Major Obstacles to Public-Private Partnership (PPP)-Financed Infrastructure Development in China

Abstract

Public-private partnership (PPP)-led infrastructure development has been crucial in China as it has in many other countries. However, several obstacles in the field tend to challenge its development. Based on survey responses from PPP practitioners and professionals in Hong Kong and mainland China, this study analyzes and ranks the key barriers to PPP projects. Our findings suggest that both groups classify the critical obstacles to PPP consistently, albeit with some divergences in ranking them. Reflecting mainly from the perspective of professionals, the study also proposes some suggestions for mitigating these obstacles, so it could contribute to the effective formulation of PPP and successful implementation of PPP-led infrastructure projects in China as well as elsewhere.

1. Introduction

Public-private partnerships (PPPs) have become popular with the advancement of project financing mechanisms. The British government was the first to use the term in 1982, defining it as an agreement between the government and private enterprise on infrastructure finance, operation and management. In general terms, a PPP is an alternative finance method aimed at overcoming the limitations of the public sector, as well as a way of enhancing efficiency in construction, operation and service delivery [1,2]. This definition implies three main features—partnership, benefit sharing and risk sharing—to reduce the financial burden and other risks to the public sector through different models such as build, operate and transfer (BOT), build, transfer and operate (BTO), build, own and operate (BOO) and design, build, finance and operate (DBFO). These models are efficient in different ways in sustainable infrastructure development. Each one also incorporates an element to realize sustainable social change [3]. However, each model’s effectiveness is also affected by the various obstacles that are encountered in practice [4,5]. The absence of clear contractual arrangements, resulting in weak governance, is one of many factors contributing to the failure of PPP projects [6].

PPPs have received a great deal of attention in research across academic disciplines, and academics have studied them from many different perspectives. Scholars have looked at the various obstacles to PPPs using their respective disciplinary perspectives, from financial risk assessment to construction project management [7,8]. A large part of the literature has focused on the financial risks arising from having weak contractual arrangements between stakeholders, including the uncertainty of long-term concessional periods which generate high risks for both government and private enterprises. This implies that a project’s success is thus heavily dependent on having the right contractual arrangements in place and allocating risks in line with resources, institutional frameworks and use of institutional rules [6,9,10]. The literature has investigated these contractual arrangements and risks extensively, however, it is not well known how important these major obstacles are, so an investigation into them and their level of importance is needed. Written from the perspectives of PPP practitioners and professionals in Hong Kong and mainland China, this study uses conventional mean score methods to rank the obstacles. PPP practitioners are those involved in PPP-led project construction and operation (e.g., people working in the industry), whereas PPP professionals are those academic or professional experts who have capacity to provide advisory services on PPP contracts. Moreover, the study employs the ‘two-sample t-test’ to estimate differences in perceptions between the two groups regarding each of the key obstacles, and the level of variance is estimated using the rank agreement factor (RAF). The estimates show divergence between the two groups concerning the main obstacles. The study also suggests a few mitigation measures that will potentially help overcome the obstacles to PPPs.

In Section 2, we review the literature. Section 3 discusses the study’s methodology, and explains our field survey strategy and analytical methods. Section 4 presents the results, based on the estimates. In Section 5, we analyze the findings related to the major obstacles, their importance and policy measures to help overcome them. Finally, we draw conclusions, while outlining contributions made to the literature, this study’s limitations and the direction we believe further research should take.

2. Relevant Literature

The concept of public–private partnerships is cross-disciplinary in nature. While public administration discipline focuses on public values safeguarding political ideology and interests, management focuses on improving the efficiency of service delivery through close monitoring of firms’ performance. Collaborative governance focuses on improving interorganizational partnerships, built on trusted relationships and mutual negotiations. Engineering and environmental governance focuses on improving the use of expertise and ensuring sustainability; private enterprises take the most risks, and limited interactions take place between partners. Given due consideration to theoretical foundations, this paper looks at the issues of PPP obstacles through the perspective of management.

