When might a project company break up? The perspective of risk-bearing capacity

Chen-Yu Chang

Construction Management and Economics, 2013, vol. 31, issue 12, 1186-1198

Abstract: Public-private partnerships (PPPs) have developed into a mainstream alternative procurement solution for the provision of public services. The aim is to explore a crucial but hitherto ignored issue in the study of PPPs: at what point a project company might break up. The project company's two-stage break-up in the National Physical Laboratory PFI project inspired this research in which a formal model is developed to demonstrate that contract break-up decisions can be plausibly explained through quasi-rent changes. This finding brings to the foreground the importance of taking into account risk-bearing capability in the design of project governance. How to achieve a level of risk-bearing capacity through the optimal use of financial, organizational and contractual means is a research area worthy of future exploration.

Date: 2013
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DOI: 10.1080/01446193.2013.868015

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