Habitat International 36 (2012) 423e432

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Habitat International
journal homepage: www.elsevier.com/locate/habitatint

Factors inuencing the success of PPP at feasibility stage e A tripartite comparison study in Hong Kong
S. Thomas Ng, Yoki M.W. Wong, James M.W. Wong*
Department of Civil Engineering, The University of Hong Kong, Pokfulam Road, Hong Kong

a b s t r a c t
Keywords: Critical success factors PPP Procurement strategies Project feasibility

Public Private Partnerships (PPP) have been used extensively in both developing and developed countries in delivering various types of projects, ranging from road construction, railway transport systems to health care facilities and schools. Critical success factors of PPP schemes at the implementation stage were identied. It is however more important for decision-makers to identify the factors for feasibility evaluation of adopting the PPP at the outset. This study aims to explore the key successful ingredients to be assessed at the initial stage of PPP projects as perceived public sector, private consortium and general community so as to attain a triple win scenario, via a questionnaire survey and a series of expert interviews conducted in Hong Kong. Survey results indicate that the most critical factor for evaluating the feasibility of PPP projects, especially to the general community, is an acceptable level of tariff. Cost effectiveness and nancial attractiveness are the most important evaluation factors as ranked by the public sector and private consortium respectively. In addition, the existence of a long-term demand for the proposed services, availability of strong private consortium, alignment with governments strategic objectives, as well as reliable service delivery are also rated as highly important to the success of PPP schemes. Addressing the tripartite expectations is indispensable to ensure the feasibility and successful delivery of public services and infrastructure projects via PPP schemes. 2012 Elsevier Ltd. All rights reserved.

Introduction The notion of involving private sector for the provision of public facilities and services by means of publiceprivate partnerships (PPP) is becoming increasingly popular in both developing and developed countries (McQuaid, 2000; Takim, Abdul-Rahman, Ismail, & Egbu, 2009). Many practitioners and researchers believe that PPP can release governments tight budgetary pressure by injecting private sectors resources, encouraging innovation, enhancing productivity, allowing better risk allocation, increasing value-for-money, improving cost effectiveness, and so on (Cheung, Chan, & Kajewski, 2009; Kernaghan, 1993; Kouwenhoven, 1993; Medda, 2006). PPP shall, therefore, create a triple win scenario among the public sector, private consortium and general community. Despite being extensively applied in both developed and developing countries since 1970s, PPP is not a panacea as the interests of the government, investor and society may vary significantly (HM Treasury, 2000). Identifying and balancing the interests of all stakeholders in an open and equitable manner thus becomes
* Corresponding author. Tel.: 852 9075 7072; fax: 852 2559 5337. E-mail addresses: tstng@hkucc.hku.hk (S.T. Ng), h0009282@hkusua.hku.hk (Y.M.W. Wong), jmwwong@hkucc.hku.hk (J.M.W. Wong). 0197-3975/$ e see front matter 2012 Elsevier Ltd. All rights reserved. doi:10.1016/j.habitatint.2012.02.002

a major challenge when determining whether PPP is a feasible and the most value-for-money approach for delivering public facilities and services. The problem is aggravated as stakeholders interests may change over time due to such forces as political pressure, organisational change and social behaviour. When a PPP scheme fails to meet the conicting expectations of any parties, the government might have to consider buying out the facility for retendering or own operation, and the results could be protracted negotiation and compensation (Dailarni & Klein, 1997). Therefore, it is imperative to examine what contributes to the success of a PPP scheme from the corresponding views of the government, investor and society. Research and case studies were carried out to investigate the drivers or factors contributing to the success of PPP projects as well as the reasons for PPP projects failure (e.g. Jefferies, Gameson, & Rowlinson, 2002; Zhang, 2005). Most of the critical success factors (CSFs) identied in the literature, however, are related to the operation and implementation stage. Little study has been focussing on the factors pertinent to the feasibility stage that are critical to project success from both public and private perspectives (Hardcastle, Edwards, Akintoye, & Li, 2005; Keong, Tiong, & Alum, 1997). In addition, previous studies merely focused on the acquisition of the views from industry practitioners in the public and

