Determining Critical Success Factors (CSFs) and Appropriate Models

of Public Private Partnership (PPP) Projects in Bangladesh

by

Mahinur Raiyan Mortuza

A thesis submitted in partial fulfillment of the requirements for the

degree of Master of Science in
Information Management

Examination Committee: Dr. Vatcharaporn Esichaikul (Chairperson)

Prof. Sumanta Guha
Dr. Chutiporn Anutariya

Nationality: Bangladeshi
Previous Degree: Bachelor of Science in Computer Science and Engineering
Ahsanullah University of Science and Tehcnology
Dhaka, Bangladesh

Scholarship Donor: AIT Fellowship

Asian Institute of Technology

School of Engineering and Technology
Thailand
May 2018
 Acknowledgments

First and foremost all glory to the almighty Creator, without His help nothing can be accom-
plished. Then I would like to express my gratitude from bottom of my heart to my advisor,
Dr. Vatcharaporn Esichaikul for continuously supporting me, helping me and teaching me
from beginning till the end of the master research study. This study would not have seen the
end without her dedicated help and observation.

I deeply appreciate the help from my thesis committee members Professor Sumanta Guha
and Dr. Chutiporn Anutariya for their valuable suggestions and guidelines.

I would also like to thank Mr. Najmus Sayadat from the PPP authority of Bangladesh for
helping out in my research and providing me the valuable data on PPP of Bangladesh.

Lastly, I want to express my gratitude towards my father, mother, my siblings and other
family members. Maybe without their help and support, this degree would only been a
dream of mine. For their prayers, support and efforts on me through the entire period of my
study in AIT, I wanna thank them from bottom of my heart.

ii
 Abstract

The practice of PPP has been done worldwide still it is far from the mature state in devel-
oping countries like Bangladesh. There was an urgent need of finding the factors which are
responsible for the success of the PPP project in context of the country. A mixed method
approach was applied to identify those responsible factors. Nine CSFs and twenty six suc-
cess sub-factors of PPP projects were determined. For measuring success of PPP, this study
suggests that project efficiency, risk transfer, tendering process, impact on the future PPP
initiatives, and impact on the citizens/ users should be analyzed. Furthermore, the qualita-
tive analysis showed the importance of the appropriate model selection and how it plays a
vital role in the success of PPP projects. In addition, a guideline is provided based on three
case studies on transportation sector, power and energy sector, and government and social
infrastructure sector. This paper also exhibits that one factor alone cannot be the cause of the
success of a project. The findings can be helpful for successfully handing the PPP scenario
of Bangladesh as well as other the developing countries of the world.

iii
 Table of Contents

Chapter Title Page

Title Page i
Acknowledgments ii
Abstract iii
Table of Contents iv
List of Figures vi
List of Tables vii
List of Abbreviations ix
1 Introduction 1
1.1 Overview 1
1.2 Problem Statement 1
1.3 Objectives 2
1.4 Limitations and Scope 3
1.5 Outcome of the study 3
2 Literature Review 4
2.1 Sectors of Public-Private Partnership 4
2.2 Types of projects in Public-Private Partnership 5
2.3 Models in Public-Private Partnership 7
2.4 Measuring success of Public-Private Partnership projects 11
2.5 Critical Success factors in Public-Private Partnership projects 14
2.6 Public-Private Partnership projects in Bangladesh 19
2.7 Related Studies in underdeveloped countries 24
3 Methodology 27
3.1 Identification of sectors, Critical Success Factors and selec-
tion of projects and models for case study 29
3.2 Verification of conceptual model and determination of ap-
propriate models 40
3.3 Validation and determination of Critical Success Factors 44
4 Data analysis Results and Discussions 49
4.1 Qualitative analysis to determine appropriate models of PPP 49
4.2 Determination of the CSFs 56
4.3 Discussion on appropriate models and the Critical Success Factors 80
5 Conclusion and Recommendations 83
5.1 Conclusion 83
5.2 Recommendations 84
6 References 85

iv
7 Appendices 89

v
 List of Figures

Figure Title Page

2.1 PPP models based on risk sharing and private sector participation. 10
2.2 Number of publications per year on PPP CSFs from 1990 to 2013. 14
3.1 Research methodology. 27
3.2 Proposed Conceptual Model. 38
3.3 Method of grouping CSFs. 40
3.4 Process of verifying proposed conceptual Model. 42
3.5 Process of qualitative data analysis. 44
3.6 Process of the questionnaire design. 46
4.1 Outcome of the case study on Mayor Hanif flyover project from
transportation sector. 51
4.2 Outcome of the case study on Sirajgonj gas-fired power project
from power and energy sector. 53
4.3 Outcome of the case study on BEPZA lease contracts from social
and government infrastructure sector. 54
4.4 Model summary of Success of PPP. 66
4.5 Multicollinearity statistics of Success of PPP. 66
4.6 Skewness and kurtosis statistics of Success of PPP. 67

vi
 List of Tables

Table Title Page

2.1 Proposed PPP project success measures. 13

2.2 The list of PPP projects in Bangladesh till 2009. 22
2.3 The list of completed and awarded PPP projects. 23
2.4 The summary of related works on Critical Success Factors of
PPP projects in underdeveloped countries. 26
3.1 Category of sectors of PPP. 29
3.2 PPP Sectors of Bangladesh categorized in five sectors. 31
3.3 Characteristics of selected projects 33
3.4 Selected projects for case study 34
3.5 Identified Critical Success Factors in context of Bangladesh. 35
4.1 Demographic profile of respondents. 57
4.2 Summary of responses of Success sub-factors under respective
Critical Success Factors. 58
4.3 Descriptive statistics of the sub-factors under Financial and eco-
nomic viability. 59
4.4 Descriptive statistics of the sub-factors under Transparent transaction. 59
4.5 Descriptive statistics of the sub-factors under Relationship management. 59
4.6 Descriptive statistics of the sub-factors under Regulatory environment. 60
4.7 Descriptive statistics of the sub-factors under Appropriate PPP model. 60
4.8 Descriptive statistics of the sub-factors under Supportive community. 60
4.9 Descriptive statistics of the sub-factors under Risk sharing and
allocation. 60
4.10 Descriptive statistics of the sub-factors under Strong public and
private consortium. 61
4.11 Descriptive statistics of the sub-factors under Political support
and stability. 61
4.12 Ranking of the critical success sub-factors. 62
4.13 Ranking of the Critical Success Factors. 63
4.14 Descriptive statistics of the measure points under each success measure. 64
4.15 Descriptive statistics of the success measure groups. 64
4.16 List of verified hypotheses. 65
4.17 Hypothesis testing result. 68
4.18 Summary of the opinions of experts on Financial and economic
viability. 70
4.19 Summary of the opinions of experts on Transparent transaction. 71
4.20 Summary of the opinions of experts on Relationship management. 72
4.21 Summary of the opinions of experts on Regulatory environment. 73
4.22 Summary of the opinions of experts on Appropriate PPP model. 74

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4.23 Summary of the opinions of experts on Supportive community. 75
4.24 Summary of the opinions of experts on Risk sharing and allocation. 75
4.25 Summary of the opinions of experts on Strong public and private
consortium. 76
4.26 Summary of the opinions of experts on Political support and stability. 77
4.27 Summary of the opinions of experts on PPP success measures. 78
4.28 Study comparison with other developing countries. 82

viii
 List of Abbreviations

ADBI Asian Development Bank Institute

BEPZA Bangladesh Export Processing Zones Authority
BBO Buy, Build and Operate

BLT Build, Lease and Transfer

BO Build and Operate
BOO Build, Own and Operate

BOT Build, Operate and Transfer

BOOT Build, Own, Operate and Transfer
BTO Build, Transfer and Operate

DBFOT Design, Build, Finance, Operate and Transfer

EC European Commission
GCC Gulf Cooperation Council

ICT Information and Communications Technology

KPI Key Performance Index
LDO Lease, Develop and Operate

MRT Mass Rapid Transit

KPMG Klynveld Peat Marwick Goerdeler
PPP Public Private Partnership

PPIAF Public Private Infrastructure Advisory Facility

PPPIRC Pulic Private Partnership in Infrastructure Resource Center
UNDP United Nations Development Programme

VOIP Voice over Internet Protocol

VfM Value for Money
WAA WrapAround Addition

WiMax Worldwide Interoperability for Microwave Access

ix
 Chapter 1

Introduction

1.1 Overview

Public Private Partnership (PPP) has been established way before the name itself came to ex-
istence. For centuries, governments of the countries collaborated with private companies to
implement some tactical, financial or manpower based projects which could not be achieved
by the government alone. PPP was first applied in 1950s in United States for improving ed-
ucation system and urban expansion, and eventually in 1990s the Public Private Partnership
found its wider application in United Kingdom according to PPIAF (2009). As the level of
public debt and macroeconomics grew, the PPP became a reliable method for the government
projects all over the world especially in the underdeveloped countries.

The projects done under PPP are vastly diverse. The diversity emerged as a country needs
a lot of improvement in different sectors for development and among them, Information
and Communication Technology (ICT), transport, solid waste, energy and power, water and
sanitation are some of the mostly granted sectors for the PPP projects. For every sector there
are some legislation and rules which are different from each other which lead eventually
the need of different models of Public-Private Partnership for conveniences of both public
and private party. World Bank Group (2016) showed the major types of models i.e. service
contracts, lease, concession, full divestiture etc. which can be used in different type of
projects.

There are more than one factors which determine the success and failures of PPP projects.
This study is emphasized on the PPP initiatives in context of Bangladesh to find out the
selection of appropriate models and the Critical Success Factors affecting the projects.

1.2 Problem Statement

Various kinds of models are being used to implement projects in various types of sectors
in PPP projects all over the world. There are so many studies which show factors of the
successful projects. There are so many things to learn from those papers including the used
models, the regulations used in the projects, reasons concluded for success or failure. World
Bank Group (2016) also showed and gave which kind of models can be used according to
the extent of participation and risk sharing by the private party. Every model of PPP is not
suitable for every country and the selection of models depends on many factors. The models
which are successful in the developed countries may not be successful in the underdeveloped
or the developing countries. The factors which are the reason behind the success may be also
different in aspect of different countries.

1
The risk analysis and finding the success factors are important in business strategic planning.
Both public and private companies are involved in PPP projects and for that the research on
findings of key factors for success of previously implemented projects are very important.
Along with the research on the success factors, the need of study on the models used in the
projects are also necessary to choose more effective models in the future projects of PPP.
Moreover, if the critical success factors analyzed more to show the reasons of success, the
public and private both partners can be beneficial from it.

PPP is an emerging and necessary tool for developing a country. As the time goes on, more
and more governments are leaning towards PPP project because of its risk sharing and fund-
ing from the private parties. Joha & Janssen (2010) showed the differences between the
PPP, outsourcing and shared service centres which showed PPP may have highest risk but
the risk is shared between the private and public parties. They even showed that PPP can
be a step towards outsourcing and shared service centres. The underdeveloped countries are
more keen towards these kinds of projects because of their lower income status. Bangladesh
is also one the underdeveloped countries which is leading towards a vast PPP sector. After
the establishment of legal framework in 2010, the number of PPP projects have been in-
creased manyfold. There have been some projects which have been awarded and there are
so many projects which are undergoing through regulations or under construction. Among
those projects, some projects are in the book of failure and some can be considered as suc-
cessful projects. For this reason the analysis of the projects and finding out the Critical
Success Factors and finding out the compatible model for Bangladeshi PPP scenario is nec-
essary. Findings of the appropriate model will help to take good decisions while selecting
the models for PPP projects in the future. And on the other hand, Critical Success Factors
will help the public and private parties to find the lacking in the initiatives and correct them.

So this study will try to explore the following points:

• What are the categories of the PPP models available at present based on some specific
criteria?
• Which model would be suitable for developing country like Bangladesh?
• What are the Critical Success Factors (CSFs) for the PPP projects in Bangladesh?

1.3 Objectives

There are so many types of models are being used in the PPP projects all over the world.
Governments and private parties are trying to implement various kind of models to get the
most profit out of the projects. But there are few studies which show which models are being
used mostly and which models should be used more in the future projects based upon the
success. The studies of these kind are more rare in case of underdeveloped countries. As for
Bangladesh, though so many projects are completed under PPP initiatives, the guidelines for
PPP is still lacking the success ingredients. The study on Critical Success Factors will help

2
to increase the success rate of PPP projects and will increase the public and private parties
interest towards implementing these kind of projects.

So the main objectives of this study are the followings:

• Determine appropriate models for PPP projects in Bangladesh

• Identify Critical Success Factors (CSFs) of PPP projects in context of Bangladesh

1.4 Limitations and Scope

The information about projects are gathered from only the authentic sources found in web
which reduced the number of projects as many official websites of Bangladesh are not up-
dated and there are few studies on this topic. Only the completed and awarded projects are
selected for analysis to conclude the primary selection of appropriate models.

The case study is done on mostly used three sectors for PPP projects in Bangladesh. The
case study covered the transportation sector; power and energy sector; and the social and
government infrastructure sector.

The Critical Success Factors (CSFs) of PPP are analyzed in general for all sectors. The PPP
is not a new concept in Bangladesh, but the number of projects completed were not that
much. So it is too early to conclude CSFs for individual sectors.

Another important limitation is this research and data sets are taken from the projects im-
plemented in underdeveloped country. The outcomes will be totally based on the scenario
of underdeveloped and developing countries which may vary from the PPP scenarios in the
developed countries with advanced technologies, improved policies and guidelines.

1.5 Outcome of the study

With appropriate data and analysis, the study can conclude the following:

• Guidelines on models to use in case of PPP projects in Bangladesh in future

• A list of Critical Success Factors of PPP projects in Bangladesh

3
 Chapter 2

Literature Review

This section is about the discussion of Public-Private Partnership. In this section, the discuss
of the sectors, project types and models of PPP have been shown. After that, discussion of
measuring the success of PPP projects and the Critical Success Factors (CSFs) affecting the
success of the projects are mentioned. In the next phase, the PPP sectors in Bangladesh, types
of projects done under the sectors in Bangladesh and the models used in there are shown. Fi-
nally, some prior examples of Critical Success Factors (CSFs) of projects in underdeveloped
and developing countries to find out the effective CSFs in Bangladeshi Projects have been
shown.

2.1 Sectors of Public-Private Partnership

The practice of Public-Private Partnership projects throughout the world primarily began in
1970s by British Government as the necessity of irregular help from the private funding in
infrastructure projects. But the corner stone of PPP was placed in 1997 by former prime
minister of United Kingdom Sir John Major under the new labor law. Broadbent & Laughlin
(2003) discussed though in United Kingdom the PPP was contained but eventually the con-
cept of PPP has been well accepted by the countries all over the world in a short amount of
time in multiple forms. Yescombe (2007) defined that the structure of PPP can be complex
as the partnership can be between government and one or more private sector companies,
and a large number of parties are involved in the process. However, the Governments around
the world are more keen towards PPP projects because of its wide range of sectors. The
sectors vary from country to country depending on the geographical location, financial and
political state or sometimes the policy framework. But according to The World Bank et al.
(2014) there are two major characteristics to be fulfilled before it can be counted as a sector
for PPP projects. Firstly, the project needs to have contribution towards the public services
and secondly, the project will have a contract which will clearly define about the long term
assets involvement.

To talk about the sectors of PPP, Yescombe (2007) talked about the infrastructures of public
sections mainly transportation, social infrastructure, public utilities, government offices and
accommodation, and some specialized service like communication networks. In a broad
study on PPP, The World Bank et al. (2014) showed some major sectors where the PPP are
vastly used. The sectors showed are - transport, water and waste management, power sector,
social infrastructure and government infrastructure.

For maintaining a standard and to handle unique challenges of each sectors, the PPPIRC
(2017) has categorized the projects into 7 major sectors depending on the PPP projects all
around the world. They have regulations for each sector and sectors are - energy and power,

4
solid waste, clean technology, water and sanitation, transport, information and communica-
tion technology, sub-national and municipal PPP.

2.2 Types of projects in Public-Private Partnership

The The World Bank et al. (2014) showed different types of projects are done under the
different sectors. The types of projects done under each sector are vastly diverse and different
depending on the needs of the country. According to their study they have categorized the
sectors and showed some types of projects. The results are shown as follows:

• Transport sector has projects type like roads, tunnels, bridges, railway sector, different
types of ports, mass transit systems and airports
• Water and waste management has bulk water treatment, water distribution and sewer-
age system, and solid water management services
• Power sector consists of projects like power generation and distribution system
• Under social and government infrastructure sectors consist education facilities, health
facilities, prison facilities, and urban regeneration and social housing projects were
included

While discussing on types of projects done all around the world, Siemiatycki (2012) showed,
in about 25 years history, the number of highways, bridges, hospitals, bridges, water-waste
management and prison facilities have been made under PPP procurement process have ex-
ceeded so much than expected. The study added that, in United States alone there are differ-
ent types of projects were done under transport sector.

The transport sector is one of the most admired sectors of Public-Private Partnership because
of the fiscal challenge faced by the governments all over the world. AECOM Consult Team
(2007) searched for findings of institutional context for transport sector and showed the 11
(eleven) different project done in United States. The projects in this study are from Alaska,
California, Florida, Georgia, Illinois, Massachusetts, New Jersey, Texas and Virginia. All the
states are considered as developed states and the type of projects done are tunnels, bridges
and ramps, sky ways, highways expansion, highways rehabilitation, ports, expressways and
expressway connector, and tollways. From the study we can find the so many varieties of
projects done only in United States under the transport sector. In a study on East Asia re-
gion’s transport sector, Halcrow Group Limited (2004) pointed out the Skytrain and Mass
Rapid Transit (MRT) projects in Thailand; Monorail, MRT and automated transit projects in
Malaysia; MRT projects in Philippines and railway systems in Indonesia. While discussing
these projects with developed countries, the study also pointed out the bus, metro rail and
light rail projects in United Kingdom; MRT projects in China and metro rail project in Sin-
gapore. Bruchez (2014) pointed out some of the South African projects in the transport

5
sector. The projects mentioned in the study are airports, rail corridor development, roads and
tollways.

The telecommunication sector has been used in PPP for many years, but after the internet
reached the far and wide throughout the world, the most recent addition in the PPP is the
Information and Communication sector combining the telecommunication and information
technologies. The countries around the world are interested towards this sector because of
the sector’s reach to citizens. Talking about ICT sector, Bruchez (2014) showed the infor-
mation system and broadband initiative projects. The study pointed out the projects are the
South African national level program with a huge budget. In a review on ICT projects in
Vietnam, Owen (2006) showed the VOIP and WiMax projects all over country. To improve
the quality and productivity, the governments are using ICT sector of PPP to implement the
e-government projects. Sharma (2007) has talked about the e-government projects in Asian
countries and showed some successful projects. The study showed the e-Procurement project
from Singapore; and from India, 3 projects were discussed in the paper - online delivery of
lands, online access to company affairs and regional e-procurement system. The impact of
PPP in ICT sector was emphasized in this study.

Marin (2009) analyzed 65 developing countries in Sub-saharan region, East-Asia Pacific,

South Asia, Africa, Europe and Latin America and found the vast PPP projects in water
utility sector. Varma et al. (2013) showed the irrigation, canal water distribution system and
drainage systems projects in water sectors which improved the life of village people. The
study also discussed about the possibility of having water embankment speedway, tube well
expansion programs, sewerage treatment plants linked through riverfront development and
also the micro irrigation projects in future. Pusok (2016) showed the potable water projects
done in the 56 (fifty-six) countries. In those countries sanitation projects are another type of
water sector projects done under the PPP contracts.

Energy sector is broad and the demanding sector all around the country as the gas sector, or
power sector or oil sector projects are expensive. Because of this reason the governments are
leaning more towards private investors to come towards the PPP projects. In a study of World
Bank, Vagliasindi (2013) discussed about the recent states of the PPP projects investments
in energy sector all over the world and showed the several renewable energy projects in
China, Peru, Mexico and Brazil. Middle-East has a vast power sector which runs on the PPP
infrastructure delivery. Biygautane (2017) discussed the water and power projects in Saudi
Arabia, Kuwait and Qatar. In a brief overview on PPP in Indian infrastructure projects,
KPMG INDIA (2006) showed the energy distribution and transmission projects under the
energy sector of India.

The social and government infrastructure have so many types of projects from hospital to
prison facilities. These types of projects are getting more popular in developed countries
as well as in the developing ones. Barrows et al. (2011) analyzed the PPP in a Canadian
Health-Care and concluded some guidelines for the future of health-care projects in Canada
and other countries. According to the study, these guidelines will help the success of PPP
infrastructures in health projects. ADBI (2000) showed the case study of a school in Peo-
ple’s Republic of China which is a successful example of collaboration between government
policy and private investment. The study additionally discussed the education projects in

6
Philippines, schools in rural areas in Samoa, health and education projects in Bangladesh.

The discussion from the previous studies pointed out different types of projects in different
countries depending on the necessity of the government for the development of the country.
In a nutshell, despite of the different necessities, the main types are still similar and fall under
the main categories of the PPP sectors.

