Enhancing the Public Investment in Public-Private Partnerships Using System Dynamics Modeling

Public-Private Partnership (PPP) programs have been adopted to leverage private funding for the development of public infrastructure and services, thereby relieving public fiscal pressure. However, the complexity and length of PPP contracts can lead to higher costs for the public sector. Using data from more than 700 PPPs that integrate the UK Private Finance Initiative and Private Finance 2 programs, this study analyzes the long-term financial implications of these programs using System Dynamics. Causal-loop diagrams were developed to illustrate the causal structures that generate the long-term financial effects of PPPs on the public sector. The paper offers potential strategies to enhance the performance of PPP programs. This study contributes to closing the research gap identified in previous research for more efficient PPP programs by uncovering their dynamics and offering suitable policies for governments to improve their outcomes.