Risks in Public Private Partnerships A Systematic Literature Review of Risk Factors Their Impact and Risk Mitigation Strategies

Public Performance & Management Review
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Risks in Public–Private Partnerships: A Systematic

Literature Review of Risk Factors, Their Impact and
Risk Mitigation Strategies
Robert Rybnicek, Julia Plakolm & Lisa Baumgartner
To cite this article: Robert Rybnicek, Julia Plakolm & Lisa Baumgartner (2020) Risks in
Public–Private Partnerships: A Systematic Literature Review of Risk Factors, Their Impact and
Risk Mitigation Strategies, Public Performance & Management Review, 43:5, 1174-1208, DOI:
10.1080/15309576.2020.1741406
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PUBLIC PERFORMANCE & MANAGEMENT REVIEW
2020, VOL. 43, NO. 5, 1174–1208
https://doi.org/10.1080/15309576.2020.1741406
Risks in Public–Private Partnerships: A Systematic

Literature Review of Risk Factors, Their Impact and Risk
Mitigation Strategies
Robert Rybnicek, Julia Plakolm, and Lisa Baumgartner
University of Graz
ABSTRACT KEYWORDS
Public–private partnerships (PPPs) are a popular way to form PPP; public–private
synergies between public and private partners in order to partnership; risk
overcome modern challenges and develop new opportunities. management; risks;
systematic literature review
However, recent research suggests that PPPs entail more risks
than other projects. In this systematic literature review, we
analyze 159 articles published in international journals and
identify eight major risk factors in PPPs. We integrate our
results into a risk management framework and examine how
the risk factors potentially impact PPPs before summarizing
risk mitigation strategies. Our findings offer a cross-sectoral
perspective and bridge the gap between research and prac-
tical implementation. By developing a novel conceptual model
we advance the understanding of risks in PPPs and contribute
to the theoretical foundations.
Introduction
The cross-sectoral cooperation between private and public institutions has
become an important element in facing the increasing demands from soci-
ety (van Ham & Koppenjan, 2001). Today, PPPs enjoy great popularity in
developed as well as developing countries. The OECD (2012), for example,
reports a value of 645 billion USD for PPPs between 1985 and 2009. In the
European Union, 1,184 PPP projects have reached financial close between
2000 and 2015 (Tomasi, 2016). PPPs have become an inevitable part in
realizing projects in many countries (Warsen et al., 2018) and offer several
advantages for both public and private partners. They allow public partners
to increase effectiveness (Pinz et al., 2018), to gain access to private financ-
ing, to import management expertise (Brinkerhoff & Brinkerhoff, 2011) or
to implement cost-saving mechanisms (Kwak et al., 2009). Private partners,
in return, can share or shift risks and get access to public projects they
CONTACT Julia Plakolm julia.plakolm@uni-graz.at Department of Corporate Leadership and

Entrepreneurship, University of Graz, Graz 8010, Austria.
Supplemental data for this article is available online at https://doi.org/10.1080/15309576.2020.1741406.
ß 2020 The Author(s). Published with license by Taylor & Francis Group, LLC
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PUBLIC PERFORMANCE & MANAGEMENT REVIEW 1175
could not sustain otherwise (Brinkerhoff & Brinkerhoff, 2011).

Nevertheless, PPPs also have their drawbacks. Partners pursue different
interests when they engage in PPPs (Pinz et al., 2018) and PPPs might
have more and a higher degree of risks than other projects (Bloomfield,
2006; Carbonara et al., 2015; Grimsey & Lewis, 2002; Wang et al., 2018).
There already exists a vast body of literature investigating risks in PPPs.
There is a large volume of case studies, but also a great number of quantita-
tive and qualitative empirical studies and even some literature reviews.
However, these articles have mainly focused on specific cases, sectors, scien-
tific disciplines, factors or countries. For example, Carbonara et al. (2015)
focus their review on motorways, Bel et al. (2013), Leruth (2012), and
Zimmermann and Eber (2014) concentrate on infrastructure development,
construction or transportation, and the reviews of Roehrich et al. (2014),
Torchia et al. (2015) or Hellowell (2016) investigate the health-care sector. A
recent study by Wang et al. (2018) reviews only articles published in inter-
national public administration journals and other studies are restricted to a
specific area or country, such as Chou and Pramudawardhani (2015) who
focus on Taiwan, Singapore, China, the United Kingdom, and Indonesia.
Furthermore, several studies explore particular factors. For example, Warsen
et al. (2018) examine relational aspects like trust, Becker and Patterson
(2005) concentrate primarily on financial returns and risks as well as the
roles of partners, and Sarmento and Renneboog (2016) investigate the struc-
ture, financing and renegotiation of PPPs.
Thus, although a vast body of literature is already available, to date there
exists no overarching overview that synthesizes risk factors that are relevant
to all PPPs regardless of the actual project or sector. Therefore, our article
aims to fill this gap by identifying generic risk factors, relating them to ele-
ments of current risk management frameworks and establishing a concep-
tual model. Our study is guided by three core questions: (1) What are the
most important risk factors in PPPs?; (2) What impact do those factors
have on PPPs?; (3) How can we mitigate those risks in PPPs? In order to
answer these questions, we conducted a systematic literature review and
investigated 1,331 articles, of which 159 papers formed the basis for our in-
depth analysis. Based on a thorough content analysis we identified several
risk factors. In the development of these factors, we deliberately refrained
from falling back on current theories, their terminology, and their defini-
tions to avoid confounding effects.
This study contributes to research and managerial practice in several
ways: first, by presenting a literature review on the risks of PPPs that is not
restricted to particular sectors, we provide an overarching, cross-sectoral
overview of generic risk factors that can serve as a starting point for future
research or for the practical implementation of PPPs, particularly for those
1176 RYBNICEK ET AL.
cases and sectors where concrete experiences are currently missing. Second,
by relating our findings to risk management frameworks our study goes
beyond existing review articles and allows the gap to be bridged between the-
oretical findings in research and the utilization of these findings in the man-
agement of PPPs. In that regard, our findings can serve as a strong basis and
checklist for practitioners in PPPs during the iterative risk management pro-
cess. Third, by developing a novel conceptual model we advance the under-
standing of risks in PPPs and contribute to the theoretical foundations. We
furthermore offer valuable suggestions for a future research agenda.
Theoretical background
Types of PPPs
In this article, we define PPPs as cooperative arrangements between public
and private partners to share resources, risks, responsibilities and rewards
to mutually gain social, economic, or environmental objectives (Kwak
et al., 2009). However, today there exist several types of PPPs and a multi-
plicity of different terms. PPPs can be distinguished by their degree of pri-
vate involvement, such as BOT, DBFO, BOOT, DBFOM, and BOO1 (Kwak
et al., 2009; Roehrich et al., 2014; Sarmento & Renneboog, 2016). We can
also observe country-based forms and terms (Barlow et al., 2010; Ke et al.,
2009) such as “private finance initiative” (e.g., especially used in the UK;
Shaoul, 2005) or “private infrastructure involvement” (e.g., Australia;
Wettenhall, 2003). And we can even identify sector-specific applications
like the “accommodation-only model” for building and managing facilities
and services in the health-care sector (Barlow et al., 2013). Additionally,
the use and definition of these terms have changed over time (Ke et al.,
2009). Therefore, today’s PPP literature is highly ambiguous when it comes
to types and terms and the only constant we have is that most authors
acknowledge and label such partnerships between private and public insti-
tutions with the overall (umbrella) term “PPP.”
Theoretical foundations related to PPP research