2.3 Models in Public-Private Partnership

Various sectors and many types of projects in PPP lead to the necessity of different types
of models. The types of projects and the models chosen for the projects all over the world
are similar. There are many types of models introduced depending on the necessity of the
public or private parties in PPP. Siemiatycki (2012) pointed out that, the success or failure of
the projects depends on the processes of planning and the risk sharing between the private
and public parties. The study added that three primary characteristics of PPP excluding the
traditional government contracts as these contracts are biased towards public companies in
risk sharing. Depending on mutual benefits of partners, contractual concession, and transfer
and sharing of risks between partners, the sutdy showed the concession style approach of
PPP where the responsibility of private party increases with the expansion of tasks in the
projects. The level of risk taken by the private party also increases as the number of tasks
are greater. The most mixed types of models can be seen in the European Countries as the
number of PPP projects are most in those countries. To talk about the mega projects delivered
under PPP contracts, Irimia & Oliver (2012) performed a detailed research and showed six
classification criterion of PPP models from various studies and projects. The models showed
in the study are discussed because of the classification.

1. In the first classification, the models are based on degree of responsibility presumed
by the public party in financing. Garcia (2005) showed seven different models:
• Public model: In this model public partner is totally in charge of presuming all
the functions.
• Public model with private payment: Functions of the sectors are also in charge
of the public partner except the payment. The payment in done by the private
partner.
• Public model with private management: This model gives the management re-
sponsibilities to the private partner. The other functions are controlled by the
public partner.
• Private model: This model is difficult to find but in this model the private partner
is total responsible for all the functions.
• Private model with public payment: In this type of model, the private partner is
responsible for all the functions except the payment, which is done by the public
partner.

7
 • Privatized public model: This kind of model is built and funded by the pub-
lic partner, user provided the payment and private partner is responsible for the
management.
• Private socialized model: The project construction and finance are done by pri-
vate partner, then management and remittance is done by public partner by leas-
ing it from the private enterprise.
2. The second classification of models is done by considering source of finance and risk
assumption. Irimia & Oliver (2010) sorted out three types of outcome from this classi-
fication - public party seeks private funding and also assumes the risk of implementing
the project; the private party risk sharing and funding; and the private party taking all
risk following the guidelines of public sector.
3. The system of payment is the base of these models. The money management in public
sectors and private sectors categorized the projects in three models:
• Traditional System: In a closed budget, the constructor is given payment on ac-
count which is approved by the administration and the revision of the budget can
be done later if necessary.
• German Method: The governments deals a contract with the tender winning pri-
vate enterprise where the payment is only given after the successful completion
of the projects. After the public project is completed and running, the payment
can be given in full or in annual installments. The reason behind this kind of
project is postponing the arise of debt as the entry of the investment in govern-
ment accounts goes in a later date.
• Shadow Toll Method: The government pays the rates according to agreement to
get the services in this method. The concessionaire is responsible for building
and operation of the project and the payment is done in a periodic manner based
on the use of the infrastructure by the citizen. The risk for private party is less
in these types of project because the government ensures the level of income not
the users. After the agreement term is over, the project is delivered to the public
party without any additional cost. This method is also known as the ”Operating
lease”.
4. Irimia & Oliver (2010) also showed that the project models can be categorized based
on the budgetary impact of the private party. The study showed four types of models
under this category:
• Private Models: The government is only capable of granting permission for con-
struction and operation in these models. After the permission has been granted,
the private sector is solely responsible for fund collection, construction and man-
agement. Though the public party can control and supervise the functions, the
level of risk taken by private sector is high.
• Models with budgetary implications: In these projects, the public party is ready
to take all the risks and budget completely comes from the public budget.
• Models of no budget impact: It is a mixture between public party controlled
administration and private party funding.
8
 • Mixed Models: This model includes the funding and resources both from public
and private party. The percentage of responsibilities are finalized by the agree-
ments.
5. In this category, the models are categorized based on the involvement of public sector
in different phases of the project. Irimia & Oliver (2012) divided the models into two
categories - direct intervention of the government and the indirect intervention through
creation of public entities and companies.
6. Finally in the last category, the study showed the most widely used model types in
PPP sector which is categorized depending on the involvement of private sector in
designing, management and financing. According to the study, the involvement and
payment infrastructure can be shown under one single model - concession. There are
varieties of models under the formula of concession with different types:
• Build and Operate (BO) Model: There is no time limit given to private party who
will be responsible for finance, construction and management. The controlling
of the project is done by the public section.
• Build, Operate and Transfer (BOT) Model: In this kind of concession, the private
partner constructs and manages the project within a time limit. The private party
manages the project till the expected return is secured and after that the ownership
goes to the public partner.
• Build, Transfer and Operate (BTO) Model: The public party takes over the own-
ership of the project after the construction phase but before the operation. After
the project is ready for operation, the private party leases the project from the
public partner.
• Buy, Build and Operate (BBO) Model: The private enterprise purchases the pub-
lic property for management purpose after the renovation or extension is done.
This kind of model is useful for the development of damaged or old infrastruc-
tures.
• Design, Build, Finance and Operate (DBFO) Model: This is identical to the pure
concession model where private enterprises finance, design, constructs and man-
ages the infrastructure but the difference is payment is given by the administra-
tion. The payment is given by public party in terms from the services of the
projects.
• Lease, Develop and Operate (LDO) Model: In this concession model, private
party leases government infrastructures, then repairs and develops it in the con-
cession period and operates it under the lease agreement.
• Wraparound Addition (WAA) Model: The private party owns a extended part of
publicly owned and managed infrastructure. After the completion, the public and
private partners share the ownership.

Turina & Car-Pušić (2006) analyzed the European Commission (EC) research on PPP projects
and the models used on infrastructure delivery. The study also talked about the models em-
phasized on the risk sharing and involvement of private sector. In a brief overview, the study
9
showed the models from Skendrović & Vukmir (1999) which are categorized into five types
- Service Contracts, Operation and Management Contracts, Leases, Concessions, and Build
Operate Transfer contracts and variants. For maintaining the standard the World Bank Group
(2016) has categorized the models according to the agreements to clarify risk sharing and ex-
tent of the private sector participation. The study categorized the models which are mostly
used all over the world. The models are similar to the models shown by Degood (2014)
which are also based on the risk sharing and private sector involvement. Service contract,
Management contract, Lease, Concession, Greenfield project and Divestiture.

To discuss in brief, the most commonly used models are chosen for PPP projects. The models
discussed are dependent on the risk sharing and the level of private sector involvement. There
are so many models which are hybrid of these main models and can be found in many
projects all over the world. In Figure 2.1, models are shown based on the range of private
sector involvement and the risk sharing.

Figure 2.1: PPP models based on risk sharing and private sector participation. Reprinted
from Degood (2014).

• Service Contracts: Service Contracts are legal agreements between the government
and the private enterprise for a time period which is usually for a short periods of few
months to a year or two. The private enterprise is chosen by competitive bidding pro-
cess to procure non-core tasks of the public infrastructure system. Capital investments
and maintenance of the overall services are in charge of the public party. The nature
of work can be purchasing goods to customer service.
• Management and Operational Contracts: Management and Operational Contracts are
agreements between public and private parties where the operational and management
responsibilities of government owned assets are transferred to the private enterprise.
The ownership of the assets, capitals and financial risks, and overall responsibility still
remains to the government authority. These contracts involve the private operator be-
ing paid in a fixed fee to maintain and operate public facilities more effectively. The
duration of contracts are usually two to five years long and payment can be perfor-
mance based. These types of agreements are good for increasing the management and
operational efficiency of already running projects.
• Leases: Under the lease agreement, the private enterprise takes full responsibility of
a properly authorized project or asset of government sector. The private party takes
10
 the total responsibility of the operation part but the partial investment still remains the
obligation for the public partner. The government retains the ownership of the property
as well as the capital investment and plannings of rehabilitation. In the leasing period,
all the profits are obtained by the private party. The contracts are usually for ten to
fifteen years.
• Concessions: The concessionaire or the private party is totally responsible for plan-
ning, financing, maintenance, operation, capital investment for renewal or rehabilita-
tion and expansion of the services. The ownership only remains to the government and
the concession term is usually between twenty to thirty years depending on the rate of
the return. In this period, the private party sets a tariff or fee which can be adjusted
over the course of agreement and is paid by the consumers directly. For larger projects
there are various types of concession models depending on the responsibilities of the
private and public party. Build-Transfer (BT), Build-Operate-Transfer (BOT), Build-
Own-Operate (BOO), Build-Own-Operate-Transfer (BOOT), Design-Build-Finance-
Operate (DBFO), Design-Build-Finance-Operate-Transfer (DBFOT) and Build-Lease-
Transfer (BLT) are some of the used models on large infrastructure projects. In these
types of models, after the construction and maintenance according to the contracts
phase is expired, the facility is returned to the government for future usage.
• Full divestiture: Full divestiture occurs when the government transfers infrastructure
to private enterprise either in part or full including certain conditions of improvements
in services or the infrastructure. The government only retains some indirect control
over regulations of the projects where private partner is responsible over everything
else. These type of models are also called privatization.

2.4 Measuring success of Public-Private Partnership projects

The success measurement of the PPP projects are different from study to study. The success
measurement is also different for every stage of the project. Ashley et al. (1987) described
the success of the project as the better result than expectation in terms of cost, quality, safety,
time and satisfaction of the participants. Atkinson (1999) showed the ‘Iron triangle’ of mea-
surement to success the measure. According to his study, a project is considered successful
if it fulfills cost, time and quality according to the specifications. For measuring the suc-
cess of PPP, Akintoye et al. (2003) discussed about the ‘Best Value’ to define the primary
objectives of the PPP. Greater Value for Money (VfM), cost, time, effective solution and
level of relationship between the partners are some of the areas to measure the success of the
projects.

Shenhar et al. (2001) argued the traditional approach of measuring the success of the project
and stated that, ‘One size does not fit all’ as projects differ in terms of technology, size, risk,
complexity, industry and others. The study showed four success dimensions and thirteen
performance measures to measure the success of the projects, which are the following:

1. Project Efficiency: The performance measures under this dimension are- meeting
11
 schedule goal and meeting budget goal.
2. Impact on the customer: Meeting functional performance, meeting technical spec-
ification, fulfilling customer needs, solving customers’ problem, product usage and
customer satisfaction are the measures in this dimension.
3. Business success: Commercial success and creating a large market share are the mea-
sures under this dimension.
4. Preparing for the future: The measures in this dimension are- creating new market,
creating new product line and developing a new technology.

Liyanage & Villalba-Romero (2015) discussed that, the success of the PPP projects are con-
sidered in context of three perspectives and the project is considered successful if they have
been met successfully. The three perspectives containing three elements per perspective
showed in the study are:

• Project management perspective: Time, cost and quality are the elements in this per-
spective.
• Stakeholder perspective: Public, private and user are the elements in this perspective.
• Contract management perspective: The three elements in this perspective are- contract,
process and results.

The study also showed eleven Key Performance Indexes (KPIs) to measure the success of
the toll roads. The KPIs are - objectives, risks, contract project specifications, tendering
process, construction phase, operations, maintenance, monitoring and evaluation, finance,
actual traffic and revenue, and downtime impact.

Might & Fischer (1985) showed that measurement of overall project success, measurement
of the cost, measurement of schedule and measurement of technical success are the areas to
measure the success of the projects. Morris et al. (1986) discussed that the project success
measurement is dependent on three measures:

• Project functionality: Financially, technically or otherwise.

• Project management: Budget, schedule and technical specifications.
• Contractor’s commercial performances: short term or long term.

According to Hughes et al. (2004), the success measurement factors can be categorized into
six categories. The categories are - cost, schedule, quality, performance, safety and operating
environment.

The previous studies show many success measures, however the measures are not solely
based on PPP projects. In order to measure the success of PPP projects, this study proposes
12
measures based on PPP context. Table 2.1 shows five proposed measures of success in
context of PPP projects.

Table 2.1: Proposed PPP project success measures.

No Measure Description References
1 Project efficiency Measurement of meeting Shenhar et al. (2001) discussed that
the schedule goal and meet- the schedule goal and budget goal
ing of budget goal should met according to contracts
should be measured; Akintoye et al.
(2003), Hughes et al. (2004), Mor-
ris et al. (1986) and Might & Fis-
cher (1985) discussed that whether
the projects met the expected bud-
get and schedule goal should be
measured; Ashley et al. (1987) de-
scribed the project should give bet-
ter result than expected in terms
of cost and time; Atkinson (1999)
showed that projects should be fin-
ished within budget and schedule.
2 Risk Transfer Measurement of the level of Liyanage & Villalba-Romero
risk transfer and risk alloca- (2015) found out that risk transfer
tion. and monitoring is necessary for
measuring success.
3 Tendering process Measurement of partici- Liyanage & Villalba-Romero
pants in bidding and level (2015) showed that creating com-
of clarity in tender process petition is tendering process and
transparency of the contracts are
necessary and should be measured.
4 Impact on future PPP Measurement of level of Shenhar et al. (2001) discussed
initiatives quality increased and level that the creation of new market
of innovation showed and product line are dimension for
measuring success which can be a
model for future initiatives; Ashley
et al. (1987) and Atkinson (1999)
discussed that measuring quality of
the project in terms of specifica-
tions.
5 Impact on the citizens Measurement of fulfilling Shenhar et al. (2001) discussed
the need of citizens, solving about the measuring the level of ful-
citizens’ problems and level fillment of customer needs, solving
of the citizen satisfaction. customers’ problems and level of
satisfaction of the customer.

13
2.5 Critical Success factors in Public-Private Partnership projects

As the PPP usage is growing continuously all over the world, the findings of these critical
factors behind the success of the projects became a necessity. Osei-Kyei & Chan (2015)
researched some top tier journals i.e. International Journal of Project Management (IJPM),
Journal of Management in Engineering (JME) and Built Environment Project and Asset
Management (BEPAM), and explored the CSFs related research papers from 1990 to 2013.
The result indicated that the study on CSFs of PPP has increased drastically over the years.
From Figure 2.2 we can see that the number of publications on CSFs in the 1990s were
relatively less than the 2000s. According to the study on 27 papers over 23 years, a total
of 57 critical success factors were identified in those research papers. The research found
out, there are top most five factors are repeatedly identified by researchers as critical success
factors in the papers:

• Appropriate risk sharing and allocation, identified in 13 papers

• Strong private consortium, identified in 12 papers
• Political support from the host government, recognized in 9 papers
• Support from public for projects, pointed out in 8 papers
• Transparency in the procurement system, which is spotted in 8 papers.

These findings on CSFs can be a solid foundation on future researches for sensitive policies
of PPP concept.

Figure 2.2: Number of publications per year on PPP CSFs from 1990 to 2013. Reprinted
from Osei-Kyei & Chan (2015).

14
Kwak et al. (2009) commented that critical success factors are one of the key areas which
impacts the performance of the project or an organization. The success of the projects are
dependant on CSFs and if not regulated properly and if not taken seriously, the projects may
end in failure. The concept of CSFs was experimented on the Information System projects
and Rockart (1982) defined CSFs as few of the core areas whose favourable outcomes are
indubitably direct impacts on reaching the project’s goal. These key areas have to be right to
get the successful result. In concept of PPP, Tiong et al. (1992) defined the critical success
factors as characteristics which can give successful outcome if managed, assisted properly
and given special and continued attention. The study also showed, concept of CSFs can be
applied in three areas - the project; private consortium who sponsors; and the political, social
and financial environment of the project.

Turina & Car-Pušić (2006) said the most possible realistic prediction on the risk related
components, balancing them and risk sharing according to one partner’s limit are the success
essence of the project. According to the study both of the government and sponsors should
keep that in mind that, they are responsible for entire project, and success of project primarily
depends on government parties’ attitude, the preparation of the project, expertise of the nego-
tiators, and relationship between the public and private partners. In a research on Australian
PPP projects, Duffield (2004) emphasized on contract management, financial availability,
and clarity and speed - these three issues which are important features of successful delivery
of the projects.

To maintain the growth of the private sector participation in the procurement process, Jef-
feries et al. (2002) showed the success factors in different stages of project on the case study
of Sydney Stadium. According to the study, the CSFs are:

• Wealthy, expert, high profiled and well reputed private consortium structure in devel-
opment stage
• Effective and timely approval process to assist stakeholders
• Winning strategy on financing and revenue sustainability in terms of operation

Li et al. (2005) showed Critical success factors on United Kingdom construction industry
and pointed out 18 factors. The study grouped the factors into five major factors and ranked
them on the importance:

1. Effective procurement: The effective procurement grouped seven factors are - Good
governance; transparent procurement process; competitive procurement; well orga-
nized public agency; social support; rigorous and feasible assessment of costs and
benefits; and shared authority between public and private sectors.
2. Project implementability: Favourable legal framework; technical feasibility of project;
risk sharing and appropriate allocation; responsibility of private and public sectors;
and a well built public organizations - these CSFs are pointed out in the study.

15
 3. Government guarantee: Government providing the guarantee is important for PPP
projects as the government is responsible for ensuring the procurement process. Ac-
cording to the study government involvement by providing guarantee and multiple
benefit objectives are important in the early phases of the project.
4. Favourable economic condition: Sound economic policy of a country and the stability
of the macroeconomics are under this category.
5. Available finance market: Availability of requisite and suitable financial market is only
factor the study pointed out in this category.

Among these factors, the study emphasized on ‘a strong and good consortium’, ‘availability
of financial market’ and ‘appropriate risk sharing’ - these three factors.

Kwak et al. (2009)’s research on last 20 years PPP related projects concluded that adoption
of PPP strategy is not easy and classified the success factors into four groups: the ability of
the host government, the selection of appropriate concessionaire, appropriate risk allocation
and content financial package.

On a study on power sector projects, Tam et al. (1994) pointed out the problems in Philip-
pines, Thailand, Indonesia and China, the Southeast Asian countries and suggested ‘Five-Ps’
framework. The study showed the five success factors from the perspective of the investors
which should be identified before establishing the project:

• Project: This is the first step and identification of the projects enhances the success no-
tably. Projects must be selected based upon individuals expertise and selection criteria
but should follow a standard to accelerate project progress and minimize risks.
• Partners: The second step is to choose potential partners depending on business goals
and objective, possession of political influences, access of financial sources, manage-
ment skills and guarantee of equity.
• Pattern: Considering the structure of the investment depending on the legal rights and
obligations, and the participation of the local enterprises greatly increase the success
of the projects.
• Profitability: Prediction on the level of profits coming from the projects, return rate
and incentive models should be carefully studied for getting a successful result.
• Protection: Documentation of agreements to minimize the risks and protecting the
relationship created between the partners also increase the success of the projects.

To get the successful outcomes from the projects, especially the BOT type projects, which are
getting adopted by most of the countries in the world, Tiong (1990) specified some financial
and political roles for government to ensure the securities of the private sector. According to
the study, the host government should keep an eye on these factors to get a successful result
:

16
 • Financial Security: This is the area where the investors find difficulties as the lender’s
requirements of host governments are usually not supportive. The guarantee of foreign
currency exchange convertibility; foreign currency availability; agreement of offshore
escrow account; guarantee of minimum operation income in case of revenue projec-
tion failure; and an agreement of feedstock contract to ensure the supply of required
materials in a competitive price - these factors will help to ensure securities in financial
section.
• Political Security: Political security is one of most significant factor which controls
the project outcome. By political influence, the investor can be forced to bankruptcy
and shutdown of the project at a critical stage. By providing an agreement on - project
sponsors freedom to exploit particular investment in a time frame; building a strong
consortium of international investors and lenders; political risk assurance by the gov-
ernment; and financial undertakings by host government to take over outstanding debt
will provide political securities to the private parties.

In another paper to find the CSFs in BOT infrastructures, Tiong et al. (1992) suggested that
private enterprises should be willing to take calculated risks and adapt the systems of the
host country. The study mentioned six crucial success factors after researching the projects
in Australia, China, Malaysia, Hong Kong, Thailand and United Kingdom. The factors
mentioned in the study are:

• Entrepreneurship: The contractors must have the spirit of entrepreneurship to bring

something innovative in the competition. Calculated risk taking and cultivation of
goodwill with host government are sub-factors of the entrepreneurship.
• Choosing the right project: Choosing the right project depending on the skills and ex-
pertise of the contractor plays a vital role in success of projects. Accurate prediction of
critical need of project, potential to achieve near-monopolistic advantage for services,
lack of funding by the host government and ideal project for privatization also should
be considered under this CSFs.
• Strong consortium of stakeholders: Forming a multidisciplinary team of stakeholders
with experts from multiple nationality, leadership by a champion entrepreneur or or-
ganization and negotiation skill in perseverance and financial strength are factors for
making strong consortium of stakeholders.
• Visionary technical solution: The sub-factors under this factor are simplicity, func-
tional, innovative and cost-effective. The design should contain these factors which
will make the project highly attractive to the government.
• Competitive financial proposal: This factor is another crucial determinant of success
of the projects. Low construction cost, acceptable tariff change levels, reasonable debt
ration, short concession period, and forecast of demands should be considered by the
sponsors before bidding the project.
• Special features of bid: Every winning bid proposal should be unique and imaginative
to attract the government to deal with the sponsors. Imaginative elements demonstrat-
17
 ing devotion towards the host government and contracts addressing specific concerns
of the government are some of these features.

