Risks and challenges arising during the handover of a PPP.

What is it about?

The M4 motorway is the first Australian PPP that has reached the end of its concession. The absence of formal guidance on contractual closure created challenges for the partners in interpreting contract ambiguities, and in reaching agreement on the processes needed to close the contract. These challenges had posed several relational risks, the mitigations of which were supported by the relational contract partners developed over the concession term, and their reciprocity and ethical motivations. The reintegration risk emerged in the handback exemplifies the limits of controls designed for legitimacy concerns to resolve coordination problems. The political settlement for value for money was gestured by lifting the toll after the concession ended. In providing unparalleled empirical evidence against the long-term ‘myths’ of PPPs, the study counters the criticism over PPPs’ impossibilities to handle uncertainties and to transfer risk.

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Why is it important?

The case study contributes to the overall perspective by supplementing the extensive extant literature that focuses on the ‘early life’ stages of PPPs by assessing the risks, challenges and VFM of the policy at the end of the concession cycle.

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