Research on the Allocation of Excess Revenue Between Public and Private Sectors in Mega Construction Projects

Qinghua He (), Ting Wang (), Daoan Fan () and Dongqi Wang ()
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Qinghua He: Tongji University
Ting Wang: Tongji University
Daoan Fan: Tongji University
Dongqi Wang: Tongji University

A chapter in Proceedings of the 23rd International Symposium on Advancement of Construction Management and Real Estate, 2021, pp 591-603 from Springer

Abstract: Abstract Public-Private-Partnership (PPP) which allows private firms to finance projects for public sector infrastructure has been adopted as one of the most efficient procurement and delivery methods in mega construction projects recently. However, some problems, such as the allocation of excess revenue between public and private sectors are still found to be researched in order to get a sustainable development of PPP construction projects. Therefore, this paper developed a game model on the allocation of excess revenue between public and private parts based on the Cobb-Douglas project function; and meanwhile, two scenarios, namely priority strategy of private sector and priority strategy of public sector are considered respectively in this study. To be specific, firstly, this paper analyzed the emergence mechanism of game behavior between the two sectors. Secondly, priority strategy model of private sector and public sector were established and analyzed. Thirdly, Beijing Metro Line Four was taken as a numerical example to apply the model. Research results show that (1) both the revenue function of public sector and private sector are in positive correlation with the collaborative management capacity of PPP project ( $$ \beta $$ β ); (2) the increase of investment of public sector contributes to more revenue of total excess revenue in PPP projects. The research outcomes are anticipated to deliver insights and guidance for successful and sustainable management of mega PPP projects.

Keywords: Cobb-Douglas production function; Excess revenue; Game theory; Megaproject management; Public-Private Partnership (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-15-3977-0_45

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DOI: 10.1007/978-981-15-3977-0_45

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