By conducting intensive research on the CSFs in general, Zhang & Asce (2005) noted that
the PPP projects protocol should create favorable environment and provide necessary support
toward the private partners as the private finance initiatives do not lead to success automati-
cally. After analyzing, the study found out five main CSFs to ensure the quality of privatized
projects and services:

• Favorable investment environment: The desire of private enterprise and lenders greatly
depends on the investment environment. The study found out stable political sys-
tem; enough local financial market; predictable currency exchange risk and reasonable
framework; enthusiastic economic system and promising economy; support from gov-
ernment and community; public interested project; predictable future risks; and project
well suited for privatization draw the investors towards the projects.
• Economic Viability: Long-term demand from products offered by the project; long
term attractive cash flow for lenders; prolonged availability of suppliers needed for
normal operation; sufficient and attractive profitability of the projects; and limited
competition - these sub factors are reason for strengthening the economic viability
which can reduce the uncertain risks in capital investment and throughout the project.
Projects which have no financial viability, the government should make the schemes
more flexible to support the private partner to make the financial sector more viable
for them.
• Reliable concessionaire consortium with strong technical strength: Not only the gov-
ernment party has to play the role of responsibility, the private party also plays a lead-
ing role in success of the projects. That’s why while choosing the private enterprise
- leadership role from a champion enterprise or entrepreneur; effective project enter-
prise structure; strong and capable private consortium; partnership skills with multidis-
ciplinary participants; sound, cost-effective and innovative technical solution; healthy
relationship with host public authorities; experts with rich experience in international
PPP project management; and low environmental impact with public safety and health
considerations should be considered.
• Sound financial package: A number of key features are important in the finance of
the PPP projects, among them according to the study, the success sub factors are -
thorough financial analysis; investment and payment schedules; stable currencies of
debts and equity finance; draw down schedules; Sources and structure of main loans
and standby facilities; big equity to debt ratio; lower financial charges and interest
rate; appropriate and adjustable tariff levels; long-term debt financing to minimize the
refinancing risk; and mentality to deal with fluctuations in exchange rates.
• Appropriate risk allocation via reliable contractual arrangements: Risk allocation is
another crucial factor which controls the success of the projects. For the success-
ful project, there should be reliable risk allocation in concession agreements, loan

18
 agreements, insurance agreements, supply agreements, offtake agreements, opera-
tional agreements and shareholders agreements, design contract and construction con-
tract, and letters of guarantee or support.

Zou et al. (2014) showed rather less discussed factor, the relationship management in PPP
projects. The study showed the importance of relationship management in PPP as the
projects are usually for long terms and success of the project depends on the relationship
between the public and private partners. After interviewing the experts in Hong Kong, Aus-
tralia, Singapore, China and Greece, the result came out that commitment of the senior ex-
ecutives, explanation of the objectives, integration between different divisions and forming
a multidisciplinary team are top most factors in relationship management which can help to
make a project successful.

Based on experience on Malaysian PPP sectors, Keong et al. (1997) showed the success
factors based on country, projects and the client of the project. According to the study, eco-
nomic stability of the host government, political will to proceed with projects, local capital
markets and legislative process are important on the country perspective. The study contin-
ued, the project should be a public infrastructure with a significant size and should have a
steady forecast demand with adequate return. Finally, acceptance of the concepts of PPP
and creditworthy agreements from the host public party are necessary to get a successful
outcome of a project.

2.6 Public-Private Partnership projects in Bangladesh

In this section, summary of the history of PPP in Bangladesh, laws and policies on the PPP
projects are shown. After that the sector coverage of PPP in Bangladesh and a list of projects
implemented has been shown.

2.6.1 History and policies conducting PPP

According to Bangladesh Ministry of Finance (2009), Bangladesh is still considered as Low

Income Country (LIC) in the classification of World Bank based on economic progress with
per capita income of 695 US dollar and 40 percent of the total population lives under the
poverty line. Though it is one of the 56 poorest countries, the PPP concept is not new in this
country. After the restoration of democracy in 1990, the economic growth got momentum.
Rashed et al. (2014) discussed on history of PPP in Bangladesh and said, the first generation
of PPP was established in 1996 after the approval of Private sector Power Generation Pol-
icy (PSPGP). The second phased started under the Bangladesh Private Sector Infrastructure
Guidelines (PSIG) in 2004 and the latest policy was established on 2009 after the approval
of PPP budget (PPP policy 2010) replacing the 2004 PSIG under the ‘Vision 2021 goal of
Bangladesh’. Besides the PPP policy 2010 , there are several other consents necessary for

19
PPP projects. The other policies regarding PPP projects in Bangladesh to show commitment
towards PPP concept are identified in the study:

• The Foreign Exchange Regulation Act, 1947

• Foreign Private Investment (promotion and protection) Act 1980
• Acquisition and Requisition of Immovable Property Ordinance, 1982
• The Income Tax Ordinance,1984
• Investment Board Act, 1989
• The Companies Act, 1994
• The environmental conservation act 1995 (and amendment 2000)
• The environmental conservation rules 1997
• Industrial Policy 1999
• Arbitration Act, 2001

2.6.2 Sector Coverage

PMO-Government of Bangladesh (2010) showed all the sectors which are covered by the
PPP policy of Bangladesh in PPP policy 2010. According to the policy, if any of the fol-
lowing rules exists, then the project will be eligible for the PPP if it fulfills the criterion of
International Standard Industrial Classification (ISIC) of all Economic Activities, Revision
4.

• Any project is difficult to handle in financial and expertise of the government alone;
• Private investment increases the quality of service;
• Investment of private projects which will reduce time to implement compared to the
public initiatives;
• Any competition occurs among the private investors which reduces the cost providing
a service;
• Opportunity to show innovation;
• No regulatory or legislative restraints in taking private investment for public service

But still there are sectors which are prioritized by the policy and selected according to the
International Standard Industrial Classification (ISIC) of economic activities standard:

20
 1. ISIC 05-09: exploration, transmission, and distribution of mineral resources i.e: gas,
coal, oil and others;
2. ISIC 19: Oil refinery and production of Liquefied Petroleum Gas (LPG);
3. ISIC 20: Fertilizer production;
4. ISIC 35: Generation, transmission, distribution and services of power;
5. ISIC 36-39: Water supply, distribution, sewerage, drainage, and sewage water treat-
ment;
6. ISIC 38-39: Environmental, industrial and solid waste management projects;
7. ISIC 42: Dredging of rivers, canals, wetlands, lakes and other land reclamation related
facilities;
8. ISIC 42 and 49: Highways and expressways including mass-transit, bridges, flyovers,
city roads, bus terminals, tunnels, commercial car parking etc.
9. ISIC 42 and 51: Airports, terminals and related aviation facilities;
10. ISIC 49: Railway systems related facilities;
11. ISIC 52: Port (i.e. sea, deep sea, land and river) development including inland con-
tainer terminals, depot and other services;
12. ISIC 60-63: Telecommunication systems, networks and services including information
and communication technology (ICT);
13. ISIC 79: Tourism related projects;
14. ISIC 81-82: Industrial parks and estates, economic zone, and industrial property de-
velopment including services to support non-commercial and commercial activities;
15. ISIC 84: Poverty alleviation projects: Remote area power and gas supply (ISIC 35),
village water supply, irrigation and agricultural services (ISIC 36), river passenger
terminals and landing stations (ISIC 52), internet in rural areas (ISIC 61), rural health
services (ISIC 86) and other rural projects;
16. ISIC 85-88: e-service delivery to citizens, social infrastructures i.e. education, health,
human resource research and development, and cultural provisions;

21
2.6.3 List of Projects

Bangladesh Ministry of Finance (2009) published the list of PPP projects under the Pri-
vate sector Power Generation Policy (PSPGP) and Bangladesh Private Sector Infrastructure
Guidelines (PSIG) framework till 2010.

Table 2.2: The list of PPP projects in Bangladesh till 2009. Reprinted from Bangladesh Min-
istry of Finance (2009).
Serial No Name of the Project Sector Model Used
1 Meghnaghat 45 MW Power Plant Power and Energy BOO
2 Summit Power 33 MW Power Plant Power and Energy BOO
3 Summit Uttaranchal Power Company 44 MW Power and Energy BOO
Power Plant
4 Summit Purbanchal Power Company 66 MW Power and Energy BOO
Power Plant
5 VERL 34 MW Power Plant at Bhola Power and Energy BOO
6 BEDL 51 MW Power Plant at Sylhet Power and Energy BOO
7 34 MW Malancha Holdings Power Plant at Power and Energy BOO
Dhaka EPZ
8 Thermax Trade Limited CNG Refueling Sta- Power and Energy Not Found
tion
9 Shah Cement 11.6 MW Power Plants Power and Energy Not found
10 IDCOL Solar Energy Program Renewable Energy Not found
11 National Domestic Biogas and Manure Pro- Renewable Energy Not found
gram
12 250 KW Bimas Gasification Based Power Renewable Energy Not found
Plant
13 50 KW Biogas Based Power Plant Renewable Energy Not found
14 Panama Hilli Land Port Port BOT
15 Panama Sonamasjid Land Port Port BOT
16 GrameenPhone Network Expansion Project Telecommunication Not found
Technology
17 Pacific Telecom Network Expansion Project Telecommunication Not found
Technology
18 Ranks Tel PSTN Project Telecommunication Not found
Technology
19 BanglaTrac International Communication Telecommunication Not found
Gateway Project Technology
20 DNS Satcomm Satellite Earth Station Project Telecommunication Not found
Technology
21 M and H Telecom Interconnection Exchange Telecommunication Not found
Project Technology
22 Shoanchalok ICT Program Information Tech- Not found
nology

22
 Serial No Name of the Project Sector Model Used
23 Three 22 MW Doreen Power Generations and Power and Energy BOO
System Ltd (2 in Tangail and 1 in Feni)
24 11 MW Doreen Power House and Technolo- Power and Energy BOO
gies Limited at Mahipal, Feni
25 22 MW Regent Power Limited Power and Energy BOO
26 Malancha Holdings Ltd. (44 MW Captive Power and Energy BOO
Power Plant at CEPZ)
27 Malancha Holdings Ltd. (35 MW Captive Power and Energy BOO
Power Plant at CEPZ)
28 Khulna 110 MW Power Plant Power and Energy BOO
29 Haripur 115 MW Barge Mounted Power Plant Power and Energy BOO
30 Westmont Baghabari Barge Mounted Power Power and Energy BOO
Plant
31 Ashulia 45 MW Power Plant Power and Energy BOO
32 Narsingdi 35 MW Power Plant Power and Energy BOO
33 Chandina 25 MW Power Plant, Comilla Power and Energy BOO
34 Jangalia 33 MW Power Plant, Comilla Power and Energy BOO
35 Rupganj 33 MW Power Plant, Narayanganj Power and Energy BOO
36 Maona 33 MW Power Plant, Gazipur Power and Energy BOO

Another list of latest completed and awarded projects can be found in the InfraPPP (2017b)
and PPPA Bangladesh (2017) database.

Table 2.3: The list of completed and awarded PPP projects from InfraPPP (2017b) and PPPA
Bangladesh (2017).
Serial No Name of the Project Sector Model Used
1 Sirajganj gas-fired power PPP project Energy BOO
2 Mongla Port PPP project Transport Not found
3 Dhaka Elevated Expressway (DEE) Transport BOT/ BOO/
BOOT
4 Expressway Aminbazar - Azimpur Transport BOT/ BOO/
BOOT
5 Hemodialysis Centre at Chittagong Medical Health Not found
College Hospital
6 Hemodialysis Centre at National Institute of Health Not found
Kidney Diseases and Urology (NIKDU)
7 Hi-tech Park at Kaliakoir Zone Not found
8 Economic Zone 4: Mongla Zone Not found
9 Economic Zone 2: Mirersharai Zone Not found

23
2.7 Related Studies in underdeveloped countries

In this section, a summary of the studies by other researchers on Critical Success Factors
(CSFs) in some underdeveloped countries is shown.

The success and failure mechanism on PPP projects in Lebanon, Jamali (2004) found out,
energy sector and the telecommunication sector had rapid growth in context on private activ-
ities and presented a case study assessment of PPP projects in telecommunication sector of
the country. In the Lebanese economy, private sector is dominating after two decades of civil
unrest. The government used PPP to break the barrier of the increasing negative effects of
operational, financial and management issues in projects. The study investigated a post-war
PPP initiative in telecommunication sector by fieldwork and reviewing relevant literature.
The methodology was combination of quantitative and qualitative analysis. According to
the study, a BOT agreement granting ten year GSM concessions period was given to two
operators. The quantitative analysis shows the success of the project from getting increased
subscribers, penetration and revenues which is more successful than Egypt, Morocco, Saudi
Arabia, Jordan and Oman. Qualitative analysis showed that there was no systematic effort
of mapping costs or revenues in aspect of new initiative and exploitation of the original BOT
concept resulted the negative effects in the project. Complete legal and regulatory frame-
work; strong infrastructure of central administration to steer and regulate policy implemen-
tation; transparency on financial issues; and mutual understanding of partners to tackle the
risks and opportunities are the success factors pointed out in the study.

Research on PPP initiatives in Nigeria shows promising result on finding the Critical Success
Factors in underdeveloped countries. The reason behind the research of Babatunde et al.
(2012) was to find out the suitable infrastructural projects using PPP and identifying the CSFs
to enhance the success rate of PPP projects. The quantitative methodology was used. The
structured questionnaire was made based on the literature review identifying success factors,
were to the participants involved in execution of PPP projects in Lagos State, a metropolitan
city in south-west of Nigeria. Result of the analyzed data showed two types of result: the
first one based on mean score ranking showed transportation sector is the highest ranked and
on the other hand educational construction sector ranked lowest. In the second analysis using
one-way analysis of variance (ANOVA) showed no significant sector dominating on others.
The study further identified seven critical success factors as follows:

• Competition in the procurement process

• Appropriate risk allocation and risk sharing
• Realistic and thorough assessment of the cost and benefits
• Government guarantee and political support
• Favorable framework of PPP
• Stable and sound economic policy
• Availability of suitable financial market and macro-economy
24
The study showed that, well built and committed public enterprise, project feasibility, com-
munity support and multiple benefits are success factors shown on the perspective of the
private investors. On the contrary, transparency in procurement, shared authority and well
built private consortium are important factors for the host governments. On another study
on PPP projects in Nigeria, Dada & Oladokun (2008) conducted a perceptual survey, partic-
ipants are also based on Lagos and used criticality index and significance index to rank the
Critical Success Factors. The study showed five CSFs ranking economic viability in the top.
Appropriate risk allocation, sound financial package, favorable environment to invest and the
strong private consortium are the other success factors in descending order of criticality.

Nguyen et al. (2004) showed the Critical Success Factors in large construction projects in
Vietnam. Complex and dynamic projects were surveyed to find out the secret of success
of the large construction industry. The survey questionnaire were developed based on the
incentive literature review and current construction practices in Vietnam and finalized by six
experienced professionals. Projects over 1 million USD were only considered for this survey
and the participants were professionals experienced in large projects in Vietnam. The CSFs
were chosen based on significant rates given by the participants and then ranked accordingly.
The study grouped the factors in four components and labeled as ”Four COMs”:

• Comfort: The factors under this group are competent project manager, adequate fund-
ing, comprehensive contract documentation, availability of resources, and continuous
involvement of stakeholders.
• Competence: Latest technology utilization, past experience, multidisciplinary team,
and awarding bids to right contractors are the factors under competence component.
• Commitment: Commitment to the project, clear objectives and scopes and top man-
agement support are in this group.
• Communication: Involvement of community, transparent communication channel and
frequent meeting on progress are important factors of communication.

Mostly the human related factors were considered the top most CSFs. Among 20 CSFs
in the survey, competency of the project manager was ranked as number one and adequate
funding, competent project team, commitment towards project and availability of resources
were identified as CSFs of PPP projects in Vietnam.

In Table 2.4, the similar studies on Critical Success Factors of PPP projects in underdevel-
oped countries have been shown. Those studies were more focused on the advantages and
disadvantages of the PPP concept of underdeveloped countries. This research emphasizes
more on the selection of appropriate models and the success factors of PPP projects than the
finding overall advantages and disadvantages and this is the main difference.

25
 Table 2.4: The summary of related works on Critical Success Factors of PPP projects in underdeveloped countries.
No. References Objectives Study area Methodology Critical Success Factors
1 Success and failure mech- To find out the advantages Telecommunication Extensive lit- Complete legal and regulatory framework;
anisms of public private and disadvantages of PPP sector in Lebanon erature review, strong infrastructure of central administra-
partnerships (PPPs) in de- initiatives in the context Interview tion; Transparent financial issues; and mu-
veloping countries of Lebanon and success tual understanding of partners.
Jamali (2004) factors of the projects
2 Critical success factors To find out suitable infras- Lagos state, Nige- Questionnaire Competitive procurement process; Appro-
in publicprivate partner- tructure of projects us- ria survey priate risk allocation and risk sharing; Re-
ship (PPP) on infrastruc- ing PPP and identifying alistic and thorough assessment of the cost
ture delivery in Nigeria CSFs to enhance the suc- and benefits; Government guarantee and
Babatunde et al. (2012) cess rate of PPP political support; Favorable framework;
Stable and sound economic policy; Avail-
ability of suitable financial market and
macro-economy .
3 Critical Success Factors To rank the criticality of Lagos state, Nige- Perceptual Economic viability; Appropriate risk allo-

26
for Public Private Part- factors in PPP projects by ria survey cation; sound financial package; favorable
nership Projects in Nige- conducting survey environment to invest; Strong private con-
ria: a Perceptual Survey sortium
Dada & Oladokun (2008)
4 A study on project suc- To determine the success Vietnam Questionnaire Competent manager; adequate funding;
cess factors in large con- factors of the large con- survey comprehensive documentation; resource
struction projects in Viet- struction industry availability; continuous involvement of
nam stakeholders; Latest technology utiliza-
Nguyen et al. (2004) tion; experienced and multidisciplinary
team; Choosing right contractors; Com-
mitment of partners; clear objectives and
scopes; top management support; Involve-
ment of community; transparent commu-
nication channel; and frequent meeting be-
tween partners.
 Chapter 3

Methodology

The methods and the approaches to determine the appropriate models and the CSFs of PPP
projects in Bangladesh is shown in Figure 3.1.

Figure 3.1: Research methodology

27
The research methodology is comprised of three steps.

Step 1: The methodology of this step is the literature review. In this step, all the data collected
from the previous studies on PPP models and critical success factors are summarized. Firstly,
the PPP sectors of Bangladesh have been categorized and then the projects have been selected
according to those sectors. Secondly, the CSFs have been identified in context of Bangladesh
which lead to come up with the conceptual model.

Step 2: The determination of the appropriate models has been done in this step. The method-
ology used for this is in-depth interview. The data collected from literature review in step 1
will be verified from the opinions of the experts. For interviewing, firstly the design of the in-
terview questions and selection of the participants have been done. After that the interviews
have been conducted and a conceptual model has been revised. After the verification of con-
ceptual model, the hypotheses has been established for testing. In the last part, qualitative
analysis using open coding and representation of findings on the gathered expert opinions
have helped to determine appropriate models.

Step 3: The validation of the CSFs selected and testing of hypotheses established have been
done in this step. To validate the CSFs, the methodology tool has been used is survey.
After the design of the questionnaires for survey and participants selection, the survey has
been conducted. The data collected from the survey and interview from experts have been
analyzed to determine and rank the CSFs of PPP projects in context of Bangladesh. Then to
test the hypotheses, Pearson’s correlation of coefficient methods has been used.

28
3.1 Identification of sectors, Critical Success Factors and selection of projects and
models for case study

Tsai & Wen (2005) discussed that research study of a particular topic or research area helps
to fully review and analyze the findings from previous research studies and a methodical
analysis of publications is requisite in academic research. This section covers the methods
to identify the models and critical success factors from the Chapter 2, literature review part
and narrow it down. The extensive review of relevant available materials from books, journal
articles, conference papers, research reports, and internet information helped to categorize
the sectors and the identification of CSFs in context of Bangladesh. From the historical data,
analysis of PPP projects have been done to select projects and models to conduct case study.

3.1.1 Categorize the sectors

To make the category of sectors, from Section 2.1 and Section 2.2, we can find out that there
are similar projects done and the sectors are not that much different from the observations of
the researchers. From the literature review on sectors and types of project, there can be seen
that five sectors are mostly used all over the world for the PPP projects which can be helpful
to categorize the PPP sectors of Bangladesh shown in Section 2.6.2.

Table 3.1: Category of sectors of PPP.

