Business Strategy
Critical Success Factors of Public-Private Partnership for Road Sector Development in India: A Private Sector Perspective

Article Details
Pub. Date : Dec., 2018
Product Name : The IUP Journal of Business Strategy
Product Type : Article
Product Code : IJBS31812
Author Name : Vimlesh Prabhudesai and Nandkishor G Sarode
Availability : YES
Subject/Domain : Management
Download Format : PDF Format
No. of Pages : 12

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Abstract

Developing countries and even some developed countries face financial constraints in building the country's infrastructure. Public-private partnership (PPP) appears to be an adequate mechanism for empowering both developing and developed countries to bring together the strengths of public and private sectors to build infrastructure projects. Given the state of affairs of India's transportation sector in general and road sector in particular, PPP may be one of the most preferred solutions. After the introduction of PPP, there was an exponential growth of 69.43% in the length of the National Highways in the 9th Five-Year Plan. But thereafter, the growth subsided-14.59% in the 10th Plan (2002-07) and 15.36% in the 11th Plan (2007-12). The number of projects awarded to PPP decreased sharply. This paper aims to investigate the factors critical to the success of PPP in the development of the road sector. The paper analyzes the views of one stakeholder-Private Developer (Concessionaire). The study is motivated by the country's inability to use PPP to the extent required in the development of the road sector. A questionnaire with a list of 26 critical success factors of PPP, identified through literature review and through discussions with experts, was administered among respondents experienced in development of road projects through PPP mode. The questionnaire was tested for its reliability using Cronbach's Alpha. The data was analyzed using relevant statistical tools. The top five factors identified were-sufficient financial viability, appropriate dispute resolution mechanism, favorable government policy measures, long-term low interest rate finance and suitable adjustment formula for toll revenue.


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World over, the provisioning of infrastructure has been the responsibility of the government. They traditionally employ lowest bid method Engineering Procurement and Construction (EPC) to award the contract. But this encourages parties to use cost-cutting measures at the cost of quality-enhancing measures, which makes it less likely that the contract shall be awarded to the party that delivers highest quality products. Besides, the state-owned infrastructure utilities suffered problems such as low labor productivity, poor service quality, thefts, revenue shortages, inadequate investments and deteriorating equipment.


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