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private sectors. The perspectives and expectations of the community have not been carefully explored and compared (Goven & Langer, 2009; Treatmann, 2007). Identifying the success factors as perceived by these three parties for evaluating the feasibility of PPP is considered essential and valuable. In view of that, this study applies an industry-wide survey in Hong Kong to explore the key successful ingredients for feasibility evaluation of PPP projects and to examine the perceptions of the public sector, private sector and general community on those success-related factors so as to arrive at the ultimate triple win outcome. Given the Hong Kongs experience in PPP since the 1970s (Cheung et al., 2009), the ndings of this study are valuable for successful PPP applications. This paper is organised as ve sections. Following this introduction, the next section reviews the success factors for PPP projects reported from the literature. Details of the research methodology including the survey methodology and data analysis technique adopted are elaborated. This is followed by the empirical results and the implications of the ndings. Concluding remarks are drawn in the last section. Literature review: critical success factors for PPP projects Success has always been the ultimate goal of every activity, and this is no exception for a construction project which is typied by completing within the budget, schedule and quality standard (Atkinson, 1999; Mahalingam, 2010; Walker, 1995). A number of CSFs or drivers to the success of PPP projects were explored by various researchers. In particular, Hardcastle et al. (2005) had conducted an extensive review into the success factors and summarised them into eighteen CSFs. Factor analysis was subsequently carried out to classify these factors into ve main groups namely (i) effective procurement; (ii) project implementability; (iii) government guarantee; (iv) favourable economic conditions; and (v) available nancial market. Zhang (2005) had also developed a CSF package for improving PPP procurement protocol. The package contains ve main CSFs namely: (i) favourable investment environment; (ii) economic viability; (iii) reliable concessionaire consortium with strong technical strength; (iv) sound nancial package; and (v) appropriate risk allocation via reliable contractual arrangements. Ozdoganm and Birgonul (2000), on the other hand, developed a decision support framework and formulated a checklist of CSFs that can be used for testing the viability of a PPP project. The CSFs being divided into four main groups include: (i) Financial and commercial factors: existence of service need, government guarantee, existence of a strong team of consortium members, protability of project, stability of economic environment in the country, and ability of project to attract foreign capital; (ii) Political and legal factors: stability of political environment in the country, experience of government in PPP schemes; transparency of procurement system, and existence of a mature legal framework and adequate regulatory framework (Cheung, Chan, & Kajewski, 2010); (iii) Technical factors: technical manageability of project size, reliability and experience of private consortium, and possible innovative solutions; as well as (iv) Social factors: public acceptance of the project, consistency of project with environmental issue, and price of service. Among various methods of CSFs classication, the grouping method suggested by Ozdoganm and Birgonul (2000) is adopted for this study since it categorises the factors systemically according to the characteristics of different aspects of risk involved in a PPP