No Sector References by study Description of Project / Coun-
Name try
1 Transport AECOM Consult Team (2007); AECOM Consult Team (2007)
Halcrow Group Limited (2004); showed transportation project
Bruchez (2014). in 11 states of United States.
Halcrow Group Limited (2004)
showed Thailand Skytrain and
MRT; Monorail, MRT and
automated transit projects in
Malaysia; MRT projects in
Philippines and railway systems
in Indonesia; Bus, metro rail
and light rail projects in United
Kingdom; MRT projects in
China and metro rail project
in Singapore. Bruchez (2014)
showed airports, rail corridor
development, roads and tollways
projects in South Africa.

29
 No Sector References by study Description of Project / Coun-
Name try
2 Power and Vagliasindi (2013); Biygautane Vagliasindi (2013) mentioned
Energy (2017); KPMG INDIA (2006). renewable energy projects in
China, Peru, Mexico and Brazil.
Biygautane (2017) showed
power projects in Saudi Arabia,
Kuwait and Qatar. KPMG IN-
DIA (2006) showed the energy
distribution and transmission
projects in India.
3 Information PPPIRC (2017); Bruchez Bruchez (2014) showed the In-
and Com- (2014); Owen (2006); Sharma formation system and broad-
munication (2007). band initiative projects in South
Technol- Africa. Owen (2006) showed
ogy(ICT) the VOIP and WiMax projects
in Vietnam. Sharma (2007) has
talked about the e-government
projects in Singapore and India.
PPPIRC (2017) mentioned the
projects worldwide.
4 Water and Marin (2009); Varma et al. Marin (2009) showed projects of
waste man- (2013); Pusok (2016). 65 developing countries in Sub-
agement saharan region, East-Asia Pa-
cific, South Asia, Africa, Europe
and Latin America. Varma et
al. (2013) showed the irrigation,
canal water distribution system
and drainage systems projects
in India. Pusok (2016) showed
the potable water and sanita-
tion projects in the 56(fifty-six)
countries.
5 Social and Barrows et al. (2011); ADBI Barrows et al. (2011) mentioned
government (2000). Heath care initiatives in Canada.
infrastruc- ADBI (2000) showed education
ture projects in People’s Republic
of China, Philippines, Samoa;
Health and education projects in
Bangladesh.

In Table 3.1, five sectors have been identified from previous research studies regarding PPP
projects in Bangladesh. Transport, Power and energy, ICT, water and waste management,
social and government infrastructure sectors have been identified by most of the studies in
different projects. Besides these projects, The World Bank et al. (2014) and PPPIRC (2017)
showed many projects in the selected sectors all over the world.

30
The list of sectors according to Section 2.6.2 are shown in five categories in Table 3.2.

Table 3.2: PPP Sectors of Bangladesh categorized in five sectors.

Category International Standard Sectors covered from PMO-Government of
Name Industrial Classification Bangladesh (2010)
(ISIC)
Transport ISIC 42 and 49; ISIC 42 Highways and expressways including mass-transit,
and 51; ISIC 49; ISIC 52 bridges, flyovers, city roads, bus terminals, tunnels,
commercial car parking etc.; Airports, terminals and
related aviation facilities; Railway systems related
facilities; Port (i.e. sea, deep sea, land and river) de-
velopment including inland container terminals, de-
pot and other services.
Power and ISIC 05-09; ISIC 19; ISIC exploration, transmission, and distribution of min-
Energy 20; ISIC 35 eral resources i.e: gas, coal, oil and others; Oil
refinery and production of Liquefied Petroleum
Gas(LPG); Fertilizer production; Generation, trans-
mission, distribution and services of power.
Information ISIC 60-63; ISIC 85-88 Telecommunication systems, networks and services
and Com- including information and communication technol-
munication ogy (ICT); E-service delivery to citizens, social in-
Technol- frastructures i.e. education, health, human resource
ogy(ICT) research and development, and cultural provisions.
Water and ISIC 36-39; ISIC 38-39; Water supply, distribution, sewerage, drainage, and
waste man- ISIC 42 sewage water treatment; Environmental, industrial
agement and solid waste management projects; Dredging of
rivers, canals, wetlands, lakes and other land recla-
mation related facilities.
Social and ISIC 79; ISIC 81-82; ISIC Tourism related projects; Industrial parks and
government 84 estates, economic zone, and industrial property
infrastruc- development including services to support non-
ture commercial and commercial activities; Poverty alle-
viation projects: Remote area power and gas supply
(ISIC 35), village water supply, irrigation and agri-
cultural services (ISIC 36), river passenger terminals
and landing stations (ISIC 52), internet in rural areas
(ISIC 61), rural health services (ISIC 86) and other
rural projects;.

31
3.1.2 Selection of models and projects for case study

The literature review gives the knowledge about the projects and models used in Bangladesh.
For case study three mostly used sectors were selected where the most PPP projects have
been implemented in Bangladesh. Most of the projects listed in Section 2.6.3 are before the
PPP law and regulation implementation in 2010. Transport sector, power and energy sector
and the social and government infrastructure sector were considered, to select projects for
case study as these sectors are on high demand in context of Bangladesh.

To select the projects for case study, two-stage decision making method of PPP model selec-
tion has been used. This method is developed by Yang et al. (2012) to choose the best model
for PPP projects. The equation of evaluation score,
7
X
T si = Xij .Wj (Equation 3.1)
j=1

Where,

• T s = Evaluation Score.
• i = 1,2,3,4,5,6,7 respectively means Module Outsourcing , Turnkey, Sale / Leaseback,
Lease / Purchase, BOT/BOOT/BOO, TOT, and privatization.
• j = 1,2,3,4,5,6,7 respectively means bundle or unbundle, operation and maintenance,
construction obligations, asset ownership, operation efficiency, investment efficiency
and degree of cooperation.
• Xij = 0 or 1, 1 means matched and 0 means unmatched.
P7
• j=1 Wj = 100%

For the transportation sector, one of the PPP projects which is on commercial operation stage
was considered. This project namely, Mayor Hanif Flyover Project was built on Build-Own-
Operate-Transfer model. From the information from Orion Group (2017), the requirement
of government and characteristics of the project can be found. Government requirements and
characteristics of the power and energy sector project was discussed by InfraPPP (2017a).
For the third case study, from the social and government infrastructure sector, one from
lease model was chosen and requirements were shared by World Bank (2014). Required
information for the considered projects has been summarized in Table 3.3.

32
 Table 3.3: Characteristics of selected projects
Project Sector Bundle or Operation and Construction Asset ownership Operation Investment Degree of
Unbundle Maintenance obligations efficiency efficiency cooperation
Mayor Hanif Transportation Bundle Private Private Public High Medium High
Flyover
Project
Sirajgonj gas- Power and Bundle Private Private Public High Medium High
fired power energy
PPP project
BEPZA Lease Social and Bundle Private Private Public Medium Low Low
Contracts government
infrastructure

33
For all three projects, the weight of the characteristics operation and maintenance, asset
ownership and investment efficiency has been considered 20% and others are considered
10% depending on the degree of government priority. The value of T si for Mayor Hanif
Flyover project, Sirajgonj gas-fired power PPP project and BEPZA lease contracts project
were respectively 0.9, 0.9, and 0.8 .

The value of T s is ranged from 0 to 1. The maximum value is 1 and the minimum is 0. The
more the evaluation score, it is more suitable for selecting the model for PPP project. For
being the appropriate model, the evaluation score, T si has to be more than 0.7 as it is closer
to being the perfect evaluation score of 1. So, from the value of T si , the conclusion comes
that the models used were appropriate for Mayor Hanif Flyover project, Sirajgonj gas-fired
power PPP project and BEPZA lease contracts project.

There are some examples of choosing the same type of projects depending on the cost, qual-
ity, time and innovation. Jefferies (2006) showed the Build-Own-Operate-Transfer procure-
ment and leasing of Sydney super dome. In Malaysian context, Hensley & White (1993)
showed the success of Build-Own-Operate/Build-Operate-Transfer/Build-Own-Operate-Transfer
model selection. In Table 3.4 all the selected projects are summarized accordingly.

Table 3.4: Selected projects for case study

Sector Project Name Selected Model Evaluation Reference
Score, T si
Transport Mayor Hanif Build-Own- 0.9 Jefferies (2006)case stud-
Flyover Project Operate- ied the innovative syd-
Transfer ney superdome which is
a prime example for us-
ing Build-Own-Operate-
Transfer models in con-
struction.
Power and Sirajgonj gas- Build-Own- 0.9 Hensley & White (1993)
Energy fired power PPP Operate showed the innovation,
project high value for money,
improved quality and
time reduction of Build-
Own-Operate models in
Malaysian PPP initiatives.
Social and Lease Contract Lease 0.8 Jefferies (2006) showed
government at BEPZA the sydney superdome
infrastruc- successful lease contract
ture after ending of BOOT
contract.

34
3.1.3 Identify CSFs of PPP in context of Bangladesh

The primary identification of CSFs are based on consideration of facts and judgments. The
policies from PMO-Government of Bangladesh (2010) were kept in mind while choosing
CSFs. The choosing of the CSFs is based on studies on underdeveloped countries, but
some other CSFs are also taken because those are compatible with the PPP environment
of Bangladesh. Table 3.5 shows the list of CSFs which can be applicable for Bangladesh.

Table 3.5: Identified Critical Success Factors in context of Bangladesh.

No Critical Success Factor Description References
1 Competitive procurement Competition in the procurement Babatunde et al.
process process to select the right private (2012);Tiong et al. (1992);Li
partner et al. (2005).
2 Transparent procurement Procurement process has to be Babatunde et al. (2012);Osei-
process transparent for both parties in every Kyei & Chan (2015);Li et al.
steps (2005).
3 Favorable framework The framework of PPP established Babatunde et al.
by government has to be favorable (2012);Zhang & Asce
for private parties (2005).
4 Appropriate risk allocation Risk allocation between the public Babatunde et al. (2012);Dada
and private partners has to be fitting & Oladokun (2008);Zhang
for both parties & Asce (2005);Tam et
al. (1994);Kwak et al.
(2009);Osei-Kyei & Chan
(2015);Li et al. (2005).
5 Appropriate risk sharing Risk sharing between the partners Babatunde et al. (2012);Tam
should be suitable et al. (1994);Turina & Car-
Pušić (2006);Osei-Kyei &
Chan (2015);Li et al. (2005).
6 Government guarantee Private parties should get the guar- Babatunde et al.
antee from the host government (2012);Keong et al.
(1997);Zhang & Asce
(2005);Tiong (1990);Li et al.
(2005).
7 Political support Private parties should get the polit- Babatunde et al.
ical support from host country or (2012);Keong et al.
government (1997);Zhang & Asce
(2005);Tiong (1990);Osei-
Kyei & Chan (2015).
8 Stable political environment A stable political environment is Zhang & Asce (2005).
necessary to get the success of
projects

35
No Critical Success Factor Description References
9 Stable economic policy Stable economic policy from gov- Babatunde et al.
ernment ensures the private parties (2012);Keong et al.
to invest (1997);Zhang & Asce
(2005).
10 Sound economic policy Sound economic policy of a country Babatunde et al. (2012);Dada
gives assurance to private parties to & Oladokun (2008);Zhang &
invest Asce (2005);Li et al. (2005).
11 Transparent economic policy Transparent economic policy which Jamali (2004);Zhang & Asce
has no holes help private parties in (2005).
the long run
12 Suitable financial market The financial market has to be suit- Babatunde et al. (2012);Dada
able where the partners can draw the & Oladokun (2008);Keong
investment money and get benefits et al. (1997);Zhang
easily and faster & Asce (2005);Tiong
(1990);Kwak et al.
(2009);Duffield (2004);Li
et al. (2005);Nguyen et al.
(2004).
13 Sound macro-economy A large scale economy of a country Babatunde et al.
gives more opportunity to bring out (2012);Keong et al.
the benefits (1997);Zhang & Asce
(2005);Tiong (1990);Kwak
et al. (2009);Li et al. (2005).
14 Assessment of costs and ben- Costs and benefits of the projects Babatunde et al. (2012).
efits must be analyzed thoroughly and
should be realistic
15 Strong private consortium A strong private party consists of Dada & Oladokun (2008);
experts experienced in international Zhang & Asce (2005);Tiong
PPP projects et al. (1992);Tam et al.
(1994);Jefferies et al.
(2002);Osei-Kyei & Chan
(2015);Li et al. (2005).
16 Favourable legal and regula- Regulatory and legal frameworks Li et al. (2005);Babatunde et
tory framework should be favourable that private al. (2012).
partners do not hesitate to invest
17 Complete legal and regula- Legal and regulatory framework has Jamali (2004).
tory framework to be complete and there should be
no gap in them
18 Mutual understanding Understanding between the public Jamali (2004);Zhang & Asce
between partners and private partners should be same (2005);Turina & Car-Pušić
level and positive (2006);Li et al. (2005).

36
No Critical Success Factor Description
19 Transparent communication Communication between the part-
ners should be frequent and trans-
parent
20 Involvement of community Host country citizens should be in-
volved into PPP initiatives
21 Supportive community Host country citizens should be sup-
portive towards the PPP initiatives
22 Strong public administration Structure of the public administra-
tion has to be strong and corruption
free
23 Sufficient profitability The profits from the PPP initiative
has to be sufficient for both parties
24 Multidisciplinary experts Experts from different sectors
should be involved in the PPP
initiatives
25 Identification of appropriate Public party should identify
projects projects to attract private enter-
prises and Private parties should
identify the suitable model for them
to invest in
26 Innovation The PPP initiative should show the
innovative ideas which can be fol-
lowed in future projects
27 Attractive profitability The benefits from the PPP initia-
tives has to be attractive for private
parties
37
References
Nguyen et al. (2004);Jamali
(2004);Turina & Car-Pušić
(2006);.
Nguyen et al. (2004);Li et al.
(2005).
Zhang & Asce (2005);Osei-
Kyei & Chan (2015);Li et al.
(2005).
Jamali (2004);Li et al.
(2005).
Zhang & Asce (2005);Tam et
al. (1994).
Zhang & Asce
(2005);Nguyen et al. (2004).
Tiong et al. (1992);Tam et al.
(1994).
Tiong et al. (1992);Zhang &
Asce (2005);Nguyen et al.
(2004).
Zhang & Asce (2005).
3.1.4 Conceptual Model

Figure 3.2 shows all the main CSFs which are the reason behind the success of the PPP
projects.

Figure 3.2: Proposed Conceptual Model

From the list of CSFs, the factors which affects the success of PPP projects are selected for
conceptual model. The selection has been done dependent on two characteristics. If one was
fulfilled, then the factor was selected.

• If two or more researchers identified the success factor in context of any country.
• If researchers identified the success factor in context of any underdeveloped country.

Nguyen et al. (2004), Zhang & Asce (2005), Tiong (1990), Tiong et al. (1992) showed the
analysis of CSFs in categories helps to make the decisions more easily and describe more
efficiently. Adapted from studies of Zhang & Asce (2005) and Nguyen et al. (2004), related
CSFs are grouped into nine main CSFs each consisting more than one success factors. The
main Critical Success Factors(CSFs) are:
38
1. Financial and economic viability: Right project identification based on financial and
economic viability enhance the possibility of PPP projects to be successful. All the factors
related to financial and economic viability are under this group of CSF: Stable economic
policy, sound economic policy, transparent economic policy, suitable financial market, sound
macro-economy and sufficient profitability.

2. Transparent transaction: Right partner selection through transparent transaction and com-
petition of the private enterprises in the market enhance the possibility of PPP projects to
be successful. The factors related to the transaction process are: competitive procurement
process, transparent procurement process and assessment of cost and benefits.

3. Relationship management: Having good cooperation among the private and public part-
ners, and relationship management between them enhances the possibility of PPP projects to
be successful. Transparent communication and mutual understanding between partners are
the factors in this main success factor.

4. Regulatory environment: Enabling regulatory, legal, institutional and policy environment

in favor of implementing PPP policy enhance the possibility of PPP projects to be successful.
The factors under this are: complete legal and regulatory framework, favorable framework
of PPP, favorable legal and regulatory framework and government guarantee.

5. Appropriate PPP model: Selection of appropriate PPP models depending on the project
type enhances the success of the projects. The innovation and identification of appropriate
projects are the factors in this group.

6. Supportive Community: The community of the host country is very important for the
success of the PPP projects. Involvement of community and supportive community are the
factors under this main group of CSFs.

7. Risk sharing and allocation: The risk management between the partners enhances the
success of the projects. Appropriate risk allocation and appropriate risk sharing are the
chosen factors under this group of CSFs.

8. Strong public and private consortium: The management structure of public and private
parties are important factor for the success of projects. The factors for this group are: multi-
disciplinary experts, strong public administration and strong private consortium.

9. Political support and stability: Supportive and stable political environment is necessary
for a PPP project to be successful. Political support and stable political environment are the
factors under this group of CSFs.

Grouping of related CSFs: From the list of twenty-seven identified CSFs in context of
Bangladesh, only one success factor has been rejected which is attractive profitability shown
by only one study and was not in context of underdeveloped country. The other twenty-
six success factors fulfilled the criterion of selecting and grouping CSFs for the conceptual
model. The selection methodology of CSFs are shown in figure 3.3.

39
 Figure 3.3: Method of grouping CSFs.

3.2 Verification of conceptual model and determination of appropriate models

In this step the in depth expert interview question have been designed and conducted. The
interview is very important to get the opinions of the experts about the PPP projects and
models in Bangladesh.

3.2.1 Design Interview questions

Creswell (2014) said qualitative methods are open-ended, flexible, depends on individuals
experience as participants gets freedom to choose their own opinions in details, and Mack
et al. (2011) said this method is more feasible than quantitative studies. This approach is
necessary for determining the appropriate models and identifying the critical success factors
unique to the PPP environment of Bangladesh. Predefined question has helped to verify data

40
necessary for the objectives. Further questions also has been added or revised depending on
the exposure of the relevant data or the expert advice. The interview questions have been
divided into three sections.

• Conceptual model and CSFs: The opinion on the conceptual model has been asked in
this section. Discussion on the selected CSFs has been done in this part to learn about
additional CSFs in context of Bangladesh.
• PPP success measurement: The measurement of success of the projects has been asked
in this section. The participants has been asked questions on the PPP project success
measures. The discussion on five proposed success measures has also be done in this
section.
• Case Study Questions: This section consists of the information about the selected case
study projects. The questions has been designed from the collected data from literature
review and further questions has been added depending on experts’ opinion on model
selections.

The sample of the interview question is provided in Appendix 1. The interview questions are
semi-structured and open ended. Measurement of success for case study projects are shown
in Appendix 2.

The question for interview was shown to 3 experts for checking the validity and quality of
the questions before conducting the interview sessions. The experts gave satisfactory marks
on the question design and no changes were necessary.

3.2.2 Selection of participants

The selection of the experts are based on the expertise, experience, and involvement with
PPP of Bangladesh. Two types of experts have been considered for the interview.

1. Academician: Experts from renowned universities who are involved or have core
knowledge in PPP.
2. Professionals: Experienced experts who are involved with any stages of the PPP
projects in Bangladesh or international level and from both private sector and the pub-
lic sector.

Total tens persons have been interviewed. The interviewees were 8 persons from the gov-
ernment sectors and 2 persons from the private sectors. 2 of the interviewees were from
the academic background (medical and finance) and rest of them were from professional
backgrounds.

41
3.2.3 Conduct in-depth interview and verify conceptual model

In depth expert interviews have been conducted face to face which helped to verify the
proposed conceptual model and the data collected on selected projects and models. Yin
(1994) concluded that the conceptual model needs to be reliable and valid. Expert verifi-
cation method has been used to validate the conceptual model. The conceptual model has
been verified and opinions has been taken for modification or update. Figure 3.4 shows the
verification process of the conceptual model.

Figure 3.4: Process of verifying proposed conceptual Model.

Firstly, the interviewees have been asked about some general questions. Then the factors
which are directly affecting the success of the projects have been asked. The main purpose
of this to bring out the unique success factors of PPP project in context of Bangladesh and
gathering the data to evaluate the proposed conceptual model. Lastly, the interviewees have
been asked to express their opinion on the three selected case study projects. In this step,
the models appropriate for the selected sectors and the conditions of selecting those models
have been asked. The interviewee has given their opinions on all of the selected projects.

3.2.4 Hypotheses

The experts’ opinion have helped the verification of the conceptual model to be completed.
After the verification, the hypotheses were in hand. The hypotheses are depending on the
CSFs of PPP in Bangladesh.
42
Hypothesis 1. Right project identification based on financial and economic viability posi-
tively impacts on the success of PPP.

Hypothesis 2. Right partner selection through transparent transaction and competition of the
private enterprises in the market positively impacts on the success of PPP.

Hypothesis 3. Having good cooperation among the private and public partners, and relation-
ship management between them positively impact on the success of PPP.

Hypothesis 4. Enabling regulatory, legal, institutional and policy environment in favor of

implementing PPP policy positively impact on the success of PPP.

Hypothesis 5. Appropriate PPP model selection based on quality, time, cost and innovation
positively impacts on the success of PPP.

Hypothesis 6. Supportive and active community of citizens positively impact on the success
of PPP.

Hypothesis 7. Appropriate risk allocation and appropriate risk sharing positively impact on
the success of PPP.

Hypothesis 8. Strong public administration and strong private consortium positively impact
on the success of PPP.

