Chapter 6 Impact of Management Control Systems on Sponsors’ Profitability in Ppp Infrastructure Ventures

The attraction of public private partnerships (PPPs) for governments is that the on-ground fructification of infrastructure projects is far higher than the traditional implementation route through public sector or departmental undertakings. Besides, time overruns are also considerably reduced. However, empirical evidence does not clearly establish that PPPs are cost efficient. This coupled with the risk intensity has impacted the long run flow of private capital to infrastructure PPPs and it therefore calls for a more scientific approach to management of profitability related risks. Appropriate management control systems (MCS) could be the answer, provided they can favorably impact profitability. Aggregating data from road, ports, airports, urban infrastructure, railways and power PPP ventures implemented in India, this chapter attempts to study the relationship between MCS and returns to sponsors through regression analysis. The study concludes that multiple MCS have a significant relationship with sponsors’ profitability.