In this study, we wanted to discover new insights about generic risk factors
in PPPs exclusively from the data we retrieved. In fact, we explicitly
avoided using existing theories and their definitions for the development of
our factors and subfactors. Therefore, we will keep this section short and
discuss our findings in relation to existing theories in the discussion sec-
tion. However, several theories are used in recent research to analyze and
study PPPs. Wang et al. (2018) identify in their literature review three dif-
ferent types of knowledge backgrounds in PPP research: first, theories with
economic backgrounds such as the transaction cost theory, property rights

theory or principal-agent theory; second, theories with a public manage-
ment or policy background, such as network and governance theories, pub-
lic choice theory, and New Public Management (NPM); and third, theories
with an organizational management background such as stakeholder theory
or institutional theory. Obviously, researchers from different fields have
diverse perspectives on the subject and, similarly to other cross-sector col-
laborations research, need to bridge these different perspectives to cope
with the complex challenges and risks that are inherent to such collabora-
tions (Bryson et al., 2006).
Risk management
Some authors assume that PPPs have more and a higher degree of risks
than other projects because they involve many stakeholders, entail complex
project arrangements, may have special rules regarding financing, docu-
mentation and taxation, or lack experienced partners (Bloomfield, 2006;
Carbonara et al., 2015; Grimsey & Lewis, 2002; Wang et al., 2018). In gen-
eral, risk is the “effect of uncertainty on objectives”. This rather technical
definition is provided by the International Organization for Standardization
(2018). In other words, risks are uncertain (expected or unexpected) possi-
bilities, opportunities or threats that might happen (Wang et al., 2018).
They are inherent to all projects and therefore proper management is
required to systematically identify, analyze, and respond to risks throughout
the whole project (Wang et al., 2004). Risk management is defined as a for-
mal process of “coordinated activities to direct and control an organization
with regard to risk” (International Organization for Standardization, 2018)
and is considered as an iterative process (Chinyio & Fergusson, 2003).
A number of authors have established different risk management frame-
works in the context of PPPs. Zou et al. (2008), for example, propose a life-
cycle risk management framework which emphasizes the dynamic process
for allocating and monitoring risks in all stages. Fischer and Porath (2010)
developed an integrated risk management system to cover different perspec-
tives of the stakeholders involved. Wang et al. (2004) identified three main
stages of risk management: (1) risk identification of relevant and potential
risks, (2) risk analysis and evaluation of the potential impact; and (3) risk
response in order to formulate suitable risk treatment strategies or mitigation
measures. Based on Steele (1992), Chinyio and Fergusson (2003) proposed
similar steps in their risk management framework for PPPs:
1. Risk identification: the first step is to identify the risks facing a project.
There are several strategies for risk identification, for example based on
personal and corporate experience, intuitive insights, brainstorming,

research, interviews and surveys, or through consultation with experts.
2. Risk evaluation: the next step is to evaluate the consequences if a risk
materializes. This task is twofold—it attempts to estimate the probability
by which a risk might occur and to assess its impact on the project
should it actually happen. There are several strategies how to assess
risks. One way is to evaluate every risk via its probability, another is to
assess only the main risks and to concentrate on key issues. The impact
on PPPs can be financial or could result in other issues, such as delays
or decreased quality of output.
3. Risk mitigation: the last step is about finding solutions to counter those
risks. Risk elimination refers to actions taken to avoid risks, risk reduc-
tion is about the minimization of risks, risk transfer means transferring
risks to insurances or specialists, risk retention is about risks being
absorbed by the organization.
In the subsequent sections, we interrelate our findings on risks in PPPs

with these three steps.
Method
To answer our research questions, we implemented a systematic literature
review and followed the guidelines of Tranfield et al. (2003) and Denyer
and Tranfield (2010). The authors highlight key aspects for applying a sys-
tematic literature review in the fields of management and organization. The
review process includes several steps, which are described below. A visual
overview is provided in the Supplemental online material (A).
In the first step, the procedure started with a database search in EBSCO
Business Source Premier in January 2017. The time frame for the database
search was determined as 2000 to 2016. Our search included only peer-
reviewed papers published in English. We used the search terms “public
private partner,” “public-private partner,” “PPP,” “private public
partner,” and “private-public partner” and included papers in which
those terms were presented in the title or in keywords. As already discussed
in the previous section, there exists a multiplicity of different terms and
types of PPPs, which change over the course of time or vary between coun-
tries and even sectors. To counteract this ambiguity, we refrained from
considering only a selective choice of PPP subtypes and instead used exclu-
sively the widely recognized umbrella term “PPP.” The result of the data-
base search implied 1,839 papers, after eliminating duplicates 1,331.
Thereafter, we eliminated papers which referred to other topics like
“purchasing power par” or “public procurement procedur,” leaving

1,104 papers.
In a second step, we selected and evaluated the literature. We, therefore,
developed a set of seven exclusion criteria to allow the assessment of each
study. First, we excluded articles from the review in the rare case of the
document not being accessible. The second exclusion criterion concerned
the scientific approach of the papers—we excluded, for example, book
reviews or any kind of nonscientific articles. Third, we eliminated those
studies that did not contain PPP as the research topic despite our applied
search terms. The fourth and fifth exclusion criteria were whether a paper
dealt with developing countries or nonprofit organizations. Recent research
suggests that there are considerable differences regarding the requirements
and risks of PPPs in developing and developed countries (Osei-Kyei &
Chan, 2017; Urio, 2010). Similarly, research in the field of nonprofit man-
agement indicates distinct and substantial differences to profit-oriented
organizations. The sixth and seventh exclusion criteria were applied when
papers did not include risks or when those risks did not refer to PPPs
themselves. As suggested by Tranfield et al. (2003), two reviewers evaluated
the studies independently and then compared their findings. After applying
the seven exclusion criteria, 159 papers remained and as basis for the in-
depth analysis.
In a third step, the reviewers independently used data extraction sheets
to analyze all articles identified. The reviewers continually compared their
results; in case of disagreement, the opinion of an additional reviewer was
decisive. Each data extraction sheet consisted of the following elements:
bibliographic data (e.g., author, title, year, journal), method (e.g., quantita-
tive studies, qualitative studies), sector (e.g., infrastructure, health, urban
development), country, risk factors. In our analysis, we combined deductive
(deductive category application; see Mayring, 2000) and inductive methods
(inductive category development; see Mayring, 2000) to derive our risk fac-
tors/subfactors. (For more information about different approaches to quali-
tative content analysis see also the thorough overview by Hsieh and
Shannon (2005)). We started with risk factors that have been suggested by
other authors, for example, Carbonara et al. (2015), who provide a list of
risks in motorway PPPs. We also drew on related literature that refers to
other sorts of collaborations—for instance, Ankrah and Al-Tabbaa (2015),
who investigated university–industry collaborations. We used this initial list
of factors and iteratively adjusted it, adopting, adding, and eliminating indi-
vidual factors in a process of refinement involving continual discussions
between the authors. During the analysis, we developed an interpretation
guide, which we used to determine whether a paper’s content could be sub-
sumed under a particular factor. This led to the modification of some
factors and to the addition and deletion of others. To increase the readabil-
ity and enhance the understanding of the nature and substance of the actual
factors, we structured them into subfactors. We derived these subfactors via
an inductive approach. We started by iteratively clustering similar text pas-
sages from our analysis to identify relevant facets and aspects within each
risk factor. Then, we renamed the subfactors, ensuring that each term
reflected the character of the condensed text passages appropriately.
In a fourth step, we synthesized our findings and combined them
with risk management of PPPs. More precisely, we used the synopsis of
our quantitative and qualitative analyses to assess the relevance of the
respective risk factors and then related the most important factors with
the three steps of our risk management framework, namely risk identifi-
cation, risk evaluation, and risk mitigation. Regarding the identification
phase, we provide an overview of the identified generic risk factors, with
respect to the evaluation phase, we report potential consequences if these
risks materialize and in terms of the mitigation phase, we synthesize
risk mitigation strategies.
Results
The analyzed papers were published in 92 different journals; about 60%
of the papers were published in journals with an impact factor (IF). In
the Supplemental online material (B) we provide an overview of the
journals, the number of articles published in these journals and their
impact factors. The key publication outlets are International Journal of
Project Management (10 articles), Journal of Construction Engineering
and Management (9), Public Performance & Management Review (7) and
Public Works Management & Policy (7). Most articles investigate PPPs
based in the United Kingdom (50), the United States (42), Australia
(26), the Netherlands (18), and Canada (11). We assigned an article to a
country according to the origin of the PPP. Our results indicate that
PPPs are particularly popular in Anglophone countries. Of the 159
investigated articles, 76 articles included case studies, which points to
the practical relevance of the topic and the still emerging nature of the
field. Lastly, the number of papers rose over the last decades, which
indicates the increasing relevance of the investigated topic in recent
years. The number of publications per year can be found in the
Supplemental online material (C).
Figure 1 depicts how many studies named each of the factors as relevant,
which does not necessarily mean that this factor was the actual focus of the
respective study. The most often named factors are contract (59%), resour-
ces (58%), objectives (45%), structure (40%), commitment (39%),
Contract 59%
Resources 58%
Objecves 45%
Structure 40%
Commitment 39%
Environment 36%
Communicaon 31%
Trust/Monitoring 31%
Process 25%
Outcome/Quality 24%
Risk Awareness 21%
Team Experse 19%
Experience 18%
Controlling 14%
Technology Transfer 13%
Role of Leadership 13%
Culture 12%
Willingness for Changes 11%
Partner Selecon 9%
Knowledge Transfer 9%
Expectaons 8%
Conﬂicts 6%
Image 3%
Intellectual Property Rights 1%
Geographical Distance 1%
0% 10% 20% 30% 40% 50% 60% 70%
Figure 1. Risk factors in PPPs.
environment (36%), communication (31%), and trust (31%). Below, we