project. Risks in different aspects including technical, nancial and economic, social, environmental, as well as political and legal are important factors to be considered by decision-makers (Han & Diekmann, 2001; Ke, Wang, Chan, & Lam, 2010). A comprehensive feasible study of a PPP project should address the factors related to all these dimensions and the project is only sustainable when it is economically viable, as well as socially and environmentally acceptable (Heinke & Wei, 2000; Zhang, 2004). A total of 36 reported CSFs from the literature that are considered relevant to the early stage feasibility evaluation of a PPP project are consolidated and categorised under the ve main groups of factors as shown in Table 1. They include: (i) technical factors; (ii) nancial and economic factors; (iii) social factors; (iv) political and legal; and (v) others (staff issue and possible management actions). Research methodology Fig. 1 summarises the research procedures and methods to achieve the stipulated research aim. Research methodology adopted in this study includes literature review, statistical analysis based on a questionnaire survey as well as semi-structured interviews to collect different types of data. A comprehensive literature review was conducted initially to identify the denitions, characteristics, benets and risks of PPP. Various success factors proposed by researchers and those reported by practitioners for project feasibility evaluation were also identied as presented in the previous section. Pilot interviews were then conducted with four PPP experts and decision-makers in both public and private sectors to examine the local practice on assessing the feasibility of PPP projects and to seek their experts opinions in validating the compiled list of CSFs. The proles of the interviewees are shown in Table 2. The interviewees unanimously consented to the identied CSFs of PPP projects. Their opinions and the results obtained from the pilot study added signicant value to the research and are useful in facilitating the study to move forward. Subsequently, a structured questionnaire protocol was designed based on the identied CSFs. Respondents were asked to rate the degree of importance of the identied success factors in evaluating the feasibility of PPP from their own perspective using a 7-point Likert scale as suggested by Powell (1991) and Oppenheim (1992). Six experts who had at least 5-years experience in carrying out PPP projects representing public agencies, private investors together with 4r citizens randomly selected from the general public were invited to pilot the questionnaire. Using a stratied sampling approach, respondents were classied into three groups: i) the government; ii) private sector; iii) and community groups. The questionnaires were directly distributed to the selected individuals via postal mail or email. The private sector group covers industry practitioners including developers, consultants, contractors and investment bankers who are experienced in PPP schemes, while ofcers with practical experience of PPP in relevant government departments were targeted. To ensure that respondents from the community appreciate the purpose of this study, a brief introduction about the concept of PPP and the research objectives were incorporated in the survey package. A total of 181 questionnaires were received out of the 800 questionnaires administered, representing a response rate of 23%. Table 3 shows the breakdown of the survey sample. About 45% of the respondents were from the private sector, while 27% and 29%t of respondents came from the public sector and the general public respectively. Over 83% of the respondents from the public sector and private groups had over 5 years of relevant practical experience, and 36% of them had worked in the industry for more than 15 years.

Table 1 Evaluation factors for feasibility study of PPP projects.

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Table 1 (continued)

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Fig. 1. Research framework.

Non-parametric statistical techniques were adopted to analyse the quantitative data acquired from the questionnaire survey. Descriptive analysis was rst conducted to establish the relative signicance of the factors for evaluating the feasibility of PPP projects. The 7-point Likert scale described previously was used to calculate the mean score for each factor, which was then used to determine their relative rankings in descending order of importance. These rankings made it possible to cross-compare the relative signicance of the factors across different groups of respondents. The level of agreement as perceived between any two surveyed groups on their rankings of the CSFs was measured by the Spearmans rank correlation coefcient (rs) as shown in Equation (1). The coefcient, rs, ranges between 1 and 1. A value of 1 denotes a perfect positive linear correlation whereas negative values indicate negative linear correlation meaning that low ranking on one is associated with high ranking on the other. If the correlation is close to 0, then it implies that no linear relationship exists between the two groups on the variable (Albright, Winston, & Zappe, 2006). If rs was signicant under the correlation test, the null hypothesis that no signicant correlation between the two groups on the rankings can be rejected. The Spearmans rank correlation coefcients were calculated by the following equation (Norusis, 2002):

In addition, independent sample t-tests were performed using SPSS to compare the specic CSFs as evaluated among the public sector, private sector and the general community. The t-tests were applied for comparing the means between two sample groups in order to determine the factors that are rated with signicant difference in importance between the three parties of stakeholders on a two-by-two basis. If the test result was signicant, then the null hypothesis that no signicant differences in the mean values between the respondent groups can be rejected (Norusis, 2002). Results derived from the analysis of empirical questionnaire survey were cross-referenced to the published literature and to complement each other for validation. Prior to drawing conclusions from the survey ndings, eight experts in PPP representing the three parties of stakeholders were invited to participate in the validation interviews in order to justify the result obtained. The proles of the interviewee are highlighted in Table 4. Critical success factors The relative importance of the CSFs for feasibility evaluation of PPP as perceived by all the survey respondents using mean analysis is shown in Table 5. In general, results show that all factors have a mean rating higher than midpoint 4 of the 7-point Likert scale, indicating the importance of the identied factors to ensure the feasibility of PPP. Particularly, acceptable level of toll/tariff (Factor S4) is rated as the most important factor (mean 5.78; s.d. 1.11). This concurs with HM Treasury (2004) that reasonable toll is

P 6 d2 rs 1 2 N N 1

(1)

where d represents the difference in rank of the two groups for the same CSF and N denotes the number of pairs of the CSFs being ranked.