Hypothesis 9. Stable political environment and political support positively impact on the
success of PPP.

3.2.5 Qualitative analysis to determine appropriate model

The responses from the expert interviews were the determinant of appropriate models. Ac-
cording to Farber (2006) guidelines this qualitative data analysis has four steps.

1. Preparation of data: The data collected from experts opinions were the raw data. They
were processed and organized for the further analysis of the data.
2. Coding the data: After the data were organized, the major task of qualitative research is
to analyze the data by organizing it into categories on the basis of themes and concepts.
This process is known as coding. The coding was done two steps.
• Open coding: Open coding is the initial examination of the data. In this step the
initial selection of data and noting the theme will be done.
• Sorting data into categories: After identifying all the themes from the data, the
final step is to sort them into categories.
3. Representation of findings: The data organized into categories were represented in this
step.
43
 4. Determination of appropriate model: The argument is if the selected models in the
projects are not appropriate PPP models for these sectors, then it affects the success of
PPP. The determination of models have been analyzed through findings whether they
covered the requirements of cost, quality, time, innovation and citizen/ user impact.

The process of qualitative data analysis is shown in Figure 3.5.

Figure 3.5: Process of qualitative data analysis.

The method of the qualitative analysis is summative content analysis. The reason behind
choosing this method is that this method is more efficient in bringing out contextual meanings
of the specific terms or opinions than the conventional content analysis and the directed
content analysis techniques (Hsieh & Shannon, 2005). The selected method is useful to
analyze the contents which is comprised of alternative opinions or terms.

3.3 Validation and determination of Critical Success Factors

The process of validating the CSFs of PPP projects in context of Bangladesh using survey is
showed in this section.

44
3.3.1 Design questionnaire for survey

The design of the questionnaire began with the review of relevant materials from research
papers, books, professional journals, conference papers and internet information to capture
the idea behind the CSFs. The questionnaire designing is adapted from the Bhattacherjee
(2012).

• The questionnaire survey method used is the Group administered survey. In group
administered survey participants are brought together at a common place and fixed
time, and each participant is asked to complete the survey questionnaire. Participants
responses independently without interacting each other. The response rate is high in
this method.
• The response format for the significance of the factors is the interval level response
format. The questionnaire has a 0-5 scale basis to rate from (0) Not applicable (1) Not
significant (2) Least significant (3) Significant (4) Very significant and (5) Extremely
significant.
• The response format for gathering the data on the three case studies to measure the
success is adopted from Liyanage & Villalba-Romero (2015). A likert scale (From
1-5) in a ‘Question’ format has been used to measure the responses.

The sample of the questionnaire is provided in the Appendix 2.

Pilot testing findings:

After the questionnaire has been completed, a pilot testing has been conducted. A pilot test
is necessary to pretest the survey questionnaire before conducting the main survey. The data
for pilot testing are collected through group administered survey. First set of questionnaire
has been distributed to the 10 government officials, second set of questionnaire has been
distributed to one private organization’s 5 PPP experts and last set of questionnaire was
distributed to another public organization’s 5 officials. Among them 2 responses from the
second set of distributed survey questionnaire have been rejected because of the lack of data
provided. So the pilot testing has been conducted using 18 total responses from public and
private companies.

The questionnaire have been tested using Kaiser-Meyer-Olkin(KMO) test for sample ade-
quacy. This test is necessary to find out whether the sample size and data is suitable for
Principal Component Analysis (PCA). The KMO measure of Sampling adequacy is 0.330
which is less than 0.5 and this showed that PCA will not give a reliable result (Kaiser & Rice,
1974). After the pilot testing, the questionnaire has been finalized as there were no changes
in the questionnaire. Figure 3.6 shows the steps of the questionnaire design for survey.

45
 Figure 3.6: Process of the questionnaire design.

3.3.2 Selection of organizations and participants

The selection from the government organization are the organizations playing role as the
public party in the PPP sector. Private organizations are chosen based on the experience and
involvement with PPP of Bangladesh as well as who have completed projects. The selection
of participants from the selected organizations has been based on sampling method discussed
by Bhattacherjee (2012).

• The target population: The target population is all the people related to this particular
sector of PPP. For this survey is the professionals, academicians, engineers, contractors
and experts related to PPP in Bangladesh are the target population.
• Sampling frame: Sampling frame is the accessible section from where a sample can be
drawn. For this survey the Government PPP organizations, Private construction farm,
private groups of industries who are directly involved with the PPP of Bangladesh are
considered. About three organizations from public sector and three organizations from
the private sector, a total of six organizations are considered for this survey. For pilot
test, one organization is considered.
• Sampling Method: The number of participants for the survey is chosen by snowball
expert sampling method. Snowball expert sampling is a non random sampling method
where the participants are chosen based on their expertise and after the selection of
one participants, other participants are selected using the reference from that selected
participant. In this case, the organizations have been selected using the snowball sam-
pling method. 42 person participated in the survey. The participants related to the PPP
46
 of Bangladesh have been chosen from the six organizations. For pilot test, accord-
ing to Wilmoth (1982), there should be 10 to 30 people. The pilot test of the survey
has been done using responses of 20 people. The survey has been done using group
administered method and group discussion method.

3.3.3 Survey data collection

The survey is necessary to collect the empirical data which cannot be collected otherwise.
Survey questionnaires have been distributed into selected organizations and to participants.
After that he questionnaires have been collected for analyzing.

3.3.4 Quantitative and qualitative analysis to determine CSFs

Quantitative method is used for gathering data for Critical Success Factors(CSFs) of PPP by
conducting a survey on selected participants.

The analysis of the CSFs and ranking them according, the formula of ”Significant Index”
developed by Zhang & Asce (2005) will be used. This method is useful to analyze impor-
tance of Critical Success Factors and also used by Dada & Oladokun (2008) for analyzing
the CSFs based on Nigeria. According to Zhang & Asce (2005), the formula is developed to
convert a linear 0-5 scale used in questionnaire to 0-100 scale. In this formula, linear scale
value 5, 4, 3, 2, 1 and 0 have significance index of 100, 80, 60, 40, 20 and 0 respectively.

0Ri0 + 20Ri1 + 40Ri2 + 60Ri3 + 80Ri4 + 100Ri5

Si = (Equation 3.2)
Ri0 + Ri1 + Ri2 + Ri3 + Ri4 + Ri5

Where:

• Si is the significance index for the ith factor.

• Ri0 is the number of responses as 0 for the ith factor or sub-factor.
• Ri1 is the number of responses as 1 for the ith factor or sub-factor.
• Ri2 is the number of responses as 2 for the ith factor or sub-factor.
• Ri3 is the number of responses as 3 for the ith factor or sub-factor.
• Ri4 is the number of responses as 4 for the ith factor or sub-factor.
• Ri5 is the number of responses as 5 for the ith factor or sub-factor.

47
The opinion of the experts about the CSFs will also be analyzed using the summative content
analysis. The qualitative analysis will strengthen the results of the quantitative analysis.

3.3.5 Testing of Hypotheses

The data from survey has helped to test the hypotheses on the CSFs in context of Bangladesh.

Firstly, to analyze the model fitness, the R squared test and value of Durbin-Watson test
of auto-correlation have been conducted. Then to test the multicollinearity, the results of
Variable Inflation Factor(VIF) and Tolerance (TOL) have been analyzed.

To substantiate the hypothesis, the correlation between the CFSs (independent variables)
and the Success of PPP (dependent variable) needs to be tested. There has to be positive
correlation between them to accept the hypothesis. The Pearson’s correlation method has
been used for testing the hypothesis. The formula for Pearson’s correlation is,

Pn
i=1 (xi − x̄)(yi − ȳ)
r = pPn pPn (Equation 3.3)
− 2 2
i=1 (x i x̄) i=1 (yi − ȳ)

Where:

• r is the Pearson’s coefficient.

• x̄ is the mean/average of the sample data set x.
• ȳ is the mean/average of the sample data set y.
• xi is the simple sample from x indexed with i.
• yi is the simple sample from y indexed with i.
• n is the total size of the sample.

Software used for the descriptive analysis and hypothesis testing is IBM SPSS 21.

48
 Chapter 4

Data analysis Results and Discussions

This chapter shows the statistics and the analysis of the qualitative and quantitative methodol-
ogy adopted for this research. The qualitative research is conducted to analyze the interview
data to determine the appropriate models of PPP for Bangladesh. On the other hand quan-
titative research is considered to analyze the survey data which leads to identify the Critical
Success Factors, ranking of CSFs and testing of hypotheses.

4.1 Qualitative analysis to determine appropriate models of PPP

Determination of the models using the qualitative analysis is discussed in this section.

4.1.1 Data preparation

To get the opinions about the PPP models government officers, PPP advisers, engineers and
researchers were interviewed. All of the interviewees were selected based upon the knowl-
edge or involvement in the PPP projects. Among 10 interviews, 9 of the interviews were
taken face to face in the interviewee’s office and one of the interview was taken via phone
call. The interviews were taken in English language and the data was recorded in text format.
Then the text data were structured for qualitative analysis. For the qualitative analysis, the
summative content analysis method is used to analyze the pattern and to derive the inter-
pretation of the contextual meaning of the expert opinions from the gathered interview data
(Hsieh & Shannon, 2005).

4.1.2 Case studies

The interviewees were asked about three selected case studies (Mayor Hanif flyover project,
Sirajganj gas-fired power PPP project and BEPZA lease contracts) and share their opinion
related to the case studies. In the interviews along with the selected models, interviewees
were also asked about the models which can be used in transportation sector, power and
energy sector, and the social and government infrastructure sector.

49
4.1.2.1 Mayor Hanif Flyover project

Mayor Hanif flyover project was planned to build after the World Bank’s study on the Dhaka
city’s traffic situation. The government decided to build this project under PPP. Initially a
flyover length of 8.4 kilometers from Jatrabari to Gulistan area was decided to be built on the
concession agreement between Dhaka City Corporation (public company under Bangladesh
government) and Belhasa Accom and Associate Limited (a member company of a private
company named Orion group). The agreement was signed on 21 June, 2005 and the project
was awarded for period of 24 years. The Build-Own-Operate-Transfer (BOOT) model for
the project was chosen under the concession contract. Because of land acquisition and fund
arrangement difficulties, the construction was delayed 5 years to start the construction and
in 2010 the construction work started after the plan was redesigned and project scopes were
expanded. In the new design the length of the flyover extended from 8.4 kilometers to 11.8
kilometers and the private company responsible for project was changed from Belhasa Ac-
com and Associate limited to Orion Infrastructure Limited. The flyover finally got opened
in 31 July, 2014 after the completion and since then it is continuing its operation fully.

The experts gave different opinions about the this project but mostly towards the unsuccessful
and failure of the project. One of the directors of the PPP authority pointed out that there
were internal problem in the selected private party. According to him, “The private party was
selected from winner of the tendering process, but the PPP project concept was new for them
which led to some organizational problems. The model selection (BOOT) was definitely a
good choice at that moment and still is a good model for the transportation sector. If we
look at the leading projects of the developed countries, the Build-Operate-Transfer (BOT)
model is the best choice for medium to large projects in transportation sector. But if we
talk about Mayor Hanif flyover project, the model selection was appropriate and obviously
model selection is a crucial point which cannot be ignored. If the model selection was faulty
at the feasibility study, the project would not have attracted any parties at all. Again if it was
the BOT model, it could have attracted better private parties and we could have said that it is
a successful project.”

The above opinions about the model selection were also similar for the nine other experts.
In addition, one of the government official said, “BOOT model should be used in large
infrastructure projects where the contractual terms are more than 30 years above and needs
a huge funding.” But only one of expert was against the BOOT model selection. According
to this interviewee from PPP operator (private party), “Feasibility study process was faulty
and definitely as you know financial models plays a vital role in the success. BOOT model
was a bad choice depending on the project. The project was not big enough and the contract
was not for long term. BOOT model should be used only in those projects where the returns
are slow that means a long term contracts. But in this case, the project was for moderate
term. So it is one the reason of failures of the project.” Lastly one of the directors from PPP
authority from Bangladesh said, “The project cannot be considered a success because of the
outcome of lower final revenue and the more time-cost it took than expected. Though the
selected model (BOOT) was perfect while the feasibility study was done, the other aspects
were definitely faulty. Another example of faulty feasibility is less users of the flyover than
expected. It happened because this flyover has some better alternate free routes and people

50
are using those routes than this flyover; because they have to pay money to use this road
while they can use those routes without paying any money at all.”

While talking about the best choices about the model selection in the transportation sector,
most of the experts chose Build-Operate-Transfer (BOT) model as the best choice. Accord-
ing to them, the BOT model is slightly different from Build-Own-Operate-Transfer (BOOT)
model as the private party does not need to own the facility and contract term is not lengthy
in BOT model. For a small developing country like Bangladesh, owning and transferring
facilities with a long term contract are not fruitful, and investors are eager to get fast returns
in here. These are reasons of choosing BOT model over the BOOT model. But the second
choice for the transport sector is definitely the BOOT model but it is only applicable for the
long term contracts which have slow returns. The experts also suggested the management
contracts for the old government facilities can be a good choice for maintaining the roads
and ports (from opinions of 9 experts).

From the opinions of the experts, it can be said that the Mayor Hanif flyover was an un-
successful project because of the faulty feasibility study which led the project return to be
slower than expected. Another point is that this project did not meet the schedule goal, the
budget goal and the less users than expected. On the other hand, BOOT model as the model
selection was appropriate for the project. The opinions also indicates that, though the ap-
propriate model selection is important, but other factors are also important for success of
a project. The opinions also indicates that the BOT model is better than the BOOT model
in the transportation sector in Bangladesh. BOOT model should be used depending on the
return and length of the contract. And lastly, the management contracts can be implemented
to the old facilities which needs to be repaired and maintained to give the citizens better
facilities. The outcome of this case study is shown in Figure 4.1.

Figure 4.1: Outcome of the case study on Mayor Hanif flyover project from transportation sector.

51
4.1.2.2 Sirajganj gas-fired power PPP project

Bangladesh Power Development Board (PDB) buys the electricity from the private operators
and pays the money depending on the supply of the amount of electricity. In this con-
cept, a 150 Mega Watt plant was proposed to build in Sirajganj and the contract was signed
on 12 October, 2010 and the North-West Power Generation Company Limited took the re-
sponsibility of this project under the Build-Own-Operate model. After the completion, the
commercial operation started on 22 December, 2012. The private company signed a contract
named power purchase agreement with the PDB under which the government will buy the
generated electricity from this Sirajgonj power-plant.

The opinions of the experts were almost the same for this project. The experts consider
this project as a successful project and all other projects in power and energy sector under
the PPP context are relatively more successful than other government controlled projects.
The interviewed 10 experts considered this project as a successful one. An expert from
the government commented that, “This IPP(Independent Power Producer) step is a good
initiative from the Bangladesh government to increase the quality of simultaneous electricity
supply to normal citizens living in every nook and corner of the country. Though the covered
area is not 100% and the load-shedding (power cut-off) is still a problem, the problems have
been reduced a lot after this initiative as the government is able to buy a lot of Mega-watts
than before. The profit was also better than before for the government where the previous
government controlled initiatives were facing financial losses. This is why we can say almost
all the initiatives including this Sirajganj project is a successful initiative in power and energy
section.”

When the experts were asked about the importance of choosing the appropriate model and
the chosen model (BOO) for the project, they gave positive opinions. According to them,
the Build-Own-Operate model is a standard for this power and energy sector of Bangladesh
(from opinions of 10 experts). The model has not shown any problem till now and giving
much needed revenue in this sector. According to a director of PPP authority, “Build-Own-
Operate is a well structured model which will certainly return the revenue whether now or
then. In case of power sector of Bangladesh where government is having trouble to cope
up with the distribution of the power all over the country, the projects under this model is a
good choice to just buy the Mega Watts from the private plants and distribute using national
power grid.”

The experts suggested a lease model is another option to use in this power and energy sec-
tor. The lease contract can be signed with the private parties who can lease the facilities and
generate power and sell it to the National Grid. On the other hand government will also earn
money from leasing the facilities (from opinions of 7 experts). The operation and manage-
ment contract model can also be implemented to the old facilities to improve and generate
better revenue from them (from opinions of 4 experts).

We can conclude from the experts’ opinions that the Sirajganj gas-fired power PPP project
is a successful project. The model selection also played a vital role in this sector to get the
maximum output from the power plants. Build-Own-Operate model is considered the best
choice for this sector and became a standard in Bangladesh for implementing the PPP power
52
plant projects. The lease and management contracts are also a good choice for this sector.
The outcome of this case study is shown in Figure 4.2.

Figure 4.2: Outcome of the case study on Sirajgonj gas-fired power project from power and
energy sector.

4.1.2.3 BEPZA lease contracts

Bangladesh Export Processing Zone Authority (BEPZA) leases certain areas to local and
foreign investors to boost up exports of the country. It has eight dedicated operating area all
over the country. The leasing concept of BEPZA was innovative in the developing countries
and attracting the investors since the starting of the first processing zone in Chittagong in
1983. The primary objective of BEPZA is to provide potential investors a special area with
hassle free environment.

The lease contract used by the BEPZA is considered to be successful by all of the experts.
Unanimously all of them agreed that this project is successful. They also added that it is an
innovative approach for the developing countries. It has improved the quality of export of
Bangladesh. By leasing the area, the government is also earning money and improving the
citizen facilities of the area as well. One of the director from the PPP authority Bangladesh
said, “When the financial outcome of the government controlled project is uncertain, it is
better to use a lease model in that project. From this, there will be availability of payment
and the project will also be successful as the private partners will try their best to improve
that facility for giving the best service.”

When talking about the other potential models for the social and government infrastruc-
ture sector, experts suggested the management contract as the best choice for managing
the government owned infrastructures such as hospitals, educational institutes, health care
institutes etc.(opinions of six experts). One of the experts also suggested Build-Operate-
Transfer(BOT) model for this sector. According to this expert, a director of PPP authority,“If
a government has barren land and have no use, the government can give the land to private
53
party to develop that area for the service purpose of the citizens in BOT model contract ba-
sis. After a certain period when the land is developed and the contract terms are over, the
government can run that facility on their own or give it a lease contract, or use management
contracts to give service to the users.”

The opinions of the experts clearly stated that the model selection for the BEPZA lease con-
tracts was perfect. It is successful as a model in every aspect and was a proper selection
for improving the economic zones in Bangladesh. For the social and government infras-
tructure sector, lease contract as a model is a good choice. Other possible models can be
Build-Operate-Transfer (BOT) and management contracts. The outcome of this case study
is shown in Figure 4.3.

Figure 4.3: Outcome of the case study on BEPZA lease contracts from social and government
infrastructure sector.

4.1.3 Case study findings

The findings from the opinions of the experts show similar results on the selection of the
appropriate model. The experts unanimously said model selection needs to be proper to
make a project successful, but it is only one of the success factors. There are other factors
which also play a vital role in the success of the projects. The best example for this is
the Mayor Hanif Flyover project from the transportation sector. Theoretically, the project
shown good model selection evaluation score. The evaluation score value is 0.9 out of 1.0
for the selected Build-Own-Operate-Transfer (BOOT) model. The opinions of experts also
supported that the model selection for this project was appropriate. But still the project is
overall a failed project. The reasons behind it is the faulty feasibility study of cost-benefit
analysis, not meeting the schedule and budget goal and the lack of users. The other two
case studies on the power and energy sector, and social and government infrastructure sector
also showed the appropriateness of selection model theoretically. The evaluation score for
the Sirajgonj gas-fired power project’s Build-Own-Operate(BOO) model showed value of
0.9. The experts also supported that the model selection is proper for this project and for

54
this sector. The BOO model is the best choice at this moment and for near future for the
power and energy sector of Bangladesh. The Lease contract model of BEPZA showed has
evaluation score of 0.8 which also suggested theoretically appropriate model. The opinions
of the experts also approved that the model selection is appropriate.

4.1.4 Recommended guidelines for choosing the appropriate models

Guidelines for choosing the appropriate models on transport, power and energy, and social
and government infrastructure sector can be drawn from the opinions of the experts. For the
transportation sector the following points can be helpful while choosing the model:

• Build-Operate-Transfer (BOT) model is suitable for using in medium to large projects

which have contract periods of 30 years or less. BOT model is mostly used all over the
world especially in developed countries. This model is the best choice for transporta-
tion sector of Bangladesh in case of new projects at this moment.
• Build-Own-Operate-Transfer (BOOT) model can only be used for those projects which
has longer contract periods more specifically contract periods more than 30 years. This
model can be useful for large constructions with huge budgets and slow return rate.
• Operation contracts and management contracts can be good model choices for old
facilities of this sector. Old damaged road which needs maintenance, old ports and
bridges which has poor service quality or needs regular maintenance can be given to
private parties under these PPP contracts.

In case of the power and energy sector, the following guidelines can be followed:

• Build-Own-Operate (BOO) model is the standard and the best choice for this sector.
This model has been used in this sector of Bangladesh for many years and maximum
of the project is successful under this model.
• Lease contracts is an option which is possible if the government power facilities are
given to private parties to develop, generate and sell the power at a low price to Na-
tional Power Grid.
• Management and operational contracts model can be used to improve the quality of
the service and operating old power grids.