report these eight factors and relate them with risk identification, evalu-
ation, and mitigation.
Contract
Contracts are binding agreements between cooperating partners and are an
essential component of any project (Soli~ no & de Santos, 2010). The exam-
ined studies show that issues regarding contracts represent one of the
greatest challenges in PPPs. Our analysis reveals three main contractual
risks, namely negotiation, incompleteness, and contractual design.
Identification: Potential issues in the context of negotiations refer to the
duration of negotiations (Zervos & Siegel, 2008; Zhang, 2005b), insufficient
processes for getting a contractual agreement (Chung, 2016; Zhang, 2005b),
asymmetric information flow and imperfect information (Parker & Hartley,
2003; Sarmento & Renneboog, 2016). Incompleteness poses another major
challenge regarding contracts in PPPs (for example, Alam et al., 2014;
Landow & Ebdon, 2012; Soli~ no & de Santos, 2010). In long-term partner-
ships, contractual arrangements need to cover a long period and it is not
possible to define a “complete” contract considering all relevant aspects
and future incidents (for example, Sarmento & Renneboog, 2016;
Siemiatycki & Farooqi, 2012; Wang, 2015). Contractual design is the third
critical aspect of PPP contracts (Marques & Berg, 2011; Nisar, 2007b) and
includes contractual ambiguities (Byoun & Xu, 2014), an absence of flexi-
bility to allow changes (Vonortas & Spivack, 2006), lacking details (Soomro
& Zhang, 2016) or missing transparency of contractual contents (Trafford
& Proctor, 2006).
Evaluation: In sum, 94 of the 159 analyzed papers dealt with the risk fac-
tor contract. The probability that issues arise in this context seems high.
Which impacts are discussed in literature? Negotiations and, at a later
stage, renegotiations are time-consuming and result in high costs (Ahadzi
& Bowles, 2004; Siemiatycki & Farooqi, 2012), delays within the project
and conflicts between partners (Zervos & Siegel, 2008). Vague or incom-
plete contracts lead to unclear distribution of tasks and responsibilities
(Soomro & Zhang, 2016), endanger the financial commitment (Bettignies &
Ross, 2009) and often cause renegotiations between partners (Sarmento &
Renneboog, 2016). However, complex and detailed agreements have their
drawbacks too and result in immense contractual conditions with disorgan-
ized and confusing information (Leruth, 2012).
Mitigation: In order to mitigate contractual risks, we found several strat-
egies in the investigated literature. A planned and staged negotiation pro-
cedure can assist in finding suitable partners, identifying and managing
risks, and finalizing an agreement on time (Forrer et al., 2010). Similarly, a
renegotiation procedure for contract extensions or adjustments is advisable
(Xiong & Zhang, 2014). One mitigation strategy to cope with incomplete-
ness and to deal with changing circumstances is contractual flexibility
(Domingues & Zlatkovic, 2015). In this regard, Zheng et al. (2008) suggest
establishing yearly contractual changes because planning too far ahead is
time-consuming. To prevent failure in contract design, the development of
guidelines with formal components for contracts is another mitigation
strategy (for example, Abdel & Ahmed, 2007; Fourie & Burger, 2000). For
instance, the case of a M4 motorway PPP in Australia has demonstrated
that the nonexistence of formal guidance was challenging for the conclu-
sion of the contract and led to contract ambiguities (Chung, 2016).
Furthermore, the design of contracts requires detailed information regard-
ing the expectations of partners (Forrer et al., 2010), clarified responsibil-
ities (Landow & Ebdon, 2012), space for flexibility (Forrer et al., 2010;
Parker & Hartley, 2003), clear lines of communication between partners
(Liu & Wilkinson, 2014), cost transparency and risk allocation (Nisar,
2007b; Zhang, 2005a), renegotiation clauses (Domingues & Zlatkovic,
2015), and procedures for conflicting situations as well as exit strategies
(Parker & Hartley, 2003).
Resources
Resources in PPPs are assets that are essential for cooperation in forming
synergies between partners to overcome challenges and develop new oppor-
tunities that neither of them could create alone (Alam et al., 2014;
Brinkerhoff & Brinkerhoff, 2011). In our analysis, we identified three main
resource-based risks, namely finance, staff and time issues.
Identification: According to financial issues, cost overrun due to poor ini-
tial cost estimates is one of the main challenges (for example, Nisar, 2007a;
Roumboutsos & Anagnostopoulos, 2008; Zhang & Soomro, 2016). Potential
reasons might lie in the financial complexity of PPPs (Zhang, 2005b). The
availability of resources is another challenging point due to the fact that
private partners are often left alone to deal with the capital procurement
and other resource acquisitions (Wang, 2015). Regarding staff, the quality
and availability of staff is an important risk for PPPs (for example,
Roumboutsos & Anagnostopoulos, 2008; Wojewnik-Filipkowska &
Trojanowski, 2013). Staff without experience of a certain type of work or of
working together as a team can harm a project (Waring et al., 2013). With
regard to time, public and private partners’ different time horizons can cre-
ate problems in PPPs (Ruuska & Teigland, 2009; van Ham & Koppenjan,
2001), e.g., private partners often focus on short-term perspectives with
profit maximization, whereas public partners are more interested in long-
term investments rather than fast cash creation (van Ham &
Koppenjan, 2001).
Evaluation: In our analysis, 93 of 159 articles dealt with the risk factor
resources and its sub facets. This result indicates that incidents regarding
resources are likely to occur. Insufficient cost estimates, for example,
endanger those parties who provide financial resources when the predicted
revenues do not materialize (Grimsey & Lewis, 2002). Control mechanisms
to monitor the allocation of resources restrict the freedom and autonomy
of partners in managing their own assets (Kakabadse et al., 2007).
Unqualified staff can induce poor-quality outcomes and may lead to staff
crises (Bing et al., 2005). Different time horizons perhaps result in delays
due to complex planning and negotiation processes (Nisar, 2013).
Mitigation: We identified different mitigation strategies for resource risks.
Regarding financial issues, it is important to pay attention to the early
stages of a partnership, where financial analysis and administration are dis-
cussed in detail (Kakabadse et al., 2007). A regular control according to the
standards of the OECD and other organizations for economic collaboration
ensures the reliability and transparency of resource management in PPPs
(Biginas & Sindakis, 2015). In this vein, Vining and Boardman (2008) claim
that only clear and consistent budget reporting can increase transparency
concerning financial resources. With regard to staff, partners can support
each other in terms of recruiting, keeping the right people, consulting