Table 3 Response rate of questionnaire survey. Table 2 Proles of interviewees for pilot study. Interviewee 1 2 3 4 Designation Assistant director Senior engineer Chief architect Head of development Organisation Policy bureau, HKSAR Works department, HKSAR Works department, HKSAR Main contractor Sector Public Public Public Private Number of questionnaires sent out Number of completed questionnaires received Response rate Percentage in the sample Public sector 200 48 24% 27% Private sector 200 80 40% 44% General public 400 53 13% 29% Total 800 181 23% 100%

428 Table 4 Proles of interviewees involved in the validation. Interviewee A B C D E F G H Designation Senior engineer Project engineer Head of department Project engineer Managing director Professor Associate professor Professor Organization

S.T. Ng et al. / Habitat International 36 (2012) 423e432 Table 5 Critical success factors for PPP projects by all respondents. Sector Public Public Private Private Private General community General community General community Success factors Technical T1 e Project size is technically manageable by a single consortium T2 e Possibility of innovative solutions (e.g. leading to time/cost savings) T3 e Availability of Government experience in packaging similar PPP projects T4 e Availability of experienced, strong and reliable private consortium T5 e Service quality can be easily dened and objectively measured T6 e Contract is exible enough for frequent change in output specication T7 e Project is not susceptible to fast-paced change (e.g. technological change) Financial and economic F1 e Project is more cost effective than traditional forms of project delivery F2 e Project can be substantially self-funded or on a non-recourse basis F3 e Project value is sufciently large to avoid procurement disproportionate procurement costs F4 e Project is of nancial interest to private sector F5 e Project can attract foreign capital F6 e Project is bankable and protability of the project is sufcient to attract investors and lenders F7 e Economic environment is stable and favourable F8 e Existence of a sound governmental economic policy F9 e Competition from other projects is limited Social S1 e There is a long-term demand of the products/service in the community S2 e The community is understanding and supportive S3 e Delivery of services is stable and reliable S4 e Level of toll/tariff is acceptable S5 e Project can create more job opportunities S6 e Project is environmentally sustainable Political and legal P1 e Project is not politically sensitive P2 e Political environment is stable P3 e There is political support for the project P4 e The project is compatible with current statutory and institutional arrangements P5 e There is a favourable legal framework (mature, reasonable and predictable) Other O1 e Fairness of new conditions to employees O2 e Possibility of signicant redundancy O3 e Existence of a resolution for any civil service staff redundancy O4 e Supportiveness and commitment of staff to the project O5 e Flexibility to decide appropriate risk allocation O6 e Support from the government (e.g. guarantee or loans) is available O7 e Authority can be shared between the public and private sectors O8 e Possibility of an effective control mechanism over the private consortium O9 e Matching governments strategic and long-term objectives Mean 5.00 5.30 5.13 5.72* 5.27 5.06 4.52 s.d. 1.39 1.12 1.20 .90 1.09 1.38 1.18

Works department, HKSAR government Works department HKSAR government Main contractor Private developer Quantity surveying rm Local university Local university Local university

