Mitigating contractual issues in public-private partnership projects in Sri Lanka

Abstract

The government-initiated infrastructure development projects which have considerable private sector involvement in attaining project goals are a sign of economic growth and are common across many developed countries. When the contractual relationship between the government party and the public or private party is considered, where there is a high risk for the private party in maintaining the responsibilities and contributing to the public assets or public service, this is defined as a Public Private Partnership (PPP). However, due to the complexities of PPP in Sri Lanka, various contractual concerns can be observed. Furthermore, no systematic method has been established in Sri Lanka to resolve contractual difficulties related to PPP. As a result, the purpose of this research is to investigate contractual problems in PPP projects and to devise effective solutions to address these concerns. As a result of the literature review, the private sector's engagement in public projects and the features of PPP were identified. Further to that, prevailing problems with numerous contractual agreements that aid in monitoring, observing, and controlling the contractual programmes in PPP projects were revealed as a result of contractual issues. Questionnaire surveys were then undertaken to examine the contractual issues of a few recognized PPP contractual arrangements. It can be shown that financial difficulties, political involvement, renegotiation, unethical finance exchange, erroneous evaluations by finance merchants, delays and cost overruns, and poor performance were identified as key issues in the studies conducted. Engaging experienced professionals is recommended to cope with the identified difficulties according to the contractual terms and further with strategic decision-making. In conclusion, a summary of prioritised contractual problems and recommended solutions are presented, which can be utilised in minimising PPP contractual challenges in the Sri Lankan construction sector.