internal experts or referring to external advisors (Liu & Wilkinson, 2014),
as well as through regular and individualized workforce training and per-
manent education (Trafford & Proctor, 2006). Concerning time delays and
different time horizons, a detailed time schedule, milestones, and fixed
deadlines help to stay on schedule. Some PPPs typically determine penalties
for late project completion or provide incentives for on-time delivery
(Davis, 2005). The relevance of the identified strategies also can be seen in
the case of a PPP school-based learning opportunities project, in which
partners continuously neglected plans and underestimated the time
required, which led to delays of the whole project (Nisar, 2013).
Objectives
Objectives refer to the strategies, visions, goals or plans of the PPPs and
their expectations about the quality of the project outcome. We identified
conflicting goals, problems with strategy and a lack of clarity as important
risks in terms of objectives.
Identification: Several studies (for example, Paez-Perez & Sanchez-Silva,
2016; Rangel & Manuel Vassallo, 2015) claim that conflicting goals are main
risks of PPPs. The private sector aims to maximize profit, create short-term
revenues, and decrease costs for firms and individual shareholders, while
the public sector aims to create jobs and increase public services from a
long-term perspective (Ruuska & Teigland, 2009). A second stream of risks
refers to the strategy of public and private partners. Due to partners’ differ-
ent perspectives on attaining their individual goals, the approach to reach-
ing mutual goals is diverse (for example, Tuncikien_e et al., 2014). The
partners’ heterogeneous background makes it often challenging to achieve a
good balance of interests (Brinkerhoff & Brinkerhoff, 2011). Another prob-
lem concerning objectives is the lack of clarity about goals and strategies
(Weihe, 2008). This aspect refers to the uncertainty about the expected out-
come (Cruz & Marques, 2013), unclear goal setting (Trafford & Proctor,
2006) or unclear policies (Sarmento & Renneboog, 2016).
Evaluation: In our systematic literature review, 71 out of 159 papers dealt
with the risk factor objectives. Different and diverging goals can lead to
conflicts between partners, misinterpretations, asymmetric flows of infor-
mation and a lack of commitment (Robinson & Scott, 2009; Vining &
Boardman, 2008). PPPs may face a standstill or even fail when project goals
are not mutually agreed upon or partners have a different prioritization of
objectives (Koppenjan, 2005; Meidute & Paliulis, 2011). Different mindsets,
perspectives, and cultures of the collaborating partners (Liu & Wilkinson,
2014) lead to conflicts and result in partners following their own strategy
(Trafford & Proctor, 2006).
Mitigation: We observed three main mitigation strategies. One of the
most frequently mentioned is simply to be aware of conflicting goals and
to understand that different goals, interests, and perspectives may arise
(Trafford & Proctor, 2006; Vining & Boardman, 2008). In this regard, it is
important to understand the individual goals of each partner by “forcing”
them to clearly communicate their goals (Ruuska & Teigland, 2009). A
second mitigation strategy is to avoid strategy conflicts by making sure that
a common vision is communicated and maintained by the partners and by
setting milestones and assuring regular negotiations (Vonortas & Spivack,
2006). A strategic development model supports setting up an agreement of
all goals, values, assets and management activities (Grossman, 2010). This
leads us to the third mitigation strategy. Contracts play an important role
in mitigating problems regarding objectives and their clarity. A proper con-
tractual agreement, in which all goals and the strategy on how to achieve
these goals are clearly stated, helps to prevent conflicts (Domingues &
Zlatkovic, 2015; Rangel & Manuel Vassallo, 2015).
Structure
Structural aspects refer to the question of how PPPs are organized and built
and how partners work together in an efficient way. Regarding structure,
we identified three main risks: roles and responsibilities, decision-making,
and coordination.
Identification: Unclear or insufficient allocation of roles and responsibil-
ities between cooperating partners is a major risk for PPPs (for example,
Chou & Pramudawardhani, 2015; Dubini et al., 2012; Jacobson & Choi,
2008). Project partners have to carry out different roles and responsibilities
at the same time, which can create difficulties (van Ham & Koppenjan,
2001), especially when some of those roles are not clearly defined
(Anderson et al., 2012; Becker & Patterson, 2005). Several authors empha-
size that decision-making in PPPs is a problematic issue (Chou &
Pramudawardhani, 2015; Klijn & Teisman, 2003; Torchia et al., 2015). This
includes the complexity or insufficient advancement of decision-making
processes (Roumboutsos & Anagnostopoulos, 2008), different strategies or
divergent expectations of partners, the lack of a harmonized process
(Petersen, 2011) and the inadequate integration of project members in
these processes (Vonortas & Spivack, 2006). Coordination risks refer to
poor coordination of partners (Zhang, 2005b), a lack of coordination
(Zhang & Soomro, 2016), a lack of transparent structures (Bloomfield,
2006), and to issues caused by the differences regarding the organizational