A number of articles have analyzed the factors affecting the success of PPP projects. Critical factors include the sharing of risk, the strength of the private enterprises involved, political will, public support and the transparency of the procurement process [11]. Liu and Wang have studied the characteristics of an efficient tender, including robustness of business case development, quality of the project brief, public sector capacity, governance structures, effective communication, balance between streamlining and competition and transparency of the bidding process [12]. Equally, studies have explored several difficulties associated with PPPs, such as finance model preparation and common errors in project development and management [12,13]. Major difficulties include high transaction costs and preconstruction delays, political/social obstacles and inefficient financial markets [1]. Contractual arrangements are often complicated, involving multiple stakeholders with different goals and requiring information sharing for bidding and negotiation, leading to high costs and lengthy procurement processes [12,14]. The professional services fee further increases the costs involved. Other factors, such as public attitude and investment of public funds, are functions of political economy [15]. Additionally, PPPs violate the free-market process by governments partnering with strong private enterprises via negotiation [16,17]. Major difficulties in PPP projects include high transaction costs and lengthy preconstruction periods, political motivation and inefficient capital markets (more details are supplied in

Table 1. Obstacles to global public-private partnership (PPP) projects.

Group	Sub-Group	Variable	Literature Source
Difficulties	High transaction costs and lengthy project period	1 High transaction costs	Whiteside 2019; Robert and Albert 2015
		2 High bidding costs	Protap and Chakrabarti 2018
		3 Lengthy bidding/negotiation process	Osei-Kyei et al., 2017; Cruz and Marques 2013
		4 Lack of competition	Cui et al., 2018; Whiteside 2019
	Sociopolitical obstacles	5 Public opposition	Boyer and Van Slyk, 2019
		6 Lack of flexibility	Liu and Wang 2016; Protap and Chakrabarti 2018
		7 High service charge to end users	Robert and Albert 2015; Liu and Wang 2016;
	Non-conducive capital market	8 Difficulties in finding financial partners	Robert and Albert 2015; Cruz and Marques 2013
Risks	Unfair allocation of risks	9 Allocation of risks	Gunnigan and Eaton 2006; Carbonara et al., 2018; Hurk and Verhoest 2016
	Political risks	10 Government investment in similar projects	Hurk and Verhoest 2016
		11 General legislative change	Carbonara et al., 2018; Hurk and Verhoest 2016
		12 Planning permission delay	Chen et al., 2018; Carbonara et al., 2018
	Financial risks	13 Cost overruns	Osei-Kyei and Chan 2017
	Legal and contractual risks	14 Trust variation	Hurk and Verhoest 2016
		15 Consultation delays	Ozdoganm and Birgonul 2000
	Environmental conditions	16 Weather/environmental conditions	Chen et al., 2018
	Management risks	17 Time overrun	Kang-Wook et al., 2016;
		18 Procedural delay	Osei-Kyei and Chan 2017; Chen et al., 2018;
Errors	Private sector failure	19 Lack of innovation	Zhang and Tariq 2020
		20 Lack of appropriate skills/experience	Ye and Tiong 2003; Zhang and Tariq 2020;
		21 Wrong expected return	Ye and Tiong 2003
	Lack of well-established legal framework	22 Absence of sound legal framework	Siagian 2017; Grimsey and Lewis 2004
		23 Indirect control of standards	Ye and Tiong 2003

).

PPP projects involve various risks associated with finance, legal framework, institutional strength and sociopolitical context [18,19]. Those risks must be shared equally between the government and stakeholders (concessionaires), who will bring differential perceptions, capacities and goals [11,20]. Risk sharing between the public sector and private enterprise is critical if the desired outcomes are to be achieved [21]. Some studies have also highlighted the political risks associated with legislative change and delays in obtaining planning permission [22]. A study of financial portfolio management has also evaluated the risks associated with exchange rates, inflation rates and cost overruns [23]. Risks are associated with ‘misallocation of risks’, ‘legislative change and planning permission delays’, ‘budget overspends’, ‘legal and contractual risks from trust variation and consultation delay’, ‘risks from the weather/environmental context’, and ‘time overruns and procedural delays’.

