A framework to evaluate the financial viability of urban public-private partnership projects

As public governments around the world face limited funding capacity for capital-intensive projects, their attention is turned towards the private sector for financing. Public-private partnerships (PPPs) have emerged as an alternative project delivery method in which the public and private sectors work together for the provision of urban projects. In deciding whether to enter into a PPP agreement, both the public and private will have to conduct the financial viability of the partnership. This thesis aims to provide a framework for estimating a project’s financial viability of large-scale urban projects, by addressing the crucial components associated with large-scale urban projects. These components include the type of PPP arrangement, contract length, financial structure, project cash flows, and capital budgeting. As part of the overall financial viability, the framework will also take into consideration the effects of uncertainties associated with a project or risks on the project’s profitability; then, various risk management strategies that aim to provide better hedging of risks will be discussed.