and managerial structures (Steijn et al., 2011).
Evaluation: Our results show that 63 out of the 159 analyzed papers dealt
with the risk factor structure. Unclear roles and responsibilities induce
unfair distribution of power, which negatively affects the implementation
and vision of a partnership (Vonortas & Spivack, 2006). Moreover, when
there is a lack of clear lines of authority or when there is no clear alloca-
tion of tasks and responsibilities, no one feels responsible for deadlines or
budgets (Little, 2011; Roumboutsos & Anagnostopoulos, 2008).
Furthermore, a lack of coordination negatively influences the progress of
PPPs (Soomro & Zhang, 2016) and causes inefficiently used or wasted
resources (Zhang, 2005a).
Mitigation: To mitigate structural issues, the following strategies are rec-
ommended in the investigated literature. One mitigation strategy refers to
clearly defining roles and responsibilities within the PPP, ideally right at
the beginning of the partnership (for example, Alam et al., 2014; Anderson
et al., 2012; Dubini et al., 2012). An important aspect is that the allocation
of responsibilities has to involve all hierarchical levels (O’Hara et al., 2014).
In this context, the analysis of three community PPP projects showed that
the focus on democratic and participative approaches helped to enable
more open discussions and to build trust (Nisar, 2013). Furthermore, clear
regulation will help to specify each other’s roles and responsibilities (Chung
& Hensher, 2015). Another mitigation strategy is the development and
implementation of appropriate decision-making structures (Currie &
Teague, 2015). Here, central authorities can assist in the development of a
common vision of the cooperation, to define and regulate milestones and
to facilitate regular negotiations and decision-making mechanisms
(Vonortas & Spivack, 2006). Furthermore, a clear framework including
milestones, targets, and rules that increase the transparency of a project can
mitigate the risks (Meidute & Paliulis, 2011). However, partners must plan
the defined elements to be as realistic as possible and need to monitor and
evaluate them constantly (Nisar, 2013).
Commitment
Commitment refers to the question of how much individuals identify with
the PPP and its goals, how loyal these individuals are to the PPP and
whether they are willing to put sufficient effort into it. In our analysis we
recognized risk factors concerning the identification with the project and
regarding the engagement of the partners.
Identification: When partners do not identify themselves with the PPP,
major challenges can arise and a negative attitude or pessimistic behavior
might be the consequence (Soomro & Zhang, 2016; Wang, 2015; Weihe,
2008). Fourie and Burger (2000) also argue, partners may have an incentive
to run a PPP only to serve their own interests before meeting the stated
mutual objectives. Our second subfactor refers to the engagement of the
partners. Risks regarding this aspect are, for example, a lack of motivation
(Parker & Hartley, 2003), an unwillingness to collaborate (Monios &
Lambert, 2013; Zhang, 2005b), or a reluctance to take risks or to invest
(Monios & Lambert, 2013). The involvement and participation in the stra-
tegic process and during the whole project are important in this context
(Koppenjan, 2005) and a lack of commitment will have an immense nega-
tive influence on the whole project.
Evaluation: In sum, the risk factor commitment is discussed by 62 out of
159 papers. Even when both partners are committed to the PPP at the
beginning, they may feel distant after a while and unwilling to collaborate
further (Klijn & Teisman, 2003). During the course of the project, motiv-
ation can decrease if partners use benefits only for their own purposes
(Wang, 2015). A lack of trust and commitment in a PPP can also impede
knowledge transfer, innovation, or the development of new skills
(Fischbacher & Beaumont, 2003). Furthermore, partners tend to follow
their own strategies and pay less or no attention to the other partners’ busi-
ness if they are not in some way involved (Edelenbos & Klijn, 2007).
Another impact of missing commitment is uncertainty about the partners
interests and preferences (Ni, 2012).
Mitigation: To mitigate commitment issues in a PPP, partners should
establish stable framework conditions that offer enough freedom for both
partners and determine incentives and rules for collaboration (Brinkerhoff
& Brinkerhoff, 2011; Weiermair et al., 2008). A high willingness to com-
promise and to collaborate is essential to enhance commitment and should
be guaranteed through shared values and goals along with open communi-
cation (Jacobson & Choi, 2008). Within the contract, rewards and even
penalties can be appropriate and function as incentives for services to be
delivered on time (Nisar, 2013). Additionally, given the complex nature of
a PPP, managers have to work together collaboratively, especially when cer-
tain circumstances change (Heurkens & Hobma, 2014).
Environment
The definition of environment in our analysis is based on factors externally
influencing PPPs. These risks cannot—or can only partially—be influenced
by the PPP partners. We identified the following environmental risks: polit-
ical risks, demand/revenue risks, risks related to a competitive environment
and unpredictable incidents.
Identification: Regarding political risks, unstable governments (for

example, Currie & Teague, 2015; Little, 2011), legal risks (for example,
Oblak et al., 2013), political uncertainty (Durand et al., 2015; Wang, 2015),
lack of political support (Jacobson & Choi, 2008; Zhang, 2005b), a poor
regulatory framework or governmental restrictions (Zhang, 2005b) are
mentioned in the analyzed literature. Another environmental risk refers to
demand or revenues. Researchers report low ridership, a decreasing number
of students attending schools or universities, or the unsatisfying actual use
of a certain infrastructure project (Leruth, 2012; Reeves, 2003; Siemiatycki
& Friedman, 2012). An additional environmental risk is the competitive
environment. For example, problems can arise in the PPP when (private)
competitors get too strong and the capital market is weak (Zhang, 2005b).
Further issues that can occur in PPPs are unpredictable incidents such as
geotechnical conditions (Roumboutsos & Anagnostopoulos, 2008), extreme
weather conditions (Little, 2011), natural and unavoidable catastrophes
(Wojewnik-Filipkowska & Trojanowski, 2013), terrorism and war (Little,
2011) or force majeure (Clifton & Duffield, 2006).
Evaluation: According to our analysis, 57 out of 159 papers dealt with
the risk factor environment. For some PPPs, the political risk is most
important, because the project stands and falls with changes in law affect-
ing PPPs (Wojewnik-Filipkowska & Trojanowski, 2013). This political risk
often results in a reestablishment of conditions and agreements in the PPP
contract (Byoun & Xu, 2014; Heurkens & Hobma, 2014). Unrealistic
demand forecasts can lead to tension between partners and to legal con-
flicts (Siemiatycki & Friedman, 2012), and sometimes demand risks require
additional negotiation efforts between partners (Carbonara et al., 2015).
Some PPPs might fail due to a monopolistic situation or the nature of the
private sectors’ competitive environment (Zervos & Siegel, 2008).
Mitigation: The success of PPPs strongly depends on the environment in
which the projects operate, and often certain circumstances cannot be
influenced by the partners but by the government. Government authorities
can support PPPs by developing an adequate legal framework for them and
by attracting private investors with good social and economic conditions
(Zhang, 2005b). The government furthermore needs to guarantee that the
legal status of the PPP is consistent during the project duration. Hence,
one mitigation strategy is to gain support and commitment from stakehold-
ers and the government through committee meetings, detailed reports or
tours for council members, and external communication with stakeholders
(Jacobson & Choi, 2008). Risks regarding the competitive environment and
demand can be minimized by looking for private enterprises or partners
with experience in given market (Weiermair et al., 2008). Unpredictable
risks can be mitigated through proper calculations and advance analysis
that include the economic, financial, legal and political complexities of such
events (Caselli et al., 2009). Nevertheless, partners will never foresee all
possible situations and stakeholder actions.
Communication
Communication is the act of transmitting the right information to the right
person at the right time. We identified three main risks regarding commu-
nication, namely the interaction between partners, shared information, and
communication at the right time.
Identification: Interaction barriers include the lack of communication
(Anderson et al., 2012; Koppenjan, 2005), the intensity of interaction
(Weihe, 2008), the complexity of communication processes (Paez-Perez &
Sanchez-Silva, 2016) and the lack of interpersonal communication
(Trafford & Proctor, 2006). Risks regarding shared information refer to
information asymmetry (Ni, 2012), the handling of confidential information
(Vonortas & Spivack, 2006) and the quality of information flow
(Wojewnik-Filipkowska & Trojanowski, 2013; Zheng et al., 2008).
Moreover, differences in language, culture or power may pose the risk of
the right information not being at the right place for the right person
(Trafford & Proctor, 2006). Risks concerning communication at the right
time often refer to the initial phase of a PPP. Especially at the beginning,
before the contracts are signed and the working phase starts, partners
might not focus sufficiently on communication (Murphy et al., 2016).
Evaluation: Of the analyzed papers, 50 of 159 articles referred to commu-
nication as a risk factor. Communication risks have several negative
impacts. A lack of communication and close interaction with strong links
between the partners can impede knowledge sharing (Nissen et al., 2014).
If there is no open communication between the partners, difficulties in
understanding each other and problems in reaching a satisfying agreement
may arise (Jacobson & Choi, 2008). If communication rules are not
embedded in the organizational structure, the consequences can be unstruc-
tured information with conflicting ideas and expectations (Koppenjan,
2005). Moreover, poor communication can negatively influence trust
(Fischbacher & Beaumont, 2003), hinder the ability to react adequately to
unforeseen situations or impact the commitment to the PPP (Domingues &
Zlatkovic, 2015).
Mitigation: One mitigation strategy to foster the sharing of information
and the interaction between partners is to establish frequent communica-
tion, for example, through weekly meetings or regular exchange (Monios &
Lambert, 2013; Nisar, 2007b). In the early stage of a partnership, the goals
of a project are usually not clearly defined; therefore extensive interaction
is required before partners reach a contract agreement (Murphy et al.,