Errors occur when contracting out PPP projects, arising from failures in estimating outcomes and the capacity of the private sector. Where there is a lack of expertise and experience among private enterprises and the public sector, this can lead to implementation delays and project failure [24,25,26]. In most cases, there is an absence of an established framework for PPPs, in which the traditional needs and control models are in place. Within this type of context, a poorly defined framework poses a risk when projects are contracted out and implemented, and they are often fraught with disputes among the parties involved [17,27]. Thus, it can be seen that errors arise from both the public sector and private enterprise. Public sector errors are linked with the absence of a relevant, established legal framework and quality control. Private sector errors are associated with a lack of design innovation, expertise and experience.

Comparing the tender documents with public finance initiatives (PFI), we see that the allocation of risks is associated with a poorly thought-out tender process. Though the process may initially save on procurement time, it favors private enterprise at the time of bargaining, against the procuring entity. This reflects private enterprise’s political influence over the public sector, which will typically disfavor the procuring authority. Globally, unsuccessful PPP projects provides some insight into the obstacles encountered. We can take the Hangzhou Bay Bridge in China (14 November 2003) and the Channel Tunnel in Europe (1 December 1987) as examples of failing PPP projects (see Appendix A). In total, we identified 23 obstacles from the literature and international evidence, and these can be divided into three broad categories—difficulties, risks and errors (see Table 1).

3. Research Methodology

This study uses cross-sectional survey data, collected from PPP practitioners and professionals based in Hong Kong and mainland China. The survey was administered in 2016 using a semi-structured questionnaire format outlining the 23 obstacles. Using sampling techniques, we invited 60 PPP firms (e.g., DaYue Consulting Co Ltd., Beijing, China) and contractors (e.g., CCCC Shipping Engineering Co Ltd., Hong Kong) to complete the online questionnaire. Around 50% of the questionnaires were completed and returned to us within two months. Additionally, we contacted a similar number of professionals online, based on their research profiles. However, we received responses only from 10 professionals, two from South China University of Technology, three from Dongbei University of Finance and Economics, two from the University of Hong Kong, two from City University of Hong Kong and one from MTR Corporation Ltd. They were asked to respond using a five-point Likert scale, on which 1 represents the lowest importance and 5 represents the highest importance. They were also asked about other obstacles that they think are important. We piloted the questionnaire before sending it to the respondents. In addition, we interviewed two reputed PPP professionals–Senior Practitioner (expert 1) and University Professor (expert 2)—who provided us with an in-depth insight into the mitigation measures needed to overcome 10 key obstacles to PPPs. Both participants hold Ph.D.s in construction management and have more than 10 years’ experience of PPP project handling. Nine open-ended (qualitative) questions were asked to capture their expert opinions and perspectives on mitigation measures. They recommended some additional measures, irrespective of the ten major obstacles identified, for achieving desired outcomes from the PPP-led infrastructure development projects, with a particular focus on China and Hong Kong.

The study followed a mixed-method approach using literature, case studies, online survey on practitioners and professionals and face-to-face interviews with the professionals. Such an approach allows us to identify potential obstacles to PPP-led infrastructure development in the context of China and Hong Kong, and analyze those in depth. Based on the responses, we estimated the average mean scores of 23 potential obstacles to PPPs identified from the literature, and ranked the top 10 obstacles among them. Given due consideration to the differences and similarities in perception of obstacles between the two study groups—practitioners and professionals—average scores were then used to estimate relative ranking using the analytical methods described below.