For social and government infrastructure sector, the following guidelines can be followed:

• Management and operational contracts are best choice for this sector. Government can
give the educational institutes, health care systems and citizen service sections under
these models for ensuring proper and quality services.
55
 • Build-Operate-Transfer (BOT) model can be used if any kind of social and government
infrastructures needed to be constructed. Government can use the unused lands for
making hospitals and educational institutes under this model of PPP.
• Lease contract is also a choice for developing certain areas i.e. economic zones, health
sector, education sector in social and government infrastructure sector.

The guidelines for these sectors are not limited to these recommendations. Many additional
guidelines can be added.

4.2 Determination of the CSFs

Description of the preparation and analysis of the raw data collected from the survey ques-
tionnaire and data collected from the interview is given below.

4.2.1 Data Preparation

For the survey questionnaires, firstly the collected questionnaires were checked visually to
find whether any missing value is available in the questionnaires. In the next step the data
were numerically coded and labeled accordingly to make the data usable for ranking using
Zhang & Asce (2005)’s significance index formula and analysis using SPSS.

4.2.2 Quantitative analysis to rank the CSFs

The statistics of the respondents and the ranking of the CSFs are shown below.

4.2.2.1 Descriptive statistics of the survey respondents

The descriptive statistics of the 42 respondents of the survey is shown in the Table 4.1.

56
 Table 4.1: Demographic profile of respondents.
Demographic Defined ranges Frequency Percentage
Director 03 7.14
Position Manager 12 28.57
PPP Advisor 05 11.90
Researcher 02 4.76
Engineer 20 47.62
Less than 5 years 07 16.67
Experience 5 years to 10 years 29 69.05
More than 10 years 06 14.29
Public 21 50.00
Organization Private 21 50.00

The survey was conducted in various sections where the people about the PPP knowledge
can be found. Survey participants were not only from the engineering sections, but also
from the administrative sections, research sections, advising sections of the participating
public, and private organizations. The demographics shows that the respondents were from
Director level to researcher level. Most of the participants were engineers, which is 20
out of 42 total participants (47.62%). In these 20 participants, the level of engineers also
varied. Executive engineers, site engineers and assistant engineers participated in the survey
to give their opinion of the PPP. The second most participants were the managers. About 12
managers participated in the survey. The most of the respondents (69.05%) had experience
over 5 years but less than 10 years. Only directors, some managers and some PPP advisers
had more than 10 years of experience. The last fact is the participants were evenly (50-50)
from private and public organizations.

4.2.2.2 Descriptive statistics of the Critical Success Factors

The questionnaire had a 0-5 scale basis to rate from (0) Not applicable (1) Not significant
(2) Least significant (3) Significant (4) Very significant and (5) Extremely significant. The
responses of the participants varied from 2 to 5 in the likert scale of 0-5. None of the par-
ticipants gave 0 or 1 in the questionnaire on any CSFs. As 0 was assigned for the ‘Not
Applicable’, so it is not shown in the table. The mean value and the standard deviation of
the CSF groups shows that two of the CSFs (Appropriate PPP model and, strong public and
private consortium) have minimum mean value of 3.98. On the other hand, relationship man-
agement has the maximum mean valie of 4.60. The responses of the participants along with
the CSF group means and standard deviation are shown in Table 4.2.

57
Table 4.2: Summary of responses of Success sub-factors under respective Critical Success Factors.
Responses selected as
No Success factors Success sub-factors (1) (2) (3) (4) (5) Group Std.
Mean dev
1 Financial and eco- 1. Stable economic policy 0 0 1 26 15
nomic viability
2. Sound economic policy 0 0 7 23 12
3. Transparent economic pol- 0 0 0 26 16 4.17 0.30
icy
4. Suitable financial market 0 0 12 25 5
5. Sound macro-economy 0 0 11 28 3
6. Sufficient profitability 0 0 0 18 24
2 Transparent transac- 1. Competitive procurement 0 3 23 14 2
tion process
2. Transparent procurement 0 0 0 20 22 4.18 0.40
process
3. Assessment of costs and 0 0 0 14 28
benefits
3 Relationship manage- 1. Transparent communica- 0 0 0 15 27
4.60 0.37
ment tion
2. Mutual understanding be- 0 0 0 19 23
tween partners
4 Regulatory environ- 1. Complete legal and regu- 0 1 7 34 0
ment latory framework
2. Favorable legal and regu- 0 0 15 26 1 4.04 0.31
latory framework
3. Favorable framework of 0 0 6 19 17
PPP
4. Government guarantee 0 0 3 17 22
5 Appropriate PPP 1. Identification of appropri- 0 0 0 7 35
3.98 0.35
model ate projects
2. Innovation 0 7 22 13 0
6 Supportive Commu- 1. Involvement of commu- 0 0 17 19 5
4.20 0.43
nity nity
2. Supportive community 0 0 0 12 30
7 Risk sharing and allo- 1. Appropriate risk alloca- 0 0 0 25 17
4.51 0.37
cation tion
2. Appropriate risk sharing 0 0 0 16 26
8 Strong public and pri- 1. Strong private consortium 0 0 6 26 10
vate consortium
2. Strong public administra- 0 6 15 16 5 3.98 0.41
tion
3. Multidisciplinary experts 0 0 0 27 15
9 Political support and 1. Stable political environ- 0 0 0 11 31
4.24 0.40
stability ment
2. Political support 0 0 15 23 4

58
The responses from the participants were analyzed descriptively and showed in 9 factor
groups. From the descriptive statistics of the sub-factors in Financial and economic viabil-
ity group, we can see that the mean of sufficient profitability has the highest mean of 4.57.
Transparent economic policy, stable economic policy, sound economic policy, suitable fi-
nancial market and sound macro-economy has mean value of 4.38, 4.33, 4.12, 3.83 and 3.81
respectively. The overview of all the sub-factors are shown in Table 4.3.

Table 4.3: Descriptive statistics of the sub-factors under Financial and economic viability.
No Success sub-factors N Mean Std. dev
1 Stable economic policy 42 4.33 0.53
2 Sound economic policy 42 4.12 0.67
3 Transparent economic policy 42 4.38 0.49
4 Suitable financial market 42 3.83 0.62
5 Sound macro-economy 42 3.81 0.55
6 Sufficient profitability 42 4.57 0.50

The descriptive statistics of sub-factors of transparent transaction shows that, assessment of

costs and benefits, transparent procurement process and competitive procurement process
have the mean value of 4.67, 4.52 and 3.34 respectively. The descriptive statistics of all
sub-factors in Transparent transaction group shows that the are shown in Table 4.4.

Table 4.4: Descriptive statistics of the sub-factors under Transparent transaction.

No Success sub-factors N Mean Std. dev
1 Competitive procurement process 42 3.36 0.69
2 Transparent procurement process 42 4.52 0.51
3 Assessment of costs and benefits 42 4.67 0.48

The descriptive statistics of the sub-factors in Relationship management group are shown in
Table 4.5. Transparent communication and mutual understanding between partners have the
mean value of 4.64 and 4.55 respectively.

Table 4.5: Descriptive statistics of the sub-factors under Relationship management.

No Success sub-factors N Mean Std. dev
1 Transparent communication 42 4.64 0.49
2 Mutual understanding between 42 4.55 0.50
partners

The descriptive statistics of the sub-factors in Regulatory environment group are shown in
Table 4.6. Complete legal and regulatory framework, favourable legal and regulatory frame-
work, favourable framework of PPP and government guarantee have the mean value of 3.79,
3.67, 4.26 and 4.45 respectively.

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 Table 4.6: Descriptive statistics of the sub-factors under Regulatory environment.
No Success sub-factors N Mean Std. dev
1 Complete legal and regulatory 42 3.79 0.47
framework
2 Favourable legal and regulatory 42 3.67 0.53
framework
3 Favourable framework of PPP 42 4.26 0.70
4 Government guarantee 42 4.45 0.63

The descriptive statistics of the sub-factors in Appropriate PPP model group are shown in
Table 4.7. The mean value of sub-factor Identification of appropriate projects, and innovation
are 4.81 and 3.14 respectively.

Table 4.7: Descriptive statistics of the sub-factors under Appropriate PPP model.
No Success sub-factors N Mean Std. dev
1 Identification of appropriate 42 4.81 0.40
projects
2 Innovation 42 3.14 0.68

The descriptive statistics of the sub-factors in Supportive community group are shown in
Table 4.8. The mean value of sub-factors Involvement of community, and supportive com-
munity are 3.69 and 4.71 respectively.

Table 4.8: Descriptive statistics of the sub-factors under Supportive community.

No Success sub-factors N Mean Std. dev
1 Involvement of community 42 3.69 0.68
2 Supportive community 42 4.71 0.46

The descriptive statistics of the sub-factors in Risk sharing and allocation group are shown
in Table 4.9. Appropriate risk allocation has the mean value of 4.41 and appropriate risk
sharing has the mean value of 4.62.

Table 4.9: Descriptive statistics of the sub-factors under Risk sharing and allocation.
No Success sub-factors N Mean Std. dev
1 Appropriate risk allocation 42 4.41 0.50
2 Appropriate risk sharing 42 4.62 0.49

The descriptive statistics of the sub-factors in Strong public and private consortium group
are shown in Table 4.10. Multidisciplinary experts has the highest mean value of 4.36 in the
group. Other sub-factors strong private consortium and strong public administration have
the mean value of 4.09 and 3.48 respectively.
60
 Table 4.10: Descriptive statistics of the sub-factors under Strong public and private consortium.
No Success sub-factors N Mean Std. dev
1 Strong private consortium 42 4.10 0.62
2 Strong public administration 42 3.48 0.89
3 Multidisciplinary experts 42 4.36 0.49

The descriptive statistics of the sub-factors in Political support and stability group are shown
in Table 4.11. Stable political environment has the mean value of 4.73 and political support
has the mean value of 3.74.

Table 4.11: Descriptive statistics of the sub-factors under Political support and stability.
No Success sub-factors N Mean Std. dev
1 Stable political environment 42 4.73 0.45
2 Political support 42 3.74 0.63

4.2.2.3 Ranking of the Critical Success Factors

The responses on the CSFs were analyzed using the Zhang & Asce (2005)’s significance
index to find out the most important CSFs and success sub-factors under CSF groups and
rank them accordingly. The ranking of success sub-factors are shown in Table 4.12.

61
 Table 4.12: Ranking of the critical success sub-factors.
Success factors Success sub-factors Significance Rank
index
1. Financial and economic viability 1. Stable economic policy 86.67 14
2. Sound economic policy 82.38 16
3. Transparent economic pol- 87.62 12
icy
4. Suitable financial market 76.67 18
5. Sound macro-economy 76.19 19
6. Sufficient profitability 91.43 7
2. Transparent transaction 1. Competitive procurement 67.14 25
process
2. Transparent procurement 90.48 9
process
3. Assessment of costs and 93.33 4
benefits
3. Relationship management 1. Transparent communica- 92.86 5
tion
2. Mutual understanding be- 90.95 8
tween partners
4. Regulatory environment 1. Complete legal and regu- 75.71 20
latory framework
2. Favorable legal and regu- 73.33 23
latory framework
3. Favorable framework of 85.24 15
PPP
4. Government guarantee 89.05 10
5. Appropriate PPP model 1. Identification of appropri- 96.67 1
ate projects
2. Innovation 62.86 26
6. Supportive Community 1. Involvement of commu- 74.15 22
nity
2. Supportive community 94.29 3
7. Risk sharing and allocation 1. Appropriate risk alloca- 88.10 11
tion
2. Appropriate risk sharing 92.38 6
8. Strong public and private consor- 1. Strong private consortium 81.91 17
tium
2. Strong public administra- 69.52 24
tion
3. Multidisciplinary experts 87.14 13
9. Political support and stability 1. Stable political environ- 94.76 2
ment
2. Political support 74.76 21

The ranking of the CSF groups showed that the relationship management is ranked 1 with the

62
significance index of 91.90%. Strong public and private consortium has the lease significant
index of 79.52%. The ranking of CSF groups are shown in Table 4.13.

Table 4.13: Ranking of the Critical Success Factors.

No Success Factor Significance Rank
Index
1 Financial and economic viability 83.19% 6
2 Transparent transaction 83.65% 5
3 Relationship management 91.90% 1
4 Regulatory environment 80.83% 7
5 Appropriate PPP model 79.76% 8
6 Supportive Community 84.22% 4
7 Risk sharing and allocation 90.24% 2
8 Strong public and private consortium 79.52% 9
9 Political support and stability 84.76% 3

4.2.2.4 Descriptive statistics of the Project Success Measures

The Success measure section of the questionnaire had a 1-5 scale basis to rate from (1)
Strongly disagree (2) Disagree (3) Neutral (4) Agree and (5) Strongly agree. The benefits
of the project under the impact on the citizens/users measures had the highest mean of 4.71
and the standard deviation of 0.45. On the other hand the tender competitiveness under
the tendering process had least mean value of 2.69 and the standard deviation of 0.56. The
descriptive statistics of measuring points under the 5 success measures are shown below with
their 12 measure points in Table 4.14.

63
 Table 4.14: Descriptive statistics of the measure points under each success measure.
No Success measure Measure point N Mean Std. dev
1 Project efficiency Schedule goal 42 4.19 0.40
2 Project efficiency Budget goal 42 4.19 0.40
3 Risk transfer Risk transfer 42 3.62 0.49
4 Risk transfer Risk allocation 42 4.09 0.62
5 Tendering process Contract clarity 42 4.67 0.48
6 Tendering process Tender competitiveness 42 2.69 0.56
7 Tendering process Tender transparency 42 4.40 0.50
8 Impact on future PPP ini- Quality of project 42 4.16 0.38
tiatives
9 Impact on future PPP ini- Innovation of the project 42 3.67 0.48
tiatives
10 Impact on the citizens/ Benefits from project 42 4.71 0.45
users
11 Impact on the citizens/ Satisfaction level of citi- 42 4.45 0.50
users zens/ users
12 Impact on the citizens/ Problem solved by the 42 4.29 0.60
users project

Overall success measures show that impact on the citizens/ users has the highest mean value
of 4.48 which means the experts gave most priority to this measure. On the other hand the
risk transfer has 3.86 mean value which makes it less important as the success measure.
The result shows that experts were almost neutral about measuring risk transfer to measure
the success but they did not totally counter it out. The descriptive statistics of the success
measures are shown in Table 4.15.

Table 4.15: Descriptive statistics of the success measure groups.

No Success measure Mean Std. dev
1 Project efficiency 4.19 0.27
2 Risk transfer 3.86 0.37
3 Tendering process 3.92 0.33
4 Impact on future PPP initiatives 3.92 0.31
5 Impact on the citizens/ users 4.48 0.28

64
4.2.2.5 Testing of hypothesis

The purpose of hypotheses were to analyze the connection between the Critical Success
Factors and the success of the PPP project. The hypotheses were verified from the interview
data of the experts. All of the hypotheses were selected. The hypotheses are shown in the
Table 4.16.

Table 4.16: List of verified hypotheses.

No Details of hypothesis Independent Variable Dependent
Variable
1 Right project identification based on finan- Financial and economic vi-
cial and economic viability positively im- ability (FEV)
pacts on the success of PPP
2 Right partner selection through transpar- Transparent transaction
ent transaction and competition of the pri- (TT)
vate enterprises in the market positively
impacts on the success of PPP
3 Having good cooperation among the pri- Relationship management
vate and public partners, and relationship (RM)
management between them positively im-
pact on the success of PPP
4 Enabling regulatory, legal, institutional Regulatory environment
and policy environment in favor of imple- (RE)
menting PPP policy positively impact on
the success of PPP
5 Appropriate PPP model selection based on Appropriate PPP model Success of PPP
quality, time, cost and innovation posi- (APM)
tively impacts on the success of PPP
6 Supportive and active community of citi- Supportive Community
zens positively impact on the success of (SC)
PPP
7 Appropriate risk allocation and appropri- Risk sharing and allocation
ate risk sharing positively impact on the (RSA)
success of PPP
8 Strong public administration and strong Strong public and private
private consortium positively impact on consortium (SPPC)
the success of PPP
9 Stable political environment and political Political support and stabil-
support positively impact on the success of ity (PSS)
PPP

The hypotheses testing were necessary to find out whether there are positive correlation be-
tween the Critical Success Factors and the success of the PPP projects. The model showed
acceptable small fit with R squared value of 0.267 which means 26.7% was explained through
the model. According to Cohen (1977) R squared value of 0.26 and above are considered
as large value for goodness of fit of a model. The Durbin-Watson value is 1.907 which is
65
close to 2 means there are no auto-correlation. The acceptable value of Durbin-Watson is
more than 1.50 and less than 2.50 (Field, 2000). Figure 4.4 shows the summary of the model
below.

Figure 4.4: Model summary of Success of PPP.

Multicollinearity analysis was examined using Variable Inflation Factor (VIF) test and Tol-
erance (TOL) test. The results showed that all the variables have VIF values below 2 and
TOL values above 0.1 which means the results are within the acceptable range (Hair et al.,
2009). Figure 4.5

Figure 4.5: Multicollinearity statistics of Success of PPP.

To test the normal distribution of data, Skewness and kurtosis test was used. Each variable
have the value of skewness and kurtosis between +2 and -2 which shows the normal distri-
bution of the data (Field, 2000). Figure 4.6 shows the statistics of the skewness and kurtosis
analysis.

66
 Figure 4.6: Skewness and kurtosis statistics of Success of PPP.

Two-tailed Pearson’s correlation of coefficient is used to analyze the relation between the
Critical Success Factors (independent variables) and the Success of PPP (dependent vari-
able). The value of Pearson correlation can be between -1 to +1 and for the positive correla-
tion, the value will be more than 0 and for negative correlation, the value will be less than 0
(Benesty et al., 2009).

The value of Pearson’s correlation of coefficient has to be positive(more than 0) to accept the
hypotheses as all the Critical Success Factors(independent variables) has to have a positive
impact on the Success of PPP(dependent variable). All the factors showed positive correla-
tion with the success of PPP. According to Hinkle et al. (1979)’s rule of thumb for explaining
the size of correlation coefficient, only regulatory environment (r= +0.712) showed high pos-
itive correlation with the success of PPP. Financial and economic viability (r= +0.682), Ap-
propriate model selection (r= +0.646) and Strong public and private consortium (r= +0.561)
showed moderate positive correlation with the success of PPP. Lastly, transparent transaction
(r= +0.461), relationship management (r= +0.426), supportive community (r= +0.364), risk
sharing and allocation (r= +0.455), and political support and stability (r= +0.332) showed
low positive correlation with the Success of PPP. The two-tailed significance test also shows
that all of the variables show good significance less than 0.05 significance value. Table 4.17
shows the overview of the hypothesis testing.

67
 Table 4.17: Hypothesis testing result.
No Hypothesis details Pearson’s p-value Accepted/
correlation Rejected
1 Right project identification based on finan- +0.682 0.000 Accepted
cial and economic viability positively im-
pacts on the success of PPP
2 Right partner selection through transpar- +0.461 0.002 Accepted
ent transaction and competition of the pri-
vate enterprises in the market positively
impacts on the success of PPP
3 Having good cooperation among the pri- +0.426 0.005 Accepted
vate and public partners, and relationship
management between them positively im-
pact on the success of PPP
4 Enabling regulatory, legal, institutional +0.712 0.000 Accepted
and policy environment in favor of imple-
menting PPP policy positively impact on
the success of PPP
5 Appropriate PPP model selection based on +0.646 0.000 Accepted
quality, time, cost and innovation posi-
tively impacts on the success of PPP
6 Supportive and active community of citi- +0.364 0.018 Accepted
zens positively impact on the success of
PPP
7 Appropriate risk allocation and appropri- +0.455 0.002 Accepted
ate risk sharing positively impact on the
success of PPP
8 Strong public administration and strong +0.561 0.000 Accepted
private consortium positively impact on
the success of PPP
9 Stable political environment and political +0.322 0.038 Accepted
support positively impact on the success of
PPP

4.2.3 Qualitative analysis of CSFs and measures from expert’s opinion

To verify the conceptual model and finalize the hypotheses, the experts were asked about
the CSFs and the success measures of the PPP projects. The data related to the CSFs and
measures were coded and separated from interview data to research qualitatively to support
the quantitative analyzed results. 10 interviewees have given their opinion about the CSFs
and the success measures. The summary table priority are considered as following:

• Opinion of 0 experts considered as none

68
 • Opinion of 1-3 experts considered as low priority
• Opinion of 4-6 experts considered as medium priority
• Opinion of 7-10 experts considered as high priority

4.2.3.1 Experts opinion on Critical Success Factors

The interviewees gave their opinions on the success factors affecting the PPP projects of
Bangladesh.

