An empirical examination of moral hazards and adverse selection on PPP projects

Owusu‐Manu, De‐Graft; Edwards, David John; Kukah, Augustine Senanu Komla; Pärn, Erika; El-Gohary, Hatem; Hosseini, M. Reza

doi:10.1108/jedt-01-2018-0001

Cited by 35 publications

(45 citation statements)

References 34 publications

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“…Moreover, the identified techniques are appropriate as noted by Forza (2002) and Bryman (2012). For instance, the independent t-test of the mean was used to measure the significance of the challenges affecting the bid decisions, and the cut-off point for five-point scale was set at 3.5 (m = 3.5) where m is the test value (Owusu-Manu et al, 2019;Chileshe and Kikwasi, 2014;Field, 2005). Procedures for the single-sample t-test were conducted as outlined in Cronk (2012).…”

Section: Sample Framementioning

confidence: 99%

Perception on challenges impacting bid decision of indigenous building contractors in Dar Es Salaam, Tanzania

Chileshe

Edwards

Kavishe

et al. 2020

JEDT

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Purpose The acknowledged mode of securing work by contractors is through the bidding process. However, the bidding decisions undertaken by some indigenous contractors in developing countries are fraught with challenges that often engender bidding practices (such as collusion through price fixing and intentional lower bidding) and threaten business survival. Therefore, in the quest to better understand these challenges and viable advocate solutions for overcoming them, this paper aims to identify the key challenges impacting the bid decision process by small indigenous building contractors in Dar es Salaam, Tanzania, and establish the strength of their relationship between the pairs of key challenges. Design/methodology/approach A comprehensive literature review was conducted to identify nine challenges impacting the bid decision of indigenous building contractors in Tanzania, which were used to design a questionnaire survey. Data collected were analysed using descriptive statistics, mean score, inferential statistics (One sample t-tests), Kendall’s concordance and correlation analysis. Findings Challenges identified from a literature review were empirically tested using survey responses accrued from 33 participating small indigenous building contractors in Dar es Salaam, Tanzania. The findings illustrate that lack of liquidity, profit returns, lack of equipment, lack of experience of several works and procurement procedures are perceived as being the five most critical challenges. Project location, site accessibility and lack of labour were least critical. The major finding from the correlation analysis was the existence of the strong and positive correlation between “project location” and “site accessibility”. Research limitations/implications The study is limited by its sample and geographical settings which focussed and confined the results on one country, Tanzania. However, the findings can be considered as important for other developing countries wishing to gain insights into the challenges impacting bid decisions. Practical implications Measures for addressing the identified challenges impacting the bidding decisions of the indigenous small building contractors would be undertaken. The findings will enable contractors to not only reconcile the challenges with the industry and in so doing benefit both themselves and the clients but also enable them to be better prepared to deliver contractual obligations and generate socio-economic wealth. Government and policymakers will also be able to appropriately develop macro interventions for managing these challenges, which could be custom-tailored to indigenous small contractors. Finally, improving the ability of local firms to compete in the construction industry has been recognised as having the potential of advancing socio-economic development within the comity of developing countries. Originality/value The study enhances government, client and practitioners’ understanding of the challenges affecting the bidding practices among the indigenous building contractors in Tanzania. This area of investigation has previously been under explored particularly sub-Saharan Africa.

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Section: Sample Framementioning

confidence: 99%

Perception on challenges impacting bid decision of indigenous building contractors in Dar Es Salaam, Tanzania

Chileshe

Edwards

Kavishe

et al. 2020

JEDT

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“…5); N total number of respondents].RII = ∑A*N One Sample T-test is a statistical procedure used to examine the mean difference between the sample and the known value of the population mean. The one sample T-test is used to establish the relative significance of the variables(Ahadzie, 2007;Owusu-Manu et al, 2018).…”

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confidence: 99%

Attributable indicators for measuring the level of greenness of cities in developing countries: lessons from Ghana