A mean score (MS) was used to compare relative importance of the obstacles:

Mean score, $MS=\frac{{\displaystyle \sum (f\times s)}}{N}, 1\ll MS\le 5$,

where ‘s’ is the given score for each obstacle, f is the frequency and N is the total number of responses, assuming that two samples are normally distributed, and the population has common variance. We further estimate the mean differences between the groups using an independent two-sample t-test:

$$\begin{gathered} t=\frac{(x_1-x_2)-(u_1-u_2)}{\sqrt{s\times s(\frac{1}{n_1}+\frac{1}{n_2})}} \\ S\times S=\frac{(n_1-1)S_1\times S_1+(n_2-1)S_2\times S_2)}{n_1+n_2-2} \end{gathered}$$

where n₁ and n₂ are the number of responses from practitioners and professionals; x₁ and x₂ correspond to the respective means. S₁ and S₂ are population means and u₁ and u₂ are sample variances.

We evaluated the uniformity of ranking between the two study groups using the rank agreement factor (RAF), percentage rank agreement factor (PA) and rank agreement disagreement factor (PD):

Percentage rank agreement, $PA=100-PD$

Percentage rank disagreement, $PD=100\times \frac{{\displaystyle {\sum }_{i=1}^N|R_{i1}-R_{i2}|}}{{\displaystyle {\sum }_{i=1}^N{D}_{\max i}}}$

$D_{\max }=|R_{x1}-R_{y2}|$ is the PD. i = 1,2,…,N. x and y represent the mean scores of ranks of the obstacles, respectively, of the two groups—practitioners and professionals.

Rank agreement factor,

$$RAF=\frac{{\displaystyle {\sum }_{i=1}^N|R_{i1}-R_{i2}|}}{N}$$

where the rankings of the obstacles of practitioners and professionals are $R_{i1}$ and $R_{i2}$.

The difference is $Di=|R_{i1}-R_{i2}|$, i = 1,2,…,N. An RAF value of zero indicates perfect agreement [28].

4. Results

4.1. Major Obstacles

According to the estimation of survey data, the mean scores of the obstacles the practitioners ranked varied from 3.47 to 4.2. They identified ‘wrong expected return’ as the most critical obstacle, and indeed this is common in PPP-led infrastructure development in mainland China and Hong Kong. The mean score of this obstacle was 4.2, followed by the obstacle ‘cost overrun’ (3.97) and ‘absence of a well-established legal framework’ (3.93). See

Table 2. Comparative ranking of the top 10 potential obstacles.

Potential Obstacles	Mean Scores from Practitioners	Rank	Mean Scores from Professionals	Rank
Wrong expected return	4.20	1	4.10	3
Cost overruns	3.97	2	4.00	4
Absence of a well-established legal framework	3.93	3	3.70	6
Private sector failure/lack of skills and experience	3.90	4	3.10	10
Trust variation	3.80	5	4.20	2
Misallocation of risk	3.73	6	4.30	1
High service charge to end users	3.57	7	3.50	7
Political/social obstacles/lack of flexibility	3.53	8	3.30	8
Time overruns	3.50	9	3.20	9
Procedural delays	3.47	10	3.80	5

for all 10 major obstacles and their mean scores.

On the other hand, the mean score (MS) of major obstacles given by the professionals varied between 3.1 and 4.3, showing little deviance from the practitioners’ perspective. For instances, the professionals ranked ‘misallocation of risk’ as the top obstacle to PPPs, with a mean score of 4.30, followed by ‘trust variation’ (4.20) and ‘wrong expected return’ (4.10). According to the professionals, these were the top three obstacles to PPP-led infrastructure projects in the study context, whereas the practitioners perceived them as the sixth (3.73), fifth (3.80) and third (4.20) most important obstacles to PPPs, respectively.

In general, a mean score greater than 3.00 demonstrates a high level of importance on a five-point scale. All key obstacles exceeded the benchmark level, exhibiting a considerable threat to PPP-led infrastructure projects in the study context. Both groups gave ‘wrong expected return, a mean score above 4.00, while the professionals gave ‘misallocation of risk’, trust variation’ and ‘cost overrun’ mean scores above 4.00. All these four obstacles were reportedly categorized as severe threats to PPP-led infrastructure development in China and Hong Kong. Other threats that the practitioners perceived very close to severe were ‘absence of a well-established legal framework’ and ‘private sector failure/lack of skills and experience’. Similarly, the professionals perceived ‘procedural delays’ as a great threat to PPP-led infrastructure development.