CSF 1: Financial and economic viability

Financial and economic viability means the economic environment and the financial con-
dition for PPP in a country. In an ideal financial and economic environment, the investors
and lenders will be eager to invest their money for projects. The importance of financial
and economic viability was pointed out by majority of the experts. The Director General of
PPP authority said, “ Financial and economic viability means the projects which are com-
mercially viable, that means a project must have a good return. A bigger market is also
important for drawing out the good private consortium. The main problem for a country like
ours is that the PPP financial market is not yet matured to draw attention of the international
private consortium that much. Again we have so many private companies in Bangladesh who
are on par with many big international consortium. But they are more interested investing in
international stages and in developed countries, where the market is huge and their work may
give a good reputation and draw attention of the other governments to get more contracts and
projects. If the market is huge, the private party can show their expertise in an international
stage which is the main target of the good private consortium.” From the previous opinion
another sub-factor was identified which is the suitable financial market. The experts pointed
out that, the stable and sound economic policy also plays a very important role in the success
of the PPP projects (opinions of 6 experts). Transparency in the economic policy is also
factor which some of the experts noted in their interview (opinions of 4 experts). One of
the PPP consultant said, “Policies ensures the parties, in this case it is for the private par-
ties, for their investment in the project. The economic policy from the government for the
PPP, I will say is very necessary. Stable economic policy with a transparent financial market
will make more profit to both parties. Stability means it should not be changed or biased
depending upon the contracts all the time. There must be a standard which should be main-
tained. Transparency is needed everywhere, and it is crucial for the sectors where everything
is revolving around money.” A director from the PPP authority of Bangladesh quoted, “Eco-
nomic viability is important because it is the economic condition of a sector which draws the
investors. The PPP sector is all about attracting private investors. If the economic policy is
not suitable, there is no market for getting the invested money back. If there are no stability
in the economic environment, then it is hard to attract the private parties in the sector. The
private party invests obviously to get a better financial return. Nobody likes to loss their
invested money.” This opinion clearly describes some of the significant sub factors under
the financial and economic viability factor. The experts clearly emphasized on the return of

69
the investments which is necessary to be sufficient for the investors (opinions of 5 experts).
Another important factor according to the experts is the macro economy market which plays
an important role in the success of the PPP projects (opinions of 4 experts). Large economic
markets will attract the investors and lenders which will help to improve the PPP sector of
the country and the good private parties will be willing to join in the PPP projects. The
summary of the opinions are shown in Table 4.18.

Table 4.18: Summary of the opinions of experts on Financial and economic viability.
No Success sub-factor Frequency/ Percentage
Priority
1 Stable economic policy Medium 60%
2 Sound economic policy Medium 60%
3 Transparent in the economic policy Medium 40%
4 Sufficient profitability Medium 50%
5 Macro economy market Medium 40%
6 Suitable financial market Low 10%

CSF 2: Transparent transaction

Transaction process is consists of the tender bidding, contract finalizing and signing, and
procurement stages. Transparency in these stages really is important as the contract terms,
partner choosing and cost benefit analysis is done in these stages. Transparency in trans-
action process plays an important role in PPP projects. The majority of the experts gave
highlights on this factor. The director general of PPP authority commented, “ Transaction
process impact is very important. If the transaction stage which has procurement process,
market analysis and partner selection has a faulty feasibility study, the project will get stuck
in the beginning for funding and later in the profit return.” The experts pointed out that the
procurement process has to be transparent and there is no room for corruption in selection of
the private parties for the PPP project (opinions of 7 experts). About the transparency, one
of the manager from PPP operators (the social and government infrastructure sector) gave a
valuable opinion. He said, “ Transparency in the procurement process is really important. If
there is corruption in the selection of the party, the project may go to a weak private consor-
tium. And the end of it will not be good for any of the parties. The public party will have an
unfinished or failed project in hand and the private party will lose the governments trust to be
selected in the future and a bad reputation.” One of the experts added that the procurement
process should be observed from beginning to the end to get the best result. Then the experts
talked about significance of the cost benefit analysis. The analysis of the cash flow has to
be proper and it is a must thing to do (opinions of 5 experts). On the topic of cash benefit
analysis, one of the director from PPP authority of Bangladesh said, “ Cost benefit analysis
shows the viability of a project. Before investing in the project, the government part should
assess all the costs and then assess the source of the profit. After that the government should
disclose this to the interested private parties. The private parties then must analyze the costs
and benefits by themselves first and should match whether their own analysis are similar
with the government analysis or not. They should only try for those projects which they are
capable of. The government also should select those parties who shows the similar analysis.

70
The cost benefit analysis has to be good enough for both parties so that they find interest in
the projects to invest in. It has to be proper to get a better outcome in PPP projects.” Only
two of the experts only mentioned about the competitiveness in the procurement process.
One of the director from PPP authority of Bangladesh said, “Corruption free contracts and
party selection but the competitiveness is not important. It is actually quality over quantity.
If the government can find a good, dedicated and trustworthy private party for the project
from two companies who are interested in the project and on the other hand ten parties ap-
plied and none of them is eligible for taking the responsibility of the project, what do you
think is better? It is a better to find a worthy party from two applied candidates than to se-
lect none from the ten unworthy candidates. Some of the projects were postponed because
none of the applied parties has the capabilities to take responsibilities of the projects.” On
the contrary another director said that, “It is good to have a competition in the procurement
process. If there are so many parties who are interested in the process, government will have
more options to choose from and eventually can find an eligible candidate for the project.”
The summary of the opinions are shown in Table 4.19.

Table 4.19: Summary of the opinions of experts on Transparent transaction.

No Success sub-factor Frequency/ Percentage
Priority
1 Transparent procurement High 70%
2 Competitive procurement process Low 20%
3 Assessment of costs and benefits Medium 50%

CSF 3: Relationship Management

Relationship management means the connection between the partners in communication. As

PPP’s core is the partnership, relationship management is a necessary factor for the success
of a PPP project. Majority of the experts included this factor as one of the success factor
of PPP projects. According to one of the directors of PPP authority Bangladesh, “Relation-
ship between the public party and the private party is most important factor for a project
to be successful in my opinion. The importance of the relationship between the partners is
crucial because a project must be kept under observation all the time. Many things can be
changed in the duration of construction or management of the project. Some problems may
occur which may force the contracts to be changed and in this case, contracts can only be
changed under the agreement of both parties. If the communication between the partners
is not crystal clear they will not try to understand the necessity of changes in the contract.
This will definitely lead a project to its failure. And again, if the relationship between the
partners are good, sometimes even the necessity of traditional contracts are not needed just
like some PPP projects in United Kingdom. This is why the relationship management play
a vital role in the success from beginning to end of a PPP project.” The understanding be-
tween the partners is the most important sub factor under this factor (opinions of 7 experts).
One of the PPP consultant from the PPP authority Bangladesh pointed that, “ Relationship
management between the parties is obviously important as if the connection or understand-
ing between them is not good, the project will get stuck in a point.” Another sub factor is
the continuous and transparent communication (opinions of 4 experts). The manager from a

71
PPP operator (social and government infrastructure) quoted, “Communication between the
partners is necessary and it will help to make a good relationship among them which is very
important. The continuous communication is the only way to make a better relationship. If
we think about other relationships also, we can see that if there is a gap in the communica-
tion, even between friends an invisible wall arises between them. And we are talking about
PPP partnership here! If the partners do not communicate regularly, then how can they find
out what is the progress, what other partner is doing, whether the work is in progress or not
etc. So the communication has to be frequent to make the project successful and we cannot
deny this factor at all.” The summary of the opinions are shown in Table 4.20.

Table 4.20: Summary of the opinions of experts on Relationship management.

No Success sub-factor Frequency/ Percentage
Priority
1 Transparent communication Medium 40%
2 Mutual understanding between partners High 70%

CSF 4: Regulatory Environment

The regulatory environment of PPP means the regulations which are helpful towards the
PPP initiatives. These regulations are made and maintained for the convenience of investors,
lenders and private partners as well as the government. Regulatory environment is another
principal factor of success for the PPP projects. All of the experts considered this factor as a
Critical Success Factor of PPP projects in Bangladesh. Several sub-factors under this factor
were pointed out by the experts. The complete legal and regulatory framework is necessary
to make a project efficient and successful (opinions of 7 experts). The director general of
the PPP authority Bangladesh said, “Regulatory environment is important as if it not suit-
able for the project the project will face problems. The problems are not only for the private
parties, it is also for the government too. Sometimes it can happen that some projects may
hamper the environment while construction or later on. Sometimes there are certain areas
the construction is not allowed. These restrictions will be in the regulations. If these are not
included in the regulations, construction workers may destroy some properties from outside
area which are not permitted for them and the government have to bear the consequences
later. If it is included in the regulation that if anything occurs like that private party will face
the consequences, the private party will work more sincerely. So there has to be a complete
laws and regulations of PPP to prevent later occurrences.” One of the directors of the PPP
authority Bangladesh pointed out that the regulations may also help to continue the project.
According to him, “Regulatory environment is important as if there are no regulatory envi-
ronment, the new government may come and shut down all the projects from the previous
government. It has happened before the establishment of the complete PPP regulations in
Bangladesh.” The experts also discussed the importance of government guarantee (opinions
of 4 experts). A manager from a PPP operator (social and government infrastructure) said
that, “ Private parties should be getting some assurance of financial support in case of failure.
Sometimes if the market is not stable, the private parties may struggle with finding the in-
vestors or sometimes after the project, the prediction of the returns from the project become
lower than expected. In that case the private parties will suffer a financial loss which can

72
be reduced a bit by the government support.” A director from the PPP authority Bangladesh
said, “Government support is very crucial. If the private partner feels like government is
not helpful towards the projects, they will not be interested to invest in that project. Every
investor needs assurance financially especially. There are many reasons for which project
investors can face financial losses and it is always too hard to recover that loss in case of big
projects. In that case, if the government can give some financial support to the private party,
the losses can be recovered easily.” The experts also talked about another vital sub-factor and
that is favorable frameworks which can help the private parties (opinions of 3 experts). One
of the directors of the PPP authority Bangladesh said, “ Regulatory environment designed
for PPP is important because it helps a project to run in an efficient way. The regulations
are more like guidelines for the project. The legal frameworks must be supportive towards
the investors and this will attract the potential investors more.” One of the advisers from the
PPP authority Bangladesh was supportive but gave an interesting opinion on the importance
of the regulations. According to him, “ Regulatory environment is necessary as a standard
but importance is not high. Many European countries have no regulatory environment or
rules but PPP projects are much successful where the Asian countries are struggling even
they have laws.” But none of the experts mentioned about the having favorable legal and
regulatory framework of the country. The summary of the opinions are shown in Table 4.21.

Table 4.21: Summary of the opinions of experts on Regulatory environment.

No Success sub-factor Frequency/ Percentage
Priority
1 Complete legal and regulatory framework High 70%
2 Favorable legal and regulatory framework Low 30%
of PPP
3 Favorable legal and regulatory framework None 0%
4 Government guarantee Medium 40%

CSF 5: Appropriate PPP model

Selection of appropriate project according to the expertise delivers better outcome of a

project. Appropriate model selection of the PPP projects also plays a vital role in the success.
Almost every experts mentioned that selection of the appropriate models and project is very
decisive in success of PPP projects (opinions of 8 experts). According to some of them the
selection of the appropriate models and project is number one success factor which controls
the projects success. One of the director from the PPP authority Bangladesh said, “Appropri-
ate structuring is important that means the feasibility study has to be realistic. The selection
of a project and the model which is appropriate is very important. This is the first work after
the selection of the private partner has been done. If the model selection and feasibility study
is not done properly, it is definite that the project will fail.” The director general of the PPP
authority of Bangladesh mentioned, “Structuring, how to structure the project. Appropriate
structuring is very important. The structure of the project, in this case the model selection
is like the pillars of a building. If it is faulty, the building will not be completed. It will be
destroyed before the competition. Similarly. If the model selection and feasibility study has
flaws, the project will fail.” The innovation is another critical success sub factor under this

73
factor (opinions of 2 experts). The experts mentioned about the showing of the innovation,
but according to them it is not that much important at this stage of PPP in Bangladesh. The
summary of the opinions are shown in Table 4.22.

Table 4.22: Summary of the opinions of experts on Appropriate PPP model.

No Success sub-factor Frequency/ Percentage
Priority
1 Identification of appropriate projects High 80%
2 Innovation Low 20%

CSF 6: Supportive community

Community support means the support from the people for whose convenience the projects
are decided to be initiated. Support from the community in the host country is really impor-
tant for making a PPP project successful. Majority of the experts talked about this while talk-
ing about the Critical Success Factors of PPP which are applicable in context of Bangladesh.
The first success sub-factor the experts talked about is the support from the citizen on the
projects (opinions of 7 experts). According to one of the director from the PPP authority
Bangladesh, “Support of the citizens actually helps the moral of a government to take steps
towards the new initiatives. PPP concept is still considered a new concept and only a few
citizens know about this concept. Citizens actually dont think about concepts or initiatives,
they want to see the development and the outcome. They want a better life, easier than before
and it is governments job to deliver it. So it is the responsibility of government to research
about the citizens problems, how to solve them and the feedback of the citizens. If the gov-
ernment does some projects which are not solving any problems of citizens and citizens are
not using it, the project will go in vain. This is how we can see citizens are actually indirectly
involved with the initiatives taken by the government.” The director general of PPP authority
Bangladesh commented, “Citizen support is crucial because all the projects are done for their
convenience. The government is made by the citizens. Obviously government has to fulfill
the citizen needs. Thats why government makes so many road, bridges, hospital, schools etc.
to develop the life of the citizens. So if government make something and nobody uses it, the
project is just a total loss. You cant judge that project in other way and make that successful.
The bottom line is, you need citizen support to make a project successful in PPP.” Another
success sub-factor is the involvement of the citizens (opinions of 3 experts). The necessity
of this sub-factor is not highly significant but it can play as a success role in a project. A
PPP consultant from the PPP Authority Bangladesh said, “Supportive community is impor-
tant but involvement is not always necessary as the project should be handled by the experts
in the beginning to the end of the work. The feedback of the projects is indeed necessary
from the citizens. But there is only a little they can do about the involvement. If it was a
government project where the citizen has opportunity to involve themselves financially or
physically, it could have been said that citizen involvement is necessary. But in PPP every-
thing is almost finalized in the contract between two parties. So there is a little window for
the citizens to involve themselves financially or other ways. But yes, we need their patience
and support toward the projects and their involvement by using the projects.” The summary
of the opinions are shown in Table 4.23.

74
 Table 4.23: Summary of the opinions of experts on Supportive community.
No Success sub-factor Frequency/ Percentage
Priority
1 Involvement of community Low 30%
2 Supportive community High 70%

CSF 7: Risk sharing and allocation

Appropriate risk transfer mitigates the failure of the project by several folds. That’s why risk
sharing and allocation between the public and private partners is another highly significant
Critical Success Factor. All of the experts talked about this success factor and considers both
the risk sharing and the risk allocation as one big success factor of the PPP projects (opin-
ions of 10 experts). One of the director from PPP authority Bangladesh said, “ Risk sharing
is important because the level of risk sharing actually controls the success of a concession
project. If the risk allocation and sharing is biased towards government and private party
bears maximum risks, the private party will lose interest to invest in the project. This will
be harmful for the future PPP initiatives, because no party will be found to invest. And if
the risk allocation is greater towards the government sector, there actually was no necessary
for that PPP initiative at the first place because if the government can take that much risk,
it can also ask for loan to world bank for that project.” The director general of PPP au-
thority Bangladesh commented that, “Risk sharing is an important feature which cannot be
neglected. If not properly distributed the project may fail. If the risk on the private party is
greater, the private party may not bid at all. In any case private party cannot get the clear
idea about the risk sharing and wins the bid and get the project, the private party may suffer
which will eventually be the reason of failing of the project .” One of the PPP consultant
from the same organization said, “ Risk sharing and allocation must be appropriate as if one
side take more risks, it will not be good in the long run and if it is in case of private par-
ties, the private company will definitely fail to meet the contractual requirements.” Another
director from the PPP authority Bangladesh gave a concise and concluding comment about
this factor. According to him, “ Risk sharing and allocation should be proper. The risk man-
agement should be finalized in affirmation of both parties and should be written clearly in
the contract. The risk should be distributed between partners and the each partner should
take those risks which they can manage properly and efficiently. In this way, the risk alloca-
tion will be proper and risk mitigation will be easier for both parties.” The summary of the
opinions are shown in Table 4.24.

Table 4.24: Summary of the opinions of experts on Risk sharing and allocation.
No Success sub-factor Frequency/ Percentage
Priority
1 Appropriate risk sharing High 100%
2 Appropriate risk allocation High 100%

75
CSF 8: Strong public and private consortium

Strong public and private consortium is a Critical Success Factor of PPP which was men-
tioned by almost all of the experts. The first success sub-factor mentioned by the experts
was the experienced private consortium (opinion of 8 experts). One of the directors from
PPP authority Bangladesh said that choosing a strong disciplined private party is like half of
the success of the project. According to him, “Strong private consortium is a step which is
chosen in the contractual stage. When the private company bids, they always have to submit
their portfolio and the structure of their organization. The government starts pre-selection
of the private party even before the bidding by looking at those portfolios and other docu-
ments. This happens because a strong private party means half of the works are done already.
A good private organization which consists of experts give a bit assurance that the project
may become successful because they have their own reputation to protect.” Director General
of the same organization also gave a similar statement that, “ Strong private consortium is
important as if the consortium is not good, there can be problem within the people in the
consortium. That shows the incompatibility of that organization. Again if the consortium is
not built with experts and knowledgeable persons, the private party may suffer in planning
of the project which may lead to the failure.” Another director of PPP authority Bangladesh
quoted, “Strong private consortium is necessary because without the experts who have done
the similar projects, the outcome of the projects can be uncertain. The percentage of failure
will also increase if there are no knowledgeable people in the responsible consortium.” The
other experts also stated the similar opinion on this factor. The other factor experts mentioned
is the corruption free public and private parties (opinions of 2 experts). A manager from a
PPP operator (social and government infrastructure) said that, “Corruption free consortium
whether public or private. Everywhere is corruption now which is destroying all the good
things. If the government does corruption in choosing the company for giving responsibility
of the project, often it is that company which is also indulged in corruption and has bad rep-
utation in the market. It often leads to a project which takes longer time with no schedule,
bigger budget and worst materials are used in those projects. If the quality of material is low
in a bridge or road, it will be broken sooner than expected and people will only blame the
government because the citizens only sees the part of the government contribution; and they
will be right because it is governments fault on choosing the bad private partner.” None of
the experts talked about necessity of having multidisciplinary experts from public and private
party in PPP projects. The summary of the opinions are shown in Table 4.25.

Table 4.25: Summary of the opinions of experts on Strong public and private consortium.
No Success sub-factor Frequency/ Percentage
Priority
1 Strong private consortium High 80%
2 Strong public administration Low 20%
3 Multidisciplinary experts None 0%

CSF 9: Political support and stability

Political support and political stability is another factor which is very important for success
of a PPP project. Government support by giving the political assurance is one of the men-
76
tioned success sub-factors of PPP in Bangladesh (opinions of 5 experts). A director from
the PPP authority Bangladesh said, “Government assurance on political support is also a
necessary point. The private partner feels should feel like they are working for the govern-
ment. Government assurance means that no other political party will harass (i.e. bribery for
continuing the work) in their work from beginning to end and if anything like that occurs
the government will help by taking legal actions. There were many government projects in
past years when the PPP term did not exist faced this kind of problem that government is
trying to do a project in an area where the people supports another political party and that
party forced their work to stop. So these kind of commitment should be given by the gov-
ernment.” A manager from a PPP operator (social and government infrastructure) quoted,
“Government support and political support is very important like a country like Bangladesh.
As the political stability is low, government support for the foreign investors in PPP is really
important.” The experts also talked about the political environment of the host country. The
political environment has to be stable to make a project successful (opinions of 6 experts).
According to a consultant from PPP authority Bangladesh the stable political environment
will only help the project works faster and without any obstacles. A director from the same
organization said, “A political unstable environment can never bring out the expected return
from a project. The project will either be incomplete as people will be afraid to work in that
environment or the users will not use the facility which will bring the money. So a govern-
ment must ensure the stability of political environment where the private parties can work
without any outside obstruction and citizens can easily get the best of the facilities.” The
summary of the opinions are shown in Table 4.26.