2016). In addition, there is also a need for communication through differ-
ent channels, such as personal communication, meetings or e-mails (Forrer
et al., 2010). Moreover, project partners have to establish an open and
transparent communication (e.g., Ahadzi & Bowles, 2004; Li et al., 2005;
Trafford & Proctor, 2006). In this context, trust can foster open communi-
cation (Fischbacher & Beaumont, 2003; Forrer et al., 2010), but building
trust takes a long time and has to be continuously developed (Forrer et al.,
2010). A mitigation strategy to handle information risks is the implementa-
tion of a regulatory framework to foster information exchange or informa-
tion sharing between partners (Garcia Martinez et al., 2013). However,
good communication among partners requires appropriate communication
skills (Ni, 2012). Each partner has to know how best to communicate
(Currie & Teague, 2015) and has to understand and promote their ambi-
tions and interests (Fischbacher & Beaumont, 2003).
Trust
Trust is of particular interest to organizations because it can influence the
business performance between partners (Lane & Bachmann, 1998). It is
defined as an expectation by one partner of the acceptable behavior of the
other partner (e.g., neither party will be exploited; Lane & Bachmann,
1998). In this analysis, three main risks related to trust could be found,
namely monitoring, trust building and transparency.
Identification: We identified monitoring respectively control mechanisms
as one of the most discussed issues regarding trust in PPPs (for example,
Boyer, 2016; Chung, 2016; Fourie & Burger, 2000; Nisar, 2007a; Reynaers
& Grimmelikhuijsen, 2015; Robinson & Scott, 2009; Soomro & Zhang,
2016). In this context, some authors claim that the public sector does not
always have enough monitoring capacity to ensure the right quality output
(Nisar, 2007a). Another important issue refers to trust building. Trust
building between public and private partners needs to be carefully imple-
mented over time and is a long-developing process (Dubini et al., 2012;
Kakabadse et al., 2007). However, too much trust can also be critical for
the partnership if the relaxed attitude of partners is predominant and leads
to situations in which trust turns into distrust (Edelenbos & Klijn, 2007).
The third issue refers to a lack of transparency. Loosemore and Cheung
(2015), for example, state that if there is no trust established in a PPP pro-
ject, confidential information exchange is not going to happen and there-
fore holistic thinking is absent (Loosemore & Cheung, 2015).
Evaluation: Our results show that 49 out of 159 papers covered the risk
factor trust. Too much monitoring can erode trust and therefore put the
whole project in danger (Grossman, 2012). As reported in a case by

Siemonsma et al. (2012), the monitoring process became an unnecessary
burden and enforced penalties and bonus regimes that challenged the
whole project. Furthermore, Weihe (2008) notes that if the trust level
decreases, the cooperation will become ineffective. That means, if trust can-
not be built over time, information will not be shared sufficiently during
the lifecycle of the project and the development of an effective cooperation
is in danger (Zheng et al., 2008). A lack of transparency can impact the
whole project and even if the partners force transparency in the PPP,
the complexity causes uncertainty regarding several parameters especially if
the responsible persons leave after contract closure (Reynaers &
Grimmelikhuijsen, 2015).
Mitigation: Trust building can be supported by supervising and careful
auditing (Marques & Berg, 2011). In a case reported by Alam et al. (2014),
the sharing of information, a mutual understanding and formal and infor-
mal meetings supported the establishment of trust and an intangible net-
work among the partners. Furthermore, mutual trust can reduce potential
conflicts in PPPs (Alam et al., 2014). Another example of trust building is
mentioned by Binza (2008), where partners had to act with as much reli-
ability as possible to ensure the project’s success. To support a transparent
collaboration, open and honest communication as well as clear roles and
responsibilities for all partners involved in the PPP are crucial (Forrer
et al., 2010; O’Hara et al., 2014). In the case of Kakabadse et al. (2007), the
informal approach and honesty between the partners were important to
successfully working together.
Based on our review, we identified the most important risk factors in
PPPs and related those findings to risk identification, risk evaluation, and
risk mitigation. A summary of our results is provided in Table 1. In the
next section, we reflect on some results of our in-depth analysis and
develop a conceptual model.
Discussion and conclusion

Connection to existing theories
Although this study is not built upon specific theories and terminologies, it
is necessary to embed the results in the extant body of literature and relate
the identified factors to existing theories.
In our study, we identified “contracts” as one of the most important risk
factors. In this context, the contract theory introduced by Holmstr€ om and
Hart (1987) is particularly relevant. It refers to the optimal design of con-
tracts and the behavior of the parties involved. This theory addresses the
issue that individuals tend to satisfy their own needs rather than to
contribute to mutually beneficial outcomes (opportunism). Our findings on

the risks in contractual design, more precisely on missing transparency and
inadequate risk distribution, provide additional evidence of this theory. As
in Pandey et al. (2018), the theoretical framework on social impact bond
contracts draws upon Spiller’s transaction cost theory of regulation (TCR)
(Spiller, 2010). This framework illustrates that in addition to moral hazards
and adverse selection, public-private contracts also deal with governmental
and third-party opportunism. In Pandey et al. (2018) the illustration of
standard opportunistic behavior, governmental opportunism and third-
party opportunism is very instructive and shows overlaps with our results
concerning contracts. In particular, our results on the incompleteness of
contracts (e.g., because future conditions can change and are not entirely
predictable) are related to this theoretical framework. Another standard
opportunistic behavior, also mentioned in Pandey et al. (2018), is transac-
tion cost theory which focuses on the distribution of rights (Brousseau &
Glachant, 2002). Our results on contracts show an interesting overlap with
this theory because contract ambiguities and insufficient distribution of
roles and rights are similarly indicated in our results. Concerning contract
negotiation, the identified issue of insufficient process agreement seems
strongly connected with the transaction cost economics theory (TCE). TCE
refers to the inefficiency of contracts due to transaction costs (Williamson,
1989). Additionally, the problem of opportunism is still present and there-
fore transaction costs due to issues such as delays, fraud or asymmetric
information flow can arise (Williamson, 1991). Another relevant theory
concerning negotiation is the principal-agent theory which addresses the
issue of information asymmetry between partners. This issue must be care-
fully considered when working together and setting up contracts, for
example, by offering appropriate incentives and monitoring the agent
according to their performance (Brown et al., 2006).
Concerning our risk factor “resources,” we see an overlap with the
resource dependence theory. Pfeffer and Salancik (1978) work on resource
dependence theory, describes the influence of external resources on strategy
and organizational behavior. The authority over particular resources can
increase the power of one partner over the other but also reduce uncertainty
and dependency (Hillman et al., 2009). We found several pieces of evidence
in the analyzed studies to support the resource dependence theory.
The stakeholder theory introduced by Freeman (1983) addresses the neces-
sity to meet the needs of the organizations’ stakeholders and to respond to
the challenges of the external environment. According to Freeman, this
environment includes all groups and individuals that can affect or are
affected by the organization. When comparing this with our analysis, we
find an overlap with the risk factor “environment.” For example, an unstable
Table 1. Summary of the Main Results.
Contract: Identification Evaluation Mitigation
(Re)negotiation
duration of negotiation time-consuming detailed (re)negotiation procedure
insufficient process agreement high costs
asymmetric and imperfect information delays
personal conflicts
Incompleteness
impossibility of completing contract unclear distribution of tasks and responsibilities contractual flexibility
unforeseen risks endangered financial commitment regular contractual changes
contractual gaps fostering renegotiations
Contractual design
contract ambiguities disorganized information and confusing information formal guidance (e.g., expectations, responsibilities,
missing flexibility communication)
lacking details
missing transparency
inadequate risk distribution
Resources: Identification Evaluation Mitigation
Finance
poor initial cost estimates revenues do not materialize pay attention in the early stage of the PPP
financial complexity management restrictions of partners regular controls with certain PPP standards
transaction costs and costs of private financing clear and consistent reporting
availability of resources support through government strategies to raise
financial capital
government agreement to pay revenue shortfall
Staff
unqualified staff poor-quality outcome recruit highly qualified workforce
availability of staff consult internal experts or refer to external advisors
collective vs. individual working behavior regular training and continuous education
resistance to change
Time
different time horizons delays in completion communicate detailed time schedule, milestones and
peaks and troughs in project duration increasing costs fixed deadlines
penalties for late completion

