PPPs are widely used around the world in the provision of public works and services. A large number of PPP projects have been successfully developed in different sectors, providing increased value for money for government departments and general publics. However, PPP projects have excessive risks compared to the traditional procurement approaches. Many projects in developed and developing countries have suffered service quality failures due to various unforeseen risks. Service quality failure in PPP projects can result in huge losses to the host government and the general public, and ultimately reduce the popularity of PPP projects. Therefore, service quality has become a concern for governments and the general public in relation to using the PPP approach to deliver infrastructu...[ Read more ]

PPPs are widely used around the world in the provision of public works and services. A large number of PPP projects have been successfully developed in different sectors, providing increased value for money for government departments and general publics. However, PPP projects have excessive risks compared to the traditional procurement approaches. Many projects in developed and developing countries have suffered service quality failures due to various unforeseen risks. Service quality failure in PPP projects can result in huge losses to the host government and the general public, and ultimately reduce the popularity of PPP projects. Therefore, service quality has become a concern for governments and the general public in relation to using the PPP approach to deliver infrastructure projects.

In this study, an overview on risk management in PPP projects is first provided, acting as the foundation of the following study. A service quality management approach is then developed based on the risk management systems used in PPP projects, containing a performance monitoring framework and execution procedures. Since service quality evaluation is the core mission of service quality management, a framework for service quality evaluation is proposed based on the EFQM excellence model, including process evaluation and results measurement. In the end, a compensation estimation framework and corresponding mathematical model are developed based on a market value approach, in which a compensation model using a discounted cash flow technique that integrates multiple input and output variables and probabilistic techniques, such as regression analysis, maximum likelihood analysis and Monte Carlo simulation, is used to analyze and address the uncertainties associated with certain socio-economic and project performance variables. This model is expected to facilitate the host government and concessionaire in effectively solving the compensation issues arising from the service quality failures of PPP projects.