imperative when considering the PPP delivery approach. Existence of a long-term demand of the services in the community (Factor S1) (mean 5.72; s.d. 1.23) and stable and reliable delivery of services (Factor S3) (mean 5.71; s.d. 1.04) are also highly rated by the respondents as important social factors. Most PPP projects involve the transfer of assets from the public sector to the private consortium and the private sector is responsible for delivering the public services. People in the society may not support this new idea of procurement as they worry about the decline in service quality or increase in price of service (MOMA, 1999). Therefore, ensuring a reliable service delivery and reasonable service charge are imperative when considering the adoption of PPP approach. Availability of experienced, strong and reliable private consortium (Factor T4) (mean 5.72; s.d. .90) is rated as the most important technical factor contributing to success for PPP projects. Tam (1999) and Hardcastle et al. (2005) also advocated that the existence of a large and reliable consortium with experienced construction organisation should be critically examined in order to achieve a successful PPP. In addition, protability of a PPP project (Factor F4) (mean 5.67; s.d. 1.26) and project is more cost effective than traditional forms of project delivery (Factor F1), as expected are highly rated as a critical factor for project feasibility evaluation in the initial stage of PPP projects. In order to attract private sectors participation and initial investment, the project should be bankable and protable to investors (Ashley, Bauman, Carroll, Diekmann, & Finlayson, 1998; Zhang, 2005). Matching governments strategic and long-term objectives (Factor O9) (mean 5.71; s.d. 1.10), on the other hand, is also an imperative factor for feasibility evaluation of PPP as addressed by Efciency Unit (2003). The interviewees agreed on the order of importance as revealed in the survey ndings. A number of interviewees (5 out of 8), however, argued that political support which is related to the support of the community should be considered as an important success factor for PPP projects. They believed that it is difcult for the government to start a project without political and community support and the private sector would be concerned about the risk of project being overturned. A comprehensive stakeholder engagement process is therefore inevitable when implementing PPP projects. Group comparisons Overall observations The possibility of diverse opinions on the rankings of CSFs for evaluating the feasibility of PPP as perceived by the public sector, private sector and general community were investigated. The rankings by each respondent group were transformed into a matrix

5.66* 5.35 5.09

1.19 1.24 1.10

5.67* 4.65 5.47

1.26 1.34 1.14

5.14 5.30 4.31 5.72* 5.62 5.71* 5.78* 4.95 5.13

1.24 1.15 1.32 1.23 1.17 1.04 1.11 1.35 1.12

4.93 5.10 5.18 5.20

1.27 1.08 1.19 1.09

5.34

1.00

4.98 4.76 4.81 5.10 5.31 5.06 5.10 5.56 5.71*

1.12 1.05 1.23 1.18 1.11 1.25 1.19 1.18 1.10

Note: Items were rated on a 7-point Likert scale with 1 strongly disagree and 7 strongly agree. * Critical success factors.

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of imported data for compiling the rankings as shown in Table 6. It should be stressed that the ranking exercise is based on the analysis of the perceived relative importance of factors, rather than an objective assessment to provide absolute value on the ranking position. Emphasis is therefore given only to factors that are placed as the most important and the least important in the ranking list (Chan & Yeong, 1995). Empirical analysis was then conducted to test the consensus amongst the groups of respondents on the ranking exercise using the Spearmans rank correlation test. Table 7 summarises the Spearmans rank correlation coefcients and the corresponding signicance levels. It suggests that all the null hypotheses that no signicant correlation between private consortium and public sector; public sector and general community; and private consortium and general community on the ranking of CSFs for PPP projects can be rejected. It is worth noting that the correlation between the private sector and public is relatively weak with rs .38, indicating that the agreement on the ranking is not considerable. Although results of the correlation test reveal that the three groups of respondents shared a fairly consistent view on the ranking of the CSFs, the analysis of the ranking exercise indicates some interesting results. Private sector investors are apparently concerned heavily with the nancial aspect in evaluating the feasibility of the PPP approach. The private sector ranked project is of nancial interest to private sector (Factor F4) and bankable/ protable (Factor F6) as the rst and third CSF, but the public

Table 7 Spearmans rank correlation test between group for CSFs of PPP. Comparison Public sector ranking vs. Private sector ranking Public sector ranking vs. General community ranking Private sector ranking vs. General community ranking rs .380 .697 .619 Sig. .022 .000 .000 Conclusion Reject H0 at 5% sig. level, and thus accept the Ha Reject H0 at 1% sig. level, and thus accept the Ha Reject H0 at 1% sig. level, and thus accept the Ha

H0 No signicant correlation on the rankings of PPPs CSFs between two groups. Ha Signicant correlation on the rankings of PPPs CSFs between two groups. Reject H0 if the signicance level (p-value) is less than the allowable value of 5% (2tailed).

