Do Public Private Partnerships Deliver Better Outcomes? Delays and Cost Overruns in Highways Projects in India

The paper compares performance of the Public Private Partnerships (PPPs) highways relative to the traditionally build highways. The focus is on the comparison of the project delays (time overrun) and cost overruns for the two types of projects. The paper also examines analyse the fiscal and political considerations behind the rampant use of PPPs for roads and infrastructure services. The empirical analysis is based on a dataset of 502 national highways projects. The project delays for the PPPs and the traditional government (non-PPP) highway projects are compared using various project specific features as controls. We control for various factors having bearing on project execution time, such as, project size, proximity to urban centres, local population density, and the choice of procurement contract. Moreover, we compare our finding with the available evidence on the issues of interest. We find that the project execution is faster for the PPPs; the time overruns for PPPs project are significantly shorter than the traditional government managed highway projects. Our data and the other available evidence also suggest that the quality of PPP roads is better than the traditional highways. However, the overall quality of road services under PPPs is deficient on several counts. PPPs contracts can be used to reduce project delays. The PPP contractors have strong interest in completing the project as soon as possible. One of the significant benefits of faster project delivery is that the economy gets to benefit from the road services sooner than later. Quality of PPP roads is also better. Both these factors are important for improving competitiveness of the economy. However, there is need for a regulatory framework for improving other aspects of the road services, such as the safety features of the roads