Table 4.26: Summary of the opinions of experts on Political support and stability.
No Success sub-factor Frequency/ Percentage
Priority
1 Stable political environment Medium 60%
2 Political support Medium 50%

4.2.3.2 Experts opinions on Success measures

The purpose of finding out the success measures of PPP from the opinions of experts is
to identify some success measures of PPP projects which are not available in Bangladeshi
PPP environment. The experts gave different opinions but similar points to measure the
success of PPP projects. Problem solving of the users or citizens and the satisfaction level
of the user was the first measure discussed by most of the experts and pointed out by all
of them. The second measure that all of the experts talked about is the fulfillment of the
objectives within time and budget. One director from PPP authority of Bangladesh said,
“Service must be fulfilled. If it is not, the making of contracts will have no value.” They
emphasized on the measure whether the project is completed within the budget and within
the time or not. Measuring the money and time required for the project against the prediction
in the contract is the way to measure cost and schedule goal. Some of them also pointed
out that the investment cost against the profit should also be measured to find out whether
the project is successful or not. After that, some of the experts pointed out the contract
77
clarity, competitive and transparent tendering process should be measured (from opinions
of 5 experts). According to one director from PPP authority of Bangladesh, “Tendering
process competitiveness is important also as the competition is a crucial point for these kind
of initiatives. The more bidders a tendering process will have, the government can get a
better partner to work with in a convenient terms and regulations.” Another director gave a
bit different opinion to measure this point for success. According to him, “Tendering process
can be observed but a little can be gained from that. It does not measure the success on the
amount of the competitors but the quality of them. Even one good private can be better if it
can show that much quality in work portfolios.” Some of the experts talked about measuring
the risk sharing and allocation to find out the project success (from opinions of 4 experts).
According to them risk sharing and allocation can be a factor to measure the success of
PPP projects as it plays a vital role in the PPP sectors. Few of the experts talked about the
showing of innovation in the project and quality of the project (opinions of 2 experts). About
this point one director from PPP authority of Bangladesh said, “ Innovation is important but
as ours is a underdeveloped country, it is not viable at this moment. Maybe in near future
when we have a developed PPP sector, measuring this point will be counted to measure the
success of the project.” The summary of the opinions on success measures are shown in
Table 4.27.

Table 4.27: Summary of the opinions of experts on PPP success measures.

No Success measure Frequency/ Percentage
Priority
1 Project efficiency High 100%
2 Risk transfer Medium 40%
3 Tendering process Medium 50%
4 Impact on the future PPP initiatives Low 20%
5 Impact on the citizens/ users High 100%

4.2.4 Determination of the Critical Success Factors

Financial and economic viability is a CSF consists of six success sub-factors which are iden-
tified theoretically and also mentioned by the experts. These sub-factors also showed good
significance index value. Every sub-factor has the significance index over 75% which makes
it a very significant CSF group. The most significant sub-factor is the Sufficient profitability
with 91.43% (rank 7) significance index value. Experts also gave emphasis on this sub-factor
and it showed a medium priority from the qualitative analysis. Other sub-factors, stable eco-
nomic policy, sound economic policy, transparent economic policy, macro economy market
and suitable financial market have significance indexes of 86.67% (rank 14), 82.38% (rank
16), 87.62% (rank 12), 76.67% (rank 18) and 76.19% (rank 19) respectively. The overall
significant index of this CSF group is 83.19% (rank 6). Financial and economic viability has
also showed moderate positive correlation (r= +0.682) with Success of PPP in hypothesis
testing.

Transparent transaction consists of three success sub-factors. Competitive procurement pro-

78
cess has a lower significance index of 67.14% (rank 25). The opinions of experts on this
sub-factor also showed low priority. The other sub-factors, transparent procurement and
assessment of costs and benefits showed better significance index of 90.48% (rank 9) and
93.33% (rank 4) respectively. The overall significant index of this CSF group is 83.65%
(rank 5). The qualitative data also showed high priority on the transparent procurement
sub-factor and medium priority on assessment of costs and benefits sub-factor. Transparent
transaction showed low positive correlation (r= +0.461) with Success of PPP in the hypoth-
esis testing.

Relationship management has two success sub-factors and those are transparent communi-
cation and mutual understanding between partners. These sub-factors showed significant
indices of 92.86% (rank 5) and 90.95% (rank 8) respectively. The overall significant index
of this CSF group is 91.90% (rank 1). Qualitative data shows transparent communication
has a medium priority while mutual understanding between partners has a high priority. Re-
lationship management also showed low positive correlation (r= +0.426) with the success of
PPP.

Regulatory environment has four success sub-factors. Among them, favourable legal and
regulatory framework has a low significance index value of 73.33% (rank 23). The qualita-
tive data also supports that it has low priority in the success of PPP as no experts mentioned
it. The other three sub-factors, complete legal and regulatory framework, favorable legal and
regulatory framework of PPP, and government guarantee have significant indices of 75.71%
(rank 20), 85.24% (rank 15) and 89.05% (rank 10) respectively. But the overall significant
index of this CSF group is 80.83% (rank 7).The group also showed a high positive correlation
(r= +0.712) with the success of PPP.

One success sub-factor, innovation from the appropriate PPP model success factor has low
significance index of 62.86% (rank 26) and a low priority from qualitative data. The other
sub-factor, identification of appropriate projects has the highest significance index of 96.67%
(rank 1) among 26 identified success sub-factors and the qualitative data also supports that
this sub-factor has very high priority. But the overall significant index of this CSF group
is 79.76% (rank 8) because of the low significant index of innovation sub-factor. The hy-
pothesis testing also showed that appropriate PPP model has a moderate positive (r= +0.646)
correlation with the success of the PPP projects.

Supportive community consists of two sub-factors, involvement of community and support-

ive community. The involvement of community has the low priority according to qualitative
data and significance index of 74.15% (rank 22). The supportive community sub-factor, on
the other hand, have the significance index of 94.29% (rank 3) and qualitative data also sup-
ports the high priority of this sub-factor. The overall significant index of this CSF group is
84.22% (rank 4). The hypothesis testing also showed that supportive community factor has
low positive (r= +0.364) correlation with the success of PPP.

Risk sharing and allocation has two sub-factors, appropriate risk sharing and appropriate
risk allocation. Both of the sub-factors have high significance index and a high priority
according to qualitative data. Appropriate risk sharing has significance index of 92.38%
(rank 6) and appropriate risk allocation has significance index of 88.10% (rank 11). The

79
overall significance index of this CSF group is 90.24% (rank 2). Risk sharing and allocation
also showed low positive correlation (r= +0.455) with the success of PPP.

Strong public and private consortium consists of three sub-factors - strong private consor-
tium, strong public administration and multidisciplinary experts. One sub-factor, strong pri-
vate consortium has qualitatively high priority and a significance index value of 81.91%
(rank 17). But the qualitative data showed that no experts talked about another sub-factor,
multidisciplinary experts in PPP projects which has a good significance index of 87.14%
(rank 13). Other sub-factor, strong public administration has significance index of 69.52%
(rank 24) and a low priority rating from qualitative analysis. But overall significant index
is of this CSF group is 79.52% (rank 9) which makes it the CSF with lowest significant in-
dex. Strong public and private consortium factor overall also showed a moderate positive
correlation (r= +0.561) with the success of PPP.

Political support and stability has two sub-factors, stable political environment, and politi-
cal support. The first sub-factor, stable political environment has a high significance index
of 94.76% (rank 2) and qualitative data shows experts gave it a medium priority. On the
other hand, political support sub-factor has a medium priority from experts and a lower sig-
nificance index of 74.76% (rank 21). The overall significance index of this CSF group is
84.76% (rank 3). The political support and stability showed low positive correlation (r=
+0.322) with the success of PPP.

The critical success factors and the sub-factors are theoretically identified at first. Then
the analyzing the data from the survey using quantitative analysis showed that all of the
CSFs and sub-factors has significance on the success of the PPP. The hypothesis testing also
showed all the CSFs has positive correlation with the success of PPP. Though some of the
sub-factors has low significant index, in groups, the CSF groups have more than 79.52%
significance index which proves they are very significant and can not be ruled out. The
qualitative research supports the previous argument. From qualitative result we can see that
some sub-factors were given medium priority by the experts, but those sub-factors ranked
higher in quantitative analysis. Even one of the unrecognized sub-factors also had good
significance index. But overall, the sub-factors which the experts gave high or medium value
eventually had the higher significance index and the sub-factors which experts gave low
priority showed lower significance index.

4.3 Discussion on appropriate models and the Critical Success Factors

The case study findings showed that the selection of the appropriate model has significant
impact on the success of the projects but it is not the only factor. There are several factors
which play vital role from the beginning of a PPP initiative till the end of it. A PPP initiative
starts from a problem or necessity of the country’s citizens or the users and the eagerness
of government to take it under PPP contracts. Then comes the feasibility study on the cost-
benefit analysis and the appropriate model selection. The success factors starts from here.
But it is not the end. The choosing of a good private partner and the meeting of the contrac-

80
tual terms i.e. budget goal, schedule goal also needs to be observed. After that the quality of
the project and the impact of the project on users or the citizens needs to be measured. All of
these factors need to be fulfilled to make a PPP initiative successful. If any of the factors is
unsuccessful, there should be backup plan in the contracts to cover it up. The failure of a PPP
project only happens if the parties are careless about the project and only focuses on doing
the work without analyzing the success factors properly as we have seen from the Mayor
Hanif Flyover project. On the other hand the PPP initiatives can be a worldwide example
and a perfect model for the sectors as we have seen in the projects from power and energy
sector, and the social and government infrastructure sector of Bangladesh.

To talk about the other objective, determining the CSFs of PPP projects in Bangladesh, the
results showed that every identified CSF is important for the PPP projects of Bangladesh. The
qualitative analysis, quantitative analysis and hypothesis testing proves that all the CSFs and
success sub-factors identified play a significant role in the success of the PPP projects. The
identified CSFs in this research are - financial and economic viability, transparent transaction,
relationship management, regulatory environment, appropriate PPP model, supportive com-
munity, strong public and private consortium, and political support and stability. All these
CSFs and the sub-factors under the CSFs are really important for the PPP of Bangladesh as
the PPP environment of Bangladesh is still in growing stage and has a lot of opportunity. If
the identified CSFs are observed carefully while making a PPP project, the rate of the suc-
cess of that project may increase a lot. For a developing country like Bangladesh, the success
of PPP projects are really necessary for the future of the PPP concept. The future of PPP is
vital for the development of the country.

Comparison with some similar studies in underdeveloped countries:

The findings of this study has been compared with some other studies conducted in devel-
oping countries to find out the similarity of CSFs in context of the developing countries so
that we can learn more about the success factors and increase the success of PPP projects.
Comparing with Jamali (2004)’s research in Lebanon, Babatunde et al. (2012)’s and Dada
& Oladokun (2008)’s research in Nigeria, there is a pattern which can be identified. The
main CSFs are similar though the sub-factors are different and rankings are different from
each other. Mainly the CSFs identified are - regulatory environment, transparent transac-
tion process, risk allocation, economic policy, strong public and private consortium, political
stability and support, supportive community, and the relationship management between part-
ners. These CSFs were identified in all of the mentioned developing countries as well as it
is true for Bangladesh. But the ranking of the factors are different from each other. The
comparison of top 5 success factors is shown in Table 4.28.

81
 Table 4.28: Study comparison with other developing countries.
Rank Factors identified Factors identified Factors identified Factors identified by
No in this study on by Jamali (2004) in by Babatunde et al. Dada & Oladokun
Bangladesh Lebanon (2012) in Nigeria (2008) in Nigeria
1 Relationship manage- Mutual understanding Availability of finan- Economic viability
ment between partners cial market
2 Risk sharing and allo- Assessment of costs Sound economic pol- Appropriate risk allo-
cation and benefits icy and good gover- cation
nance
3 Political support and Legal and regulatory Appropriate risk allo- Sound financial pack-
stability framework of PPP cation age
4 Supportive Commu- Transparent financial Stable macro eco- Strong and reli-
nity issues nomic condition able concessionaire
consortium
5 Transparent transac- Strong central admin- Assessment of costs Favourable investment
tion istration and benefits environment

82
 Chapter 5

Conclusion and Recommendations

5.1 Conclusion

In context of the findings of this study it can be summarized that, there are many factors
which plays significant role in the success of the PPP. Model selection is just one vital factor
in the success of the PPP projects but other factors cannot be overlooked. The appropriate
models selection on the selected three sectors - transport, power and energy, and social and
government infrastructure, has brought out the potential models which can be used in these
sectors in context of PPP projects in Bangladesh. But the findings also showed that appro-
priate model selection alone cannot carry the success of the project, there are many other
factors which are significant in success of the PPP projects. Secondly, nine contributing
Critical Success Factors (financial and economic viability, transparent transaction, relation-
ship management, regulatory environment, appropriate PPP model, supportive community,
strong public and private consortium, and political support and stability) and twenty-six suc-
cess sub-factors have been determined in context of PPP projects in Bangladesh. These CSFs
and success sub-factors are also similar with the other developing countries. More studies on
CSFs of PPP in developing countries can be compared and a common pattern can be drawn
which will help to make a global guideline to follow in the developing countries. The study
also identified five success measures to apply in the projects. Project efficiency, risk transfer,
tendering process, impact on future PPP initiatives and impact on the citizen/ user are the
success measures identified in this study. The study suggests that to get the best outcome
from the PPP initiatives, the CSFs should be studied carefully by both the government and
the private parties. Every stage of the project must be observed carefully from the feasibility
study to the end of the PPP contracts. The government should ensure good financial and po-
litical environment, make a good regulatory environment so that private parties and lenders
get interest to invest in the PPP projects. The feasibility study and the transaction process
has to be corruption free and proper. The risk allocation must be proper in terms of the ca-
pacity of the partners so that the risk can be handled easily and efficiently. The community
has to be supportive towards the PPP projects and political stability of the host country must
be ensured. On the other hand the private party must have a strong moral sense that no cor-
ruption will occur and comply with the terms of the contract and try to complete the project
within the budget and schedule. Last but not the least, the PPP partners should maintain a
good relationship between themselves to overcome any kind of obstacles and there should
be a continuous communication. The findings of the study hopefully can be helpful for PPP
sectors of the government of Bangladesh. The government of Bangladesh has keen interest
on the PPP concept. It is only a matter of time and patience to become an example for the
world in terms of PPP projects.

83
5.2 Recommendations

The Critical Success Factors of PPP has a vast area. This study tried to cover the general
CSFs in a PPP project’s lifespan and the findings have a lot of potentials. Following recom-
mendations can be given for future work of this study -

• The expert survey was done using the snowball sampling and the because of lack of
experts in the selected sample area, the sample size was small. In the future, if we can
increase the sample area, the result may give a better outcome.
• The proposed five success measures were confirmed by the experts and the survey
results also supported. In future more survey results will help to prove the strength of
these measures.
• The guideline on the appropriate model selection can be studied with more cases and
can make a better result. Furthermore, this study only followed three major sectors.
So other sectors also can be studied and appropriate guidelines can be made for them
too.

84
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 Appendix 1

Appropriate PPP models and CSFs in Bangladesh

Part 1. General Information

Name of respondent Years of Experience

Name of the organization Type 2P ublic 2P rivate

Name of the Department Position

Part 2. Interview Questions

Section A. Conceptual Model and Critical Success Factors

In this section the questions about the factors affecting the success of the PPP projects will
be asked.

Question 1: Can you please explain which financial and economic factors have the direct
impact on the success of the PPP projects?

Question 2: Can you please explain which factors have the direct impact on the success of
the PPP projects in the transaction process?

Question 3: Can you please explain which factors in relationship management process have
impact on the success of the PPP projects?

Question 4: Can you please explain some factors in regulatory environment which have
direct impact on the success of the PPP projects?

Question 5: Can you please explain some factors of choosing appropriate models which have
impact on the success of the PPP projects?

Question 6: Can you please explain which factors in risk sharing and allocation process have
impact on the success of the PPP projects?

Question 7: Can you please explain which factors of community have impact on the success
of the PPP projects?

Question 8: Can you please tell the importance of Private consortium in success of PPP
projects?

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Question 9: Can you please explain which factors of political support which have impact on
the success of the PPP projects?

Section B. PPP success measures

In this section the questions about the success measures of the PPP projects will be asked.

Question : Can you please tell how to measure the success of a PPP project? Please explain
briefly.

Section C. Case study Questions

In this section the questions about the selected case studies will be asked. The questions
about the selected models and projects will be asked to the participant.

I. Transportation Sector: Mayor Hanif Flyover project

Level of involvement?

1. What can we say about the Mayor Hanif Flyover project? Will you describe this project
as successful?

2. BOOT model has been used in this project, what was the reason behind choosing the
model?

3. Is BOOT model good for the transportation sector?

4. Which models are good choice for the transportation sector PPP projects of Bangladesh?
Why? Do the models vary depending on the conditions? If yes, what are the conditions for
the selected models?

II. Power and energy sector: Sirajgonj gas-fired power PPP project

Level of involvement?

1. What can we say about the Sirajgonj gas-fired power PPP project? Will you describe this
project as successful?

2. BOO model has been used in this project, what was the reason behind choosing the model?

3. Is BOO model good for the power and energy sector?

4. Which models are good choice for the power and energy sector PPP projects of Bangladesh?
Why? Do the models vary depending on the conditions? If yes, what are the conditions for
the selected models?
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III. Social and government infrastructure sector: Lease contracts at BEPZA

Level of involvement?

1. What can we say about the Lease contracts at BEPZA project? Will you describe this
project as successful?

2. Lease model has been used in this project, what was the reason behind choosing the
model? Why choosing the lease where government can appoint experienced people by them-
selves?

3. Is Lease model good for the social and government infrastructure sector?

4. Which models are good choice for the social and government infrastructure sectors PPP
projects of Bangladesh? Why? Do the models vary depending on the conditions? If yes,
what are the conditions for the selected models?

Thank you for participating in this study

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 Appendix 2

Determining Critical Success Factors questionnaire

The purpose of this survey is to determine the Critical success factors in context of PPP
projects in Bangladesh. The gathered data will be used to analyze and determine the Critical
Success Factors in context of Bangladesh. The questionnaire has two parts:

Part I: Respondent Profile

Part II: Critical factors affecting the success of PPP initiatives and the success measurement
of three case studies

Your responses and comments will be helpful to gain in depth understanding of the topic.
Please answer the questions freely. All the responses will be kept confidential and will be
analyzed without any kind of references related to company or organization. The data will
be used for the academic purpose only.

Your participation is essential for researching this topic. The researcher appreciates deeply
for your time and looking forward for your honest responses.

Instructions

• Please read each question carefully and answer honestly.

• Please keep in mind that there is no right or wrong answer for any questions.
• Please try to complete all the questions.

Part I. General Information

Name of respondent Years of Experience

Name of the organization Type 2P ublic 2P rivate

Name of the Department Position

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Part II. Survey Questionnaire
This part has two sections.

• Section A. Critical Success Factors: The purpose of this questionnaire is to collect

the data on factors which are directly or indirectly involved in the success of the PPP
projects in context of Bangladesh.

Please Note:
– There are total twenty-six (26) factors.
– The 0-5 scale given where 5 is the maximum value and 1 is the minimum. Select
0 if the factor is not applicable for PPP in Bangladesh
– Please circle (O) in the number box to give your opinion.
• Section B. PPP projects success measures: The purpose of this part of questionnaire is
to collect the data on success measures of PPP projects.

Please Note:

– There are twelve (12) questions to answer.

– Please checkmark (X) in the box to answer.

Thank you for participating in this study

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Section A. Critical Success Factors

94
95
96
Section B. PPP projects success

97
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 Appendix 3

List of interviewees

Interview Number 1
Date of Interview: 4 December 2017, 11:00 am
Place: PPP authority office
Name of interviewee: Md. Abul Bashar
Position: Director(Investment Promotion)
Organization: PPP authority Bangladesh

Interview Number 2
Date of Interview: 6 December 2017, 11:30 am
Place: PPP authority office
Name of interviewee: Md. Faruque Ahmed
Position: Director General (Programming and Investment Promotion)
Organization: PPP authority Bangladesh

Interview Number 3
Date of Interview: 6 December 2017, 03:00 pm
Place: PPP authority office
Name of interviewee: Md. Abu Rashed
Position: PPP advisor
Organization: PPP authority Bangladesh

Interview Number 4
Date of Interview: 7 December 2017, 10:00 am
Place: PPP authority office
Name of interviewee: Md. Ahsan Habib
Position: PPP advisor
Organization: PPP authority Bangladesh

Interview Number 5
Date of Interview: 11 December 2017, 04:00pm
Place: PPP authority office
Name of interviewee: Md. Hasan Sarwar
Position: Deputy Manager
Organization: PPP authority Bangladesh

Interview Number 6
Date of Interview: 21 December 2017, 10:00 am
Place: PPP authority office
Name of interviewee: Najmus Sayadat
Position: Director
Organization: PPP authority Bangladesh

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Interview Number 7
Date of Interview: 31 December 2017, 11:30 am
Place: North Dhaka city corporation office
Name of interviewee: Rajib Khadem
Position: Executive Engineer, Mayor Hanif Flyover project
Organization: North Dhaka city corporation

Interview Number 8
Date of Interview: 7 January 2018, 03:45 pm
Place: Bangladesh Power Development Board Dhaka office
Name of interviewee: Md. Ziaur Rahman
Position: Assistant Chief Engineer, Private generation(PPP)
Organization: Bangladesh Power Development Board

Interview Number 9
Date of Interview: 8 January 2018, 11:15 am
Place: Via Phone call
Name of interviewee: Mr. NU
Position: Head of Department, Safety and traffic
Organization: One the PPP operators (Transport sector)

Interview Number 10
Date of Interview: 10 January 2018, 12.30 pm
Place: PPP operators office
Name of interviewee: Dr. M A
Position: Assistant Manager
Organization: One of the PPP operators (Social and government infrastructure sector)

100