Table 6 Comparison of CSFs for PPP amongst the three stakeholders. CSFs All respondents Mean S4 T4 S1 O9 S3 F4 F1 S2 O8 F6 F2 P5 O5 T2 F8 T5 P4 P3 F7 S6 T3 O4 O7 P2 F3 T6 O6 T1 O1 S5 P1 O3 O2 F5 T7 F9 5.78 5.72 5.72 5.71 5.71 5.67 5.66 5.62 5.56 5.47 5.35 5.34 5.31 5.30 5.30 5.27 5.20 5.18 5.14 5.13 5.13 5.10 5.10 5.10 5.09 5.06 5.06 5.00 4.98 4.95 4.93 4.81 4.76 4.65 4.52 4.31 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 Public sector Mean 6.02 5.88 5.83 6.10 6.00 5.75 6.17 5.85 5.92 5.21 5.56 5.29 5.56 5.35 5.23 5.69 5.29 5.10 4.94 5.33 5.08 5.60 5.00 4.96 5.31 5.48 4.96 5.17 5.42 5.29 5.02 5.35 5.31 4.54 4.56 4.04 Rank 3 6 8 2 4 9 1 7 5 25 12 21 12 16 24 10 21 27 33 18 28 11 30 31 19 14 31 26 15 21 29 16 19 35 34 36 Private sector Mean 5.40 5.78 5.54 5.53 5.35 5.93 5.21 5.23 5.14 5.68 5.15 5.35 5.14 5.31 5.43 5.21 5.09 5.36 5.25 4.89 5.13 4.88 5.06 5.30 5.13 4.81 5.33 4.91 4.71 4.76 4.75 4.60 4.46 4.80 4.65 4.46 Rank 7 2 4 5 9 1 16 15 19 3 18 9 19 12 6 16 23 8 14 26 21 27 24 13 21 28 11 25 32 30 31 34 35 29 33 35 Community Mean 6.13 5.51 5.89 5.64 5.98 5.23 5.87 6.00 5.89 5.40 5.47 5.38 5.36 5.23 5.19 4.98 5.28 4.98 5.15 5.30 5.17 4.98 5.25 4.92 4.83 5.06 4.74 4.98 5.00 4.92 5.13 4.62 4.70 4.53 4.30 4.34 Rank 1 8 4 7 3 16 6 2 4 10 9 11 12 16 18 24 14 24 20 13 19 24 15 28 30 22 31 24 23 28 21 33 32 34 36 35

sector ranked them 9th and 25th while the general community ranked them 16th and 10th respectively. Similar results were also found in governments nancial support (Factor O6) and stable and favourable economic environment (Factor F7). The ranking exercise further unveiled the different interest of the private sector to the public facilities and services from the government and the general community, particularly on rankings of effective control over the private consortium (Factors O8), political support (Factor P3) and sound governmental economic policy (Factor F8). Additionally, as perceived from the public sector, the cost effectiveness (Factor F1) and possibility of matching governments strategic and long-term objectives (Factor O9) are their primary concerns. On the other hand, four social factors occupied the top ve CSFs from the general community perspective. All interviewees also strongly agreed that social factors should be the most important concern of the general community while nancial factors would attract the least attention of the general community when assessing the feasibility of a PPP project. In order to reveal a clearer picture of the difference on the mean score of the 36 listed CSFs for PPP projects in perspectives between the different parties of stakeholders, t-tests were carried out (Fig. 2). The Levenes test was used to determine whether equal variances between the two groups should be assumed. A signicance of greater than .1 means equal variance can be assumed. Subsequent to the Levenes test, independent sample t-tests were conducted to test for the signicance of the mean difference on the CSFs between any two groups. With a 99% condence level (i.e. a signicance level of .01, 2-tailed), factors with signicance level less than .01 shows that there is signicance difference in the means between the two groups of respondents. Table 8 highlights the results of the independent sample t-test. Public sector vs. private consortium The public and private sector are diverse actors contractually bound to deliver mutually agreed objectives (Roumboutsos & Chiara, 2009). The survey ndings reveal that one-third of the rated CSFs (12 out of 36) show a signicant difference in mean ratings as perceived by the respondents from the public sector and private consortium. Among these factors, respondents from the public sector generally gave higher ratings on most of the factors than the private sector. Factors with greatest difference between the public and private sectors are project is more cost effective than traditional forms of project delivery (Factor F1) (mean difference .95) and possibility of signicant staff redundancy (Factor O2) (mean difference .85). The result indicates the misalignment of objectives between the two project stakeholders with the government concerned about the delivery of better valuefor-money (Pearson, 2005); increased level of service (Efciency Unit, 2003); fostering countrys economic development (MOMA,

Note: Items were rated on a 7-point Likert scale with 1 strongly disagree and 7 strongly agree.