4.2. Perception Variation

The Levene t-test was used to estimate the difference in mean scores between the two study groups. A divergence between two groups was assumed to be present if the congeneric variance was homogenous in a group, then the estimation could be made. We ran such an estimation, and according to the estimation, we cannot reject the null hypothesis (at 95% confidence) that the two groups had equal variance. That means that no significant difference in variance was evident between the two groups across the 10 obstacles, except in the case of ‘political/social obstacles/lack of flexibility’. The estimate of F was as large as 13.66 (see

Table 3. The differences in perceptions of potential obstacles.

		Equality of Variances					t-Test (Equality of Means)
Variables	Equal Variances	F	Sig.	t	df	Sig.(2-Tailed)	(p–Value)
Wrong expected return	Assumed	0.06	0.81	0.35	38	0.73	0.10
	Not assumed			0.36	16	0.72	0.10
Cost overruns	Assumed	0.03	0.87	0.21	38	0.83	0.07
	Not assumed			0.21	15	0.84	0.07
Absence of a well-established legal framework	Assumed	0.14	0.71	0.75	38	0.46	0.23
	Not assumed			0.77	16	0.46	0.23
Private sector failure/lack of skills and experience	Assumed	0.00	0.98	1.96	38	0.06	0.80
	Not assumed			1.87	14	0.08	0.80
Trust variation	Assumed	1.53	0.22	−1.23	38	0.23	−0.40
	Not assumed			−1.50	24	0.15	−0.40
Misallocation of risk–high risk	Assumed	0.32	0.58	−1.88	38	0.07	−0.57
	Not assumed			−1.88	16	0.08	−0.57
High service charge to end users	Assumed	0.00	0.98	0.19	38	0.85	0.07
	Not assumed			0.19	15	0.85	0.07
Political/social obstacles/lack of flexibility	Assumed	13.66	0.00	0.66	38	0.51	0.23
	Not assumed			0.50	11	0.63	0.23
Time overruns	Assumed	0.04	0.84	0.86	38	0.40	0.30
	Not assumed			0.88	16	0.39	0.30
Procedural delays	Assumed	0.40	0.53	−0.98	38	0.33	−0.33
	Not assumed			−0.99	16	0.34	−0.33

for details of the estimates). Other estimates of F were lower than 1, except in the case of ‘Trust variation’.

Moreover, we used the independent t-test for equality of means. Such a test verifies whether the two groups have the same mean. According to the survey responses, the perspectives of the two groups did not vary significantly across the obstacles because the absolute value of p was greater than 0.05. Though the Levene test for ‘private sector failure/lack of skills and experience’ demonstrated significant differences (t–value = 1.96), p–value (=0.80) in the independent t-test evidence was such that this difference in perception was insignificant across the two groups.

4.3. Rank Agreement Factor

The rank agreement factor (RAF) was used to reach a common agreement in the ranking of all the obstacles to PPPs, and the percentage rank agreement factor (PA) was used to measure the agreement in the importance of ranking. According to our estimation, the average RAF was 0.5, which demonstrates that a moderate degree of agreement over all the obstacles between the perceptions of two groups was evident (See

Table 4. Significance of the potential obstacles.

Groups	Rank Agreement Factor (RAF)	Percentage Rank Agreement Factor (PA)	Percentage Rank Disagreement Factor (PD)
Practitioners and professionals	0.5	67%	33%

). This implies that the two study groups had a level of similarity in their perspectives on obstacles to PPP-led infrastructure development in China and Hong Kong. Moreover, the percentage rank agreement factor (PA) was 67%, which demonstrates a higher agreement than disagreement on identifying the same obstacles, and recognizes that both groups identified two-thirds of the major obstacles. Both groups recognized most of the critical obstacles to PPP-led infrastructure development in the same way.

