Capital improvement projects can be prohibitively expensive. The government (or public sector) often looks for private investors to help pay for these projects that benefit the public. As of the most recent ASCE Report Card in 2021, the investment gap is nearly $2.59 trillion. This deficiency leads the government to turn to private industry to bridge the gap and help develop new and innovative approaches to infrastructure projects. There are quantifiable benefits from this public-private partnership, including improvements in public services and infrastructure, access to private sector sources and expertise, and improved performance and overall lifecycle costs. Despite these proven benefits, disputes and contract conflicts are common in PPP projects.
In this study, researchers Mohamad Abdul Nabi, Rayan H. Assaad, and Islam H. El-adaway wanted to understand not only the primary factors associated with disputes, but also the relationships and interconnections between those factors. This research is focused specifically on U.S. infrastructure and construction projects with disputes between the project parties. In “Modeling and Understanding Dispute Causation in the US Public–Private Partnership Projects,” the authors analyzed 37 different cases of disputes. Not surprisingly, the top three types were money, regulatory issues, and mismanagement. The authors highlight early warning signs of factors that are likely to trigger conflict, and they encourage practitioners and scholars to use this research to help control dispute occurrences. The full paper is available in the Journal of Infrastructure Systems at https://doi.org/10.1061/JITSE4.ISENG-2328. The abstract is below.
Abstract
The partnership between the public and private sectors has led to a new and innovative way of delivering infrastructure projects that is referred to as public–private partnership (PPP). There are various benefits associated with PPP delivery methods including risk sharing, access to private funding, innovation, and flexibility, among others. Despite the proved benefits, contract conflicts and disputes are very common in PPP projects. While previous research studies examined the risks and the potential causes of conflicts in PPP projects, little-to-no research efforts were directed to study and model the interconnectivities between the different causes of conflicts in PPP agreements. To this end, the aim of this paper is to fill the gap in knowledge by providing a deeper understanding of the causalities or relationships between the different factors that cause disputes in PPP projects in the United States. The authors used a comprehensive analytical approach that involved three primary steps. First, 37 PPP case studies of infrastructure and construction projects were collected and analyzed using manual content analysis. Second, social network analysis was conducted to study the interdependencies between the different causal factors leading to disputes in PPP in general and in relation to Execution, Investment and Operation, and Third-Party Claims, in particular. Third, association rule analysis was conducted to identify key associations between the different causal factors that may trigger the three different types of PPP disputes. The findings showed that the key causes of disputes in PPP projects are related to (1) legal and regulatory, (2) payment and financial, and (3) poor management. While Execution-related disputes were found to be caused by complex interactions of causal factors, dispute causation of Investment and Operation–related and Third-Party Claims–related disputes seemed to be less simplistic. As such, the outcomes of this paper highlighted the important aspects required to avoid dispute occurrence in PPP projects. Ultimately, this paper contributes to the body of knowledge by providing directions for scholars and practitioners toward the aspects and interdependencies that require optimization and/or thorough consideration to avoid dispute occurrence and subsequently ensure successful implementation of PPPs.
Learn more about these signs, how to spot them and limit potential conflicts in the ASCE Library: https://doi.org/10.1061/JITSE4.ISENG-2328.