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6.5

5.5

Mean Score

4.5

All respondents Public Sector Private Sector Community

3.5 S4 T4 S1 O9 S3 F4 F1 S2 O8 F6 F2 P5 O5 T2 F8 T5 P4 P3 F7 S6 T3 O4 O7 P2 F3 T6 O6 T1 O1 S5 P1 O3 O2 F5 T7 F9

Item No.
Fig. 2. Cross-comparison of CSFs among respondents.

1999); optimisation of nancial and social benets with minimum government support (World Bank, 1998), and various staff issues, whereas the major factors considered by the private sector are protability of the project (Ashley et al., 1998); business opportunities generated by the project (Industry Canada, 2003; Pearson, 2005); appropriateness of risk allocation as well as the favourability of existing legislative and regulatory environment (Kershaw, 2003; Zhang & Kumaraswamy, 2001). The majority of the interviewees (6 out of 8) also expressed the view that prot margin should be the most important evaluation criterion taken by the private sector, which is quite different from those required by the government.

Public sector vs. general community While it was anticipated that government is representing the interest of the general public, signicant differences were found on ratings of the CSFs for feasibility evaluation of PPP projects given by the two parties. These include: existence of a resolution for any civil service staff redundancy (Factor O3); service quality can be easily dened and objectively measured (Factor T5); supportiveness and commitment of staff to the project (Factor O4); and possibility of signicant staff redundancy (Factor O2). For all these factors, ratings given by the public sector were higher than that perceived by the general community. Despite that the public sector

Table 8 Factors with signicant difference between groups under t-test. CSF Levenes test for equality of variances Assumption Public sector vs. Private sector F1 Equal variances not assumed O2 Equal variances assumed O8 Equal variances assumed O3 Equal variances assumed O4 Equal variances assumed O1 Equal variances assumed T6 Equal variances assumed S3 Equal variances assumed S2 Equal variances assumed S4 Equal variances assumed O9 Equal variances not assumed T5 Equal variances assumed Public sector vs. General community O3 Equal variances assumed T5 Equal variances not assumed O4 Equal variances assumed O2 Equal variances assumed Private sector vs. General community S2 Equal variances assumed O8 Equal variances assumed S4 Equal variances assumed F4 Equal variances assumed T5 Equal variances not assumed S3 Equal variances assumed Note: 2-tailed sig. < .01. F 11.317 2.379 .948 .870 .228 .018 .176 1.009 .657 .941 2.923 1.200 .168 3.096 .030 1.851 .044 1.015 .956 1.195 4.409 .217 Sig. .001 .125 .332 .353 .634 .894 .676 .317 .419 .334 .090 .275 .683 .082 .862 .177 .835 .316 .330 .276 .038 .642 t-test for equality of means t 5.209 4.848 3.871 3.534 3.456 3.511 2.762 3.740 3.040 3.136 3.284 2.715 3.186 3.236 2.811 3.208 4.063 3.749 3.821 3.186 3.168 3.508 df 125.8 126 126 126 126 126 126 126 126 126 118.9 126 99 92.1 99 99 131 131 131 131 126.2 131 Sig. (2-tailed) .000 .000 .000 .001 .001 .001 .007 .000 .003 .002 .001 .008 .002 .002 .006 .002 .000 .000 .000 .002 .002 .001 Mean Diff. .95 .85 .78 .75 .73 .70 .67 .65 .63 .62 .58 .47 .73 .71 .62 .61 .78 .75 .73 .70 .66 .63 Std. Error Diff. .183 .175 .201 .213 .211 .201 .241 .174 .207 .198 .176 .175 .230 .218 .222 .192 .191 .200 .192 .219 .207 .180

