Investment Analysis in Public-Private-Partnership Projects: Any Common Ground for Public and Private Investors?

Pekka Leviakangas, Pekka Kess and Jaakko Kujala
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Pekka Leviakangas: University of Oulu, Finland
Pekka Kess: University of Oulu, Finland
Jaakko Kujala: University of Oulu, Finland

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Abstract: Purpose (mandatory): The purpose of this paper is to show analytically that cash flow –based project analysis of private investors and cost-benefit analysis of the public sector conflict in many points in public-private partnership projects. Design/methodology/approach (mandatory): The method of analysis is based on cash flow accounting and cost benefit analysis. A single-project company is used as a demonstrating case. The flows of cash (private investors) and flows of costs and benefits (public investors) are integrated in a single analytical framework. Findings (mandatory): The findings show that the investors’ (public vs. private) social, economic and financial targets are not necessarily coinciding. Prospecting of common ground and win-win situations becomes a crucial success factor for any public-private partnership project. Research limitations/implications (if applicable): The current research on public-private partnerships is much focused on project delivery methods, contractual issues and discussion on the need of public-financed comparator. This paper will clarify the real problems faced. Practical implications (if applicable): The paper will set some guidelines how to find the common ground for successful PPPs. It also points out potential conflict areas. Social implications (if applicable): The paper in itself contains an element of socio-economic appraisal of projects that will increase the wealth and well-being of people. Originality/value (mandatory): The originality of the paper lies on its generic approach to single-project valuation problem, combining the both sides of valuation aspects: private and public investors.

Keywords: public-private partnerships; investment; project; cost-benefit; finance (search for similar items in EconPapers)
Date: 2013
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