5. Discussion

The survey results reveals that there are 10 most critical obstacles that challenge the success of PPP-led infrastructure development in China and Hong Kong, including ‘wrong expected return’, ‘cost overruns’, ‘absence of an well-established legal framework’ for PPP formulation and contracts, ‘private sector failure due to lack of expertise or experience’, ‘trust variation’, ‘misallocation of risks’, ‘high service charge to the end users’, ‘political/social obstacles’, ‘time overruns’, and ‘procedural delays’, here given in order of their respective significance. According to the survey responses of both practitioners and professionals, these obstacles largely contribute to PPP-led infrastructure project failure in China. Arguably, the PPP-led Hangzhou Bay Bridge development in China failed due to several reasons, including overestimation of traffic flow which caused errors in decisions (‘wrong estimation and lack of expertise or experience of private enterprises’), increase of upfront costs (‘cost overruns’), opening of competing bridges (Shaoxing-Hangzhou Bay Bridge and Salt Bridge on Hangzhou Bay) and a national infrastructure development plan for Hangzhou Bay Sea-crossing Engineering, Qianjiang 3 Channel and Ningbo, and Zhoushan-Shanghai sea-crossing (‘misallocation of risk’) which affected the cost recovery period (‘time overruns’). Finally, local weather conditions influenced by typhoon/marine climate and tidal waves also contributed to increased costs (‘political/social obstacles/lack of flexibility’). The Hangzhou Bay Bridge development was challenged by all these obstacles (see Appendix A for details).

Similar obstacles are evident in the context of Europe. PPP-led infrastructure development projects such as the Channel Tunnel have encountered challenges from the wrong estimation of revenue, and alternative modes of transportation such as road transport (particularly the Eurostar), ferries and airlines have sparked price competition. Particularly, the cost of construction increased significantly due to changes in the initial design, which contributed to a cost overrun that was more than twofold. This happened due to the involvement of inexperienced enterprises. The installation of equipment and vehicles, management delays and security controls also contributed to the delays and cost overrun. The construction delay led to operational delays, and ultimately contributed to cash flow delays, creating a financial burden for the long term. This particular PPP-led infrastructure development project between the UK and France also faced huge political and social barriers in the cross-border contract and management.

The perspectives of the two groups may have varied a little; however, such variations are insignificant for most of the obstacles, except in the case of ‘wrong expected return’: both the practitioners and professionals ranked it as a severe obstacle. This particular obstacle remains at the top of the list of major obstacles to PPP-led infrastructure development projects. Again, the practitioners rated ‘cost overruns’ as the second most important obstacle, yet they were ranked fourth by the professionals—so both groups perceived this obstacle as having considerable importance due to its negative effects on investment decisions. The practitioners rated the ‘absence of a well-established legal framework’ as the third most important obstacle to PPP-led infrastructure projects, while the professionals rated it as the sixth most important obstacle. PPP-led infrastructure development projects are at greater risk without a well-defined legal framework. Interestingly, the four least important obstacles were largely perceived as identical across both the practitioner and professional groups.

PPPs’ success depends on quality, cost, schedule timescales and governments’ capacity to overcome constraints. The professionals also provided us with some insight into other associated obstacles. Firstly, another obstacle to PPP-led infrastructure development projects was identified as the lack of government credibility arising from competitive projects taken on by the government. Such evidence is available particularly in transportation infrastructure schemes in China and Europe. The schemes affected expected revenue, diverting the flow of traffic to alternative directions (see Appendix A). A second additional obstacle was seen as the absence of policy and governance in collaborative projects involving central and local government particularly in the context of China. Thirdly, the failure of PPP projects was associated with malicious bidding practices, inefficient management and non-compliance in contract negotiations. Other macroeconomic structural obstacles to successful PPP-led infrastructure development were interest rates, inflation, re/financing problems, salvage value issues, banks’ lending policies, public opposition, distribution of responsibilities, estimation of future cash flow, a lack of appropriate standards and oversight mechanisms, government control and policy changes from new governments. PPP-led infrastructure development projects are very influenced by contextual factors, including socioeconomic, legal, legislative and financial system [29].