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would consider both the interests of the private consortium and the general community in undergoing PPP, the government appears to deliberate more holistically on the success factors to determine whether to the PPP is feasible. Private consortium vs. general community Comparing the results given by the private consortium and the general community, signicant difference in ratings were found on 6 factors as shown in Table 8. Of these factors, the general community generally gave higher ratings than the private sector except on project is of nancial interest to private sector (Factor F4). While the general community is also one of the major stakeholders in a PPP project, very few scholars have discussed their concerns in a PPP project. Flanigan (1997) and Pearson (2005) identied evaluation factors which are imperative to the community. They included the benets of: overall value-for-money, lower cost of government (hence lower taxes), innovation, reliable services, level of service charge, job opportunities, etc. These concerns apparently are distinct from those of the private consortium. However, addressing the factors concerned by the three key stakeholders for any PPP projects is important to the project success. Given the possible divergence in interests among the three stakeholders of PPP projects, the theory on alliances is considered relevant in this endeavour so as to promote mutual recognition and understanding. Many theories and models have been proposed to describe the emergence and operation of strategic alliances, and these include the transaction cost economics, game theory, strategic behaviour model, strategic decision model, social exchange theory, power dependence theory (Gray & Wood, 1991; Smith, Carroll, & Ashford, 1995) and more recently resource-based theory (Das & Teng, 2000). Roumboutsos and Chiara (2009) believed that a thorough political, economic, social and technological (PEST) analysis is desirable at the feasibility stage of a PPP project. Through which, appropriate measures can be introduced to align the objectives of different stakeholders through the engagement exercise. Conclusions The initial feasibility of a PPP project contributes directly to the overall success of the project. It is thus important to explore the CSFs for evaluation in the initial stage to ensure PPP is feasible and successful. Since PPP is a tripartite partnership which involves three parties of stakeholders including the public sector, private consortium as well as the general community (end-users), feasibility evaluation should address the CSFs of all parties so as to achieve a triple win situation. A questionnaire survey and expert interviews were conducted to glean local information and perceptions of the key project stakeholders relating to these success factors for PPP projects. The most critical factor for evaluating PPP project especially to be considered by the general public is an acceptable level of toll/ tariff. Cost effectiveness comparing to the traditional forms of project delivery and nancial attractiveness are the most important factors to be deliberated for PPP projects as ranked by the public sector and private consortium respectively. Besides, the existence of a long-term demand for the proposed services, availability of strong private consortium, alignment with governments strategic objectives, as well as reliable service delivery are also rated as important success factors. The ndings further reveal the misalignment of objectives among the key stakeholders for PPP projects. Hence, evaluating the availability of success factors at the initial stage becomes indispensable to delivering public services and infrastructure work. PPP project partners may be analysed with

respect to their individual and mutual strategic interest, in order to identify the partnership potential. More importantly, active participation and engagement of the general community during feasibility stage and scheme development may minimise future conicts. Hence, a new concept of publiceprivate-people partnership (i.e. P4) should be thoughtfully considered and promoted. Results of this study show the relative importance of the evaluation criteria considered by different parties of stakeholders in feasibility evaluation of a PPP project which leads to the ultimate outcome and provision of a wide variety of benets through delivery public service projects for society. The study is not only signicant in contributing to the eld of construction procurement strategies and practical information for successful PPP applications and implementation, but also valuable in assisting key project stakeholders in minimising the detriments brought about by potential risks arising and maximising the benets derived from implementing the PPP strategy. A series of in-depth case studies on various PPP projects should be launched in the future to further verify and enrich the applicability and reliability of the CSFs identied in this study. Acknowledgements The authors gratefully acknowledge the Research Grant Council of the Government of Hong Kong Special Administrative Region Government for nancially supporting this research study through the Public Policy Research Grant (Grant No.: 7010-PPR-4). Special gratitude is also extended to industry practitioners and experts who participated in the interviews and contributed their valuable input in completing the survey questionnaires of this study. References
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