A Structural Equation Model on Critical Risk and Success in Public–Private Partnership: Exploratory Study

In construction, risk is inherent in each project, and success involves meeting defined objectives beyond budget and schedule. Factors vary for infrastructure projects, and their correlation with performance must be studied. In the case of public–private partnership (PPP) transportation, the level of complexity is higher due to more involved parties. Risks and success factors in PPP projects affect each other, which may lead to project failure. Recognizing the critical risk factors (CRFs) and critical success factors (CSFs) is indispensable to ensure the success of PPP infrastructure project implementation. However, the existing research on the PPP risk and success relationship has not gone into sufficient detail, and more support to address the existing gaps in the body of knowledge and literature is necessary. Therefore, in response to the missing area in the public–private partnership transportation industry, this paper analyzed the correlation between PPP risks and success factors. It identified, explored, and categorized various risk and success factors by combining a literature review, expert panel interviews, and a questionnaire survey among both the public and private sectors, a win–win principle. The data collected were analyzed using the structural equation modeling (SEM) approach and relative significance. Results show the relationship between risk and success factors, their influence on PPPs, and the most important factors, known as CRFs and CSFs, with high loading factors (LF > 0.5) and high relative importance (NMS > 0.5). The top five CRFs include “Contract quality (incomplete, conflicting)”, “Staff expertise and experience”, “Financial market risk”, “Conflicting objectives and expectations”, and “Inefficient feasibility study”. The top five CSFs were found as “Appropriate risk allocation and risk-sharing”, “Strong financial capacity and capability of the private sector”, “Government providing guarantees”, “Employment of professional advisors”, and “Realistic assessment of the cost and benefits”. This study advances the understanding of risk and success factors in PPPs and contributes to the theoretical foundations, which will benefit not only public management, policy consultants, and investors but also academics interested in studying PPP transportation projects.