The differences in perception between the two groups were not statistically significant at the 95% level of confidence, except for on ‘private sector failure of skills and experience’. The t-value for ‘trust variation’ and ‘misallocation of risks’ was greater than 1, demonstrating a certain variation in perception between the two groups, but the average percentage of agreement was higher than that of disagreement. So the perspectives of the two groups were more uniform than divergent. Moreover, the rank agreement factor (RAF) of 0.5 and percentage rank agreement factor (PA) of 67% show an agreement between the two groups, and the divergence between two groups was lower than the uniformity.

As for the two professionals who were sought to give their perspectives on the mitigation measures, financial managers are crucial in financial planning and estimating revenue and overcoming major obstacles in PPPs. A special purpose vehicle (SPV) structure, for example, would see an experienced company commissioned for construction through a competitive bidding process. Such a mechanism would include provisions for a concessional agreement for raising income (if needed), extending the operational period or raising fare/ticket prices. It would also keep extra funds aside in case construction became more expensive than planned. Moreover, a precise description of roles and division of responsibilities should be clearly outlined in the contract. This should also specify the power and accountability of all stakeholders involved, and there should be terms in the contract allowing for compensation claims from the accountable party for any losses. Clarity in PPP arrangements could help overcome obstacles and achieve the desired outcomes in the infrastructure development in China and Hong Kong. Details of the expert suggestions that were obtained through the face-to-face interviews can be found in Appendix B.

6. Conclusions

This study has analyzed 23 potential obstacles to PPP-led infrastructure development in the context of mainland China and Hong Kong, from the perspectives of practitioners and professionals. It identified the top most important 10 obstacles, including ‘wrong expected return’, ‘cost overruns’ and ‘absence of a well-established legal framework’, with some divergence in their order of importance. It has identified two obstacles, ‘competitive projects’ and ‘absence of governance’, in the case of collaborative projects involving central government and local government, that are critical to the success of PPP-financed infrastructure development in the study context. This study has also suggested a few mitigation measures based on the experience of professionals. These include appropriate revenue estimation, construction design and management, and accurate project timescales. PPP formulation should carefully consider these aspects to achieve desired outcomes and sustainable growth.

In the absence of the right experience and expertise, a government’s control over PPP-led infrastructure projects can be ineffective, particularly with schemes implemented in collaboration with local government. A lack of expertise from the sponsoring government will contribute to project failure. The efficiency of private enterprise is also critical to the success of PPP-led infrastructure development projects. Both government and private enterprises must have technical expertise and financial stability to achieve the desired outcomes. Moreover, sociopolitical, weather and cultural factors, which create barriers to progress, must be taken into consideration in PPP formulation to optimize expected outcomes.

PPP-led infrastructure development projects should address all these critical obstacles to achieve the economic, social and environmental efficiency that could lead to the growth of the industry. Further, new policies that incorporate business opportunities such as carbon trading will enhance sustainability [30]. Overcoming the key obstacles will help achieve sustainability, and a sustainability-led project evaluation would facilitate efficiency in PPP-led infrastructure development, together bringing better outcomes and greater sustainability.

This study contributes to the existing literature on PPP-led infrastructure development in China as well as in the European context by identifying major obstacles and their significance. Such information is crucial in developing legal frameworks for PPPs, overcoming barriers and exploiting the benefits of PPPs. The study provides an insight into the order of significance of the major obstacles which can influence a PPP-led infrastructure development project. Relevant stakeholders of the industry can use this information to take the necessary steps at the early stage of PPP project formulation once they are aware of these critical obstacles. Moreover, the study also offers a few policy measures which can be used to potentially mitigate the obstacles’ effects and contribute to the development of a best practice framework in PPP projects in China and Hong Kong, and potentially in other similar countries across the globe. However, the ranking of the obstacles and their mitigation measures are contingent upon the context, and as such may not be universal. Future studies would increase the sample sizes of both the practitioners and professionals to increase the reliability of the findings and their implications.