Influencing factors of the government’s willingness to compensate in the early termination of PPP projects: based on multiple cases in China

Zujie Lu, Jicai Liu and Zehui Bu

Construction Management and Economics, 2025, vol. 43, issue 10, 823-848

Abstract: The Public-Private Partnership (PPP) projects often end in early termination. Investors usually fail to receive reasonable compensation from the government. The government’s willingness to compensate is crucial in the compensation process. This study aimed to clarify the factors influencing the government’s willingness to compensate and to identify the influential relationship between these factors. By selecting 18 cases of early termination of PPP projects, The key factors are identified using grounded theory. Finally, the influential relationship between the influencing factors is analyzed using Interpretative Structural Modelling (ISM), which transcribes the results and computing by SPSSAU. The results show that there are 12 major categories affecting the government’s willingness to compensate and distribute in the transmission chain with five levels. Among them, asset ownership, policy and regulation are the fundamental causes. Compensation scheme and negotiation factors are identified as direct causes. This study provides knowledge of the key factors affecting the government’s willingness to compensate. A three-tiered strategy is proposed to avoid transmitting these factors in the compensating process. Guiding the government to enhance its willingness to compensate, improve the efficiency of compensation and provides strategies for investors to obtain fair and reasonable compensation.

Date: 2025
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DOI: 10.1080/01446193.2025.2522275

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