management need a constant focus from the
beginning until the end of the project
(continued)
1193
Objectives: Identification Evaluation Mitigation
Different/Conflicting goals
profit maximizing vs. public service increase conflicts awareness of different/conflicting goals
short-term revenues vs. long-term societal well-being misinterpretations and asymmetric information flow understanding the partners’ goals
1194
decrease of costs vs. job creation project standstill/failure open communication of goals
Strategy/Vision
different perspectives different mindsets communicate common vision
different interests follow their own strategy set goals at the very beginning
heterogeneous background strategic development model
Ambiguity
unclear policy commitment contractual agreement
RYBNICEK ET AL.
unclear goal setting clearly defined objectives

Structure: Identification Evaluation Mitigation
Roles/Responsibilities
different roles at the same time negative effect on implementation involvement of all hierarchical levels
lack of clear definition of roles/responsibilities possibility of failure increases clear regulation of roles/responsibilities
insufficient allocation appropriate structural framework
lack of clear lines of authority
process of distribution
Decision-making
complexity missing sense of responsibility appropriate decision-making structures
insufficient progress
different expectations of partners
lacking coordination of process
Coordination issues
lack of transparent structures negative impacts on project progress implementation framework
lack of coordination wastes resources implementation of a central authority
structural diff. between partners
Commitment: Identification Evaluation Mitigation
Identification with project
different incentives no project occurrence stable framework conditions
negative attitude partners can become disconnected rules and incentives established in contract
pessimistic behavior no learning and no knowledge transfer rewards and penalties
individual vs. common interests no improvement in service quality shared values and goals
Project engagement
lack of motivation no innovation efficient and open communication
unwillingness to collaborate partners follow stand- alone strategies understand indiv. views
unwillingness to invest uncertainty and instability risk sharing, decision rights, flexible
reluctance to take risks management rights
lack of participation and involvement whole organization involved
management has to work together
Environment: Identification Evaluation Mitigation
Political risk
unstable government uncertainty government should develop legal framework for PPP
legal requirements project cancelation government should maintain good
political uncertainty reestablishment of PPP conditions economic conditions
lack of political support guarantee legal status during PPP
poor regulatory framework positive attitude from government
government restrictions committee meetings, reports, external communication
(stakeholders)
Demand/Revenue risk
revenue shortfalls tension and legal conflicts experienced partner
low demand/use monopoly situation
competitive environment project failure
Unpredictable incidents
geotechnical conditions no financial support any more due to financial crisis good preparation
extreme weather conditions
natural catastrophes
terrorism/war
force majeure
Communication: Identification Evaluation Mitigation
Interaction
lack of communication impedes knowledge sharing high frequency of information (e.g., weekly meetings)
intensity of interaction waste of resources different channels
complexity of communication processes time-consuming and cost-intensive renegotiation clear structure
lack of interpersonal communication difficulties understanding each other open and transparent communication
building trust
Information
quality of information flow unstructured communication processes if not stable framework
information asymmetry firmly embedded communication skills
handling of confidential information negative influence on trust and commitment understand partners’ ambitions and interest
language/cultural/power differences
availability of information
Trust: Identification Evaluation Mitigation
Monitoring
insufficient monitoring capacity negative effects on the whole project legal safeguarding
too much monitoring unnecessarily burden experts in financial and transaction processes
unsuitable monitoring methods probability of project failure

Trust-building
time-consuming lack of willingness to share information careful auditing of contracts
long-term process ineffective cooperation formal and informal meetings
1195
trend to distrust reliable actions

Lack of transparency
insufficient exchange of information complex parameters open and honest communication
absence of comprehensive thinking clear roles and responsibilities
honesty between cooperation partners
government, a lack of political support, demand shortfalls and a strong com-

petitive environment can lead to major problems within a PPP.
Interrelation between risk factors

Our analysis also reveals multiple interrelations between different risk fac-
tors. For example, it immediately becomes apparent that the risk factor
“contract” plays a central role in PPPs. Interestingly, contracts are not only
the most discussed risk factor in PPPs, but they are also often part of the
solution. Contracts are a mitigation strategy for almost every other risk fac-
tor. Partners can determine the financial administration of the project,
regular budget reporting, staff training, detailed time schedules, milestones
or deadlines in their contracts, thus mitigating the risks. They can agree on
the goals of a project and fix a strategy to achieve those goals. They can
define decision-making structures or designate superordinate authorities.
Even “soft” factors can be influenced by contracts. Partners, for example,
can set regular meetings, define different communication channels or estab-
lish incentives for participation within the projects.
However, some researchers have recently doubted the importance of con-
tract characteristics in the success of PPPs and emphasize the relevance of
other, for example, relational characteristics (for example, Klijn &
Koppenjan, 2016; Warsen et al., 2018). In fact, our study also provides
strong support in that regard since we identified a vast body of literature
referring to communication and trust with several interrelations to other
factors. Based on our in-depth analysis, we conclude that it is because of
that intense interrelation with other factors that such great importance is
ascribed to contracts on the one hand and relationship factors on the other.
These multiple interrelations can be explained by recent results that suggest
that both contracts and relationships serve as coordination between partners
(Caldwell et al., 2017). Interestingly, especially in long-term projects or
projects with uncertainties, the relational coordination becomes an import-
ant complement to contractual safeguards (Caldwell et al., 2017).
Dynamics of risk factors

We also found some evidence that certain risks are more likely at the
beginning of PPPs, while others might occur over the course of time. As
partners often work together over a long time period, risks can change.
Not without good reason, risk management is defined as a continuous and
iterative process (Chinyio & Fergusson, 2003). Although there are already
risk management frameworks that consider dynamic processes over the
whole project (for example, Zou et al., 2008), little is known about
differences regarding the actual impact and adequate mitigation strategies

on the level of individual risks. Statements like “the startup phase appears
critical” (Caldwell et al., 2009) point toward differences regarding the pro-
gress of a PPP and there are logical reasons for an approach that addition-
ally considers different phases. During our analysis, we exploratively
located the identified (sub) factors on a timeline. For example, risks regard-
ing the contractual design naturally occur at the beginning (planning
phase) of the collaboration, time delays or the acquiring of highly qualified
human resources might be important during the actual process of collabor-
ation (realization phase), and revenue risks become effective at the end
(operation phase). However, for most risk factors it remains unclear to
what extent their impact varies over the course of time. Therefore, future
research should investigate the relationship between different factors and
different phases of PPPs. Risk management will become more effective
when the partners better understand what they should keep their eye on
during the project.
Conceptual model
Based on the above-mentioned considerations, we derived a conceptual
model to enhance the understanding of risks in PPPs (please see Figure 2).
In the development of this model, we first identified the main foci of all
risk factors and then depicted the interrelations between and dynamics of
different risk factors to obtain a more sophisticated understanding about
the scope, links and temporal relevance of each factor. In a second step, we
strived to abstract and generalize our findings to allow a more holistic
Figure 2. Conceptual model.

