Identifying critical success factors for minimizing design stage transaction costs in PPP projects

Accelerating urbanization around the world has created an unprecedented demand for public infrastructure. Increasingly, governments around the world have been utilizing Public Private Partnerships (PPPs) as a vehicle for delivery. PPPs have the potential to gain efficiency, innovation and better Value for Money. However, high costs in transaction are embedded with PPPs. In many instances, these transaction costs erode all the benefits of the PPP and ultimately render an inferior alternative for procuring infrastructure. Much of the determinants of the size of the transaction costs occur in the early stage of the project. Furthermore, a front loaded distribution of significance regarding the impact of these determinants appears common in PPPs. Therefore the basis of this research is to determine the critical success factors which will minimize transaction costs in the design stage. This paper is an extensive literature review which initially identifies relevant variables involved in the reduction of transaction costs in PPPs. The extent and through what means the identified factors impact the transaction costs in PPPs are explored in the following stages of the study. This paper contributes to the research completed on transaction costs in PPPs through relating and linking specific design stage determinants to the value for money principles for public infrastructure delivery.