Public–Private Partnerships for Infrastructure Development
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Public–Private Partnerships for Infrastructure Development

Finance, Stakeholder Alignment, Governance

Edited by Raymond E. Levitt, W. R. Scott and Michael J. Garvin

Large infrastructure projects often face significant cost overruns and stakeholder fragmentation. Public-Private Partnerships (PPPs) allow governments to procure long-term infrastructure services from private providers, rather than developing, financing, and managing infrastructure assets themselves. Aligning public and private interests and institutional logics for decades-long service contracts subject to shifting economic and political contexts creates significant governance challenges. We integrate multiple theoretical perspectives with empirical evidence to examine how experiences from more mature PPP jurisdictions can help improve PPP governance approaches worldwide.
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Chapter 3: Toward a unified theory of project governance: economic, sociological and psychological supports for relational contracting

Witold J. Henisz, Raymond E. Levitt and W. Richard Scott

Abstract

To confront the extreme governance challenges posed by large, multi-phased infrastructure projects, the authors propose the application of a theoretical framework to construct a structure composed of regulative, normative and cognitive elements. The right combination of these institutional elements can allow participants to counteract problems such as displaced or “broken” agency _ in which later participants suffer from agreements crafted by earlier decision-makers holding different interests _ contracts that are overly rigid or brittle, and the absence of a shared purpose or mission. Sociological, political and psychological concepts and arguments are employed to supplement the economic and legal perspectives now dominating project governance. The harnessing of practices such as relational contracting, work group norms, network systems of decision-making, reputational capital, procedural justice and shared identities can lead the way toward crafting a more flexible, robust and effective governance structure.

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