perspective as stated by the research goals. This model considers the fol-
lowing elements:
Firstly, we introduce so-called risk layers in our framework. This idea is
based on our analysis, in which we repeatedly noted that the identified fac-
tors refer to different aspects within a PPP. Some of the factors mainly
refer to issues and challenges within the actual project (e.g., objectives or
commitment), while others relate to threats attributed to the participating
partners (e.g., structure or resources). Further factors concern the relation-
ship between the partners (e.g., communication or trust) and yet others
refer to issues induced by the overall framework in which a PPP takes place
(e.g., contracts or environment).
Secondly, building on our assumption that the importance of factors may
vary over time, we suggest a top-down approach regarding these layers when
identifying, evaluating or mitigating risks in the earlier stages of a PPP such
as exploration and planning. Here, management is mainly guided by the
objectives to be achieved. For example, based on certain objectives (risk layer:
project), partners with the required resources are sought (risk layer: partners),
initial communication channels are established (risk layer: relationship) in
order to finally agree on a contract (risk layer: framework). Conversely, in the
later stages of a PPP, such as realization and operationalization, we suggest a
bottom-up approach. In these stages, management is mainly focused on the
contract the partners have agreed on. For example, based on a certain con-
tract (risk layer: framework), formal and informal communication takes place
(risk layer: relationship), which positively or negatively influences the willing-
ness to share certain resources (risk layer: partners) to eventually achieve con-
tractually defined objectives (risk layer: project).
Thirdly, based on our finding that the factor contract as well as the rela-
tionship factors are strongly interrelated to all other factors, we assume
that this is because they play an important role in the coordination of the
project (Caldwell et al., 2017). Therefore, we determine the framework layer
and the relationship layer as the base of our model, where the coordination
between partners takes place and other layers build upon it. In fact, it is
one of the most important tasks for all participating parties to ensure the
functionality of this coordination base as issues here can impact the whole
project and all other factors.
Finally, we assign some of the most relevant theories to the particular
risk layers. In this context, it is important to acknowledge that each layer
and each factor might have a different theoretical background as discussed
in the previous section on the connection between our findings and the
existing theories.
Summing up, our model provides a compact overview about the identi-
fied risk factors, assigns them to risk layers with different foci and relates
them to relevant theories. Furthermore, we indicate the varying importance

of certain risk factors over the cycle of a project and point out those layers
with a coordinative background. This model is a clear representation of
main aspects we derived from our literature review and can serve as a
guide within the development and realization of PPPs.
Further research suggestions and limitations

We now suggest some issues that could be further discussed in PPP
research. First, besides the reported risk factors, we identified several other
risk factors, such as different cultures, partner selection, role of leadership
or knowledge and technology transfer. Analyzing these factors in detail
could provide helpful information for practitioners in PPP projects.
Second, the current literature does not differentiate much regarding the
size of the participating partners. However, we assume that the size of com-
panies or public institutions will also influence the occurrence of risks and
the availability of appropriate mitigation strategies. Future research should
examine this question to allow organizations to focus on certain risk man-
agement strategies according to their size. Third, risks and challenges in
developing countries may well be a lot different to those of developed
countries (for example, political risks) and the approach to risk manage-
ment might differ in those countries too. Further research is needed to
understand the differences between developed and developing countries
with regard to risks and risk management in PPPs.
Methodological choices always result from a weighing of advantages
and drawbacks. First, the process of literature selection encompasses cer-
tain limitations. Some relevant articles might be excluded due to the for-
mulated definitions of the exclusion criteria, others remain undiscovered
due to the selection of our search terms, and still others were not
included because of the determined time frame. Second, although we
conducted a systematic review to minimize any bias and ensure the rep-
licability of the investigation, a certain degree of professional judgment
cannot be eliminated within a review of social science literature (Denyer
& Tranfield, 2010). The definition of the factors, the choice of the risk
management framework or the assessment of the importance of certain
factors is subject to fundamental decisions. Although, our decisions were
guided by methodological considerations and recommendations of previ-
ous research or by the synopsis of our quantitative and qualitative syn-
theses, we still have to acknowledge that other judges might have drawn
different conclusions or might have rated some aspects differently (inter-
rater reliability).
Conclusions
Although a vast body of literature is already available, to date there exists
no overarching overview that synthesizes risk factors that are relevant to all
PPPs regardless of the actual project or sector. The findings of our study
contribute to the existing literature by providing a cross-sectoral under-
standing of risks in PPPs and relating our insights to elements of current
risk management frameworks. Practitioners can use our results as an aid to
build awareness and to identify, evaluate and mitigate actual risks when
implementing a PPP. The conceptual model we developed shows different
risk layers and suggests that the importance of risks might vary over time.
We recommend that future research investigates the relationship between
different factors and different phases of PPPs. Risk management will
become more effective when partners better understand what they need to
keep their eye on during the PPP.
Note
1. BTO—build, operate and transfer; DBFO—design, build, finance and operate; BOOT—
build, own, operate and transfer; DBFOM—design, build, finance, operate and manage;
BOO—build, own, operate.
Notes on contributors
Robert Rybnicek is associate professor at the Department of Corporate Leadership and
Entrepreneurship at the University of Graz, Austria. He specialized in public and strategic
management. Recent research includes collaboration management and leadership.
Julia Plakolm is a research assistant at the Department of Corporate Leadership and
Entrepreneurship at the University of Graz, Austria. Her research interests include public
management and cross sector collaboration, entrepreneurship and leadership.
Lisa Baumgartner is a former research assistant at the Department of Corporate Leadership
and Entrepreneurship at the University of Graz, Austria. Her research interests include public
management and leadership development.
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Risks in Public Private Partnerships A Systematic Literature Review of Risk Factors Their Impact and Risk Mitigation Strategies

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Public Performance & Management Review

ISSN: 1530-9576 (Print) 1557-9271 (Online) Journal homepage: https://www.tandfonline.com/loi/mpmr20

Risks in Public–Private Partnerships: A Systematic

Robert Rybnicek, Julia Plakolm & Lisa Baumgartner

To link to this article: https://doi.org/10.1080/15309576.2020.1741406

© 2020 The Author(s). Published with View supplementary material

Published online: 10 Apr 2020. Submit your article to this journal

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Risks in Public–Private Partnerships: A Systematic

CONTACT Julia Plakolm julia.plakolm@uni-graz.at Department of Corporate Leadership and

could not sustain otherwise (Brinkerhoff & Brinkerhoff, 2011).

Theoretical foundations related to PPP research

economic backgrounds such as the transaction cost theory, property rights

personal and corporate experience, intuitive insights, brainstorming,

In the subsequent sections, we interrelate our findings on risks in PPPs

“purchasing power par” or “public procurement procedur,” leaving

Figure 1. Risk factors in PPPs.

environment (36%), communication (31%), and trust (31%). Below, we

each other in terms of recruiting, keeping the right people, consulting

2006), and to issues caused by the differences regarding the organizational

Identification: Regarding political risks, unstable governments (for

is required before partners reach a contract agreement (Murphy et al.,

whole project in danger (Grossman, 2012). As reported in a case by

Discussion and conclusion

contribute to mutually beneficial outcomes (opportunism). Our findings on

 unclear goal setting  clearly defined objectives

 trend to distrust  reliable actions

government, a lack of political support, demand shortfalls and a strong com-

Interrelation between risk factors

Dynamics of risk factors

differences regarding the actual impact and adequate mitigation strategies

Figure 2. Conceptual model.

them to relevant theories. Furthermore, we indicate the varying importance

Further research suggestions and limitations

Ankrah, S., & Al-Tabbaa, O. (2015). Universities–industry collaboration: A systematic

Freeman, E. R. (1983). Strategic management: A stakeholder approach. Advances in

Swedish triple helix e-government initiative. International Journal of Project

Zhang, X. (2005a). Critical success factors for public–private partnerships in infrastructure

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unclear goal setting clearly defined objectives

trend to distrust reliable actions