression model, constructed and validated with input from another team of expert financiers, revealed five key criteria influencing the bankability of completion risk in PPP megaprojects. These include (1) a construction contractor with years of experience of successful completion of megaprojects, (2) the construction contractor's financial strength, (3) the existence of tried-and-tested technology for the construction of project, (4) the availability of an independent technical consultant (ITC), and (5) the existence of a fixed-price turnkey (FPTK) construction contract. The research findings will provide PFI/PPP contractors and clients with valuable strategies for satisfying financiers' requirements in delivering large-scale infrastructure PPP projects.