Owusu‐Manu

Debrah

Oduro-Ofori

et al. 2020

JEDT

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Purpose The advances in green city growth are widely discussed in extant literature. The benefits of green cities to urban development in recent discussions of sustainability and sustainable development are well documented and cannot be overemphasised. Although a growing study on green building development in developing countries has been advanced in literature, there is a paucity of studies that explore green cities in developing countries. Moreover, evidence of studies that have focussed on green cities development in Ghana is lacking. Because of this identified knowledge gap, the purpose of this study is to establish the indicators/attributes for measuring the level of greenness of cities in developing countries. Design/methodology/approach A comprehensive literature review was conducted to identify the indicators/attributes for measuring the level of greenness of cities in developing countries. This study has adopted the pragmatism as its undergirding research philosophy and the deductive research approach. In terms of methodological choice, quantitative research strategy was used to collect data from experts in sustainable urban development. The primary data retrieved from this study was analysed using descriptive statistics, relative importance index and one-sample t-test. The reliability and validity of this study were measured with the Cronbach’s alpha test. Findings This study established eight indicators for measuring green city development: air quality, water, sanitation, land use, health and safety, transportation, energy and building and construction. It was discovered that the development of green cities should enhance air quality, improve water production and supply, improve management in sanitation, promote mixed and integrative land use, maintain the health and safety of city dwellers, reduce the demand for transportation and formalise public transport, adopt renewable and efficient energy technologies and promote sustainable construction and green buildings. These indicators are key to policymaking and implementation of green cities development. Research limitations/implications This study focusses primarily on Ghana; however, the findings of this study do not limit the generalisability, as it can be used as an example for other developing countries. Practical implications Theoretically, this study adopted quantitative indicators that are reproducible in another geographical context. This study contributively adds to the discourse on sustainability, especially in Ghana, and can be a source of reference to motivate others to conduct further research in related areas. The outcomes of this study will help the local government, policymakers, city stakeholders and industry expertise to gain insights of the overall indicators that underpin green city development. Originality/value This paper attempts to posit in literature the foremost appraisal of green city indicators adaptive in Ghana, which could motivate other developing countries to develop their own green cities.

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“…Construction risks are controlled by way of a network of contracts (Gatti, 2013) and transferred to construction companies which efficiently make available insurance against unanticipated construction costs (Owusu-Manu et al, 2018b).…”

Section: Managing Of Construction Risksmentioning

confidence: 99%

“…Like other governments, the Government of Ghana (GoG) has also shown great interest in the PPP concept, particularly for construction projects (Osei-Kyei and Chan, 2017b). Since 2004, few construction PPP projects in Ghana have been initiated with many of the projects failing to proceed successfully due to a number of reasons including moral hazard and adverse selection (Osei-Kyei and Chan, 2017b;Owusu-Manu et al, 2018b). In Ghana, the Ghana National Housing Project (GNHP), which was the first ever major PPP housing project to be initiated in the country's housing sector failed due to the problems of MHAS (Osei-Kyei et al, 2019).…”

Section: Introductionmentioning

confidence: 99%

“…This serves as an incentive for PPP to be explored in these nations to augment infrastructure development and boost the living standards of citizens (Osei-Kyei and Chan, 2015; Kumar et al , 2018). Owusu-Manu et al (2018b) stated that moral hazard and adverse selection (MHAS) was one of the major challenges affecting PPP construction projects in developing countries; and their study went ahead to explore a number of negative effects of MHAS. McCann et al (2015) in their study too established that MHAS was a challenge in Australian PPP projects and PPP projects’ failure to meet delivery outputs’ minimum requirements.…”

Section: Introductionmentioning

confidence: 99%

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Exploring strategies to reduce moral hazard and adverse selection of Ghanaian public–private partnership (PPP) construction projects

Owusu‐Manu

Kukah

Boateng

et al. 2020

JEDT

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Purpose Conditions of inadequate and asymmetric information when an agent is hired by a principal have resulted in the problems of moral hazard and adverse selection (MHAS) in public–private partnership (PPP) construction projects. The purpose of this study is to explore strategies to reduce MHAS in PPP construction projects. Design/methodology/approach Questionnaires were used to elicit responses from respondents. Mean score ranking was used to rank these strategies while reliability analysis was conducted using Cronbach’s alpha coefficient and level of agreement tested using Kendall’s concordance. Factor analysis grouped the strategies into eight components. Findings From the mean score ranking, monitoring; transfer of risks; screening; managing of construction risks; and increased incentives to control costs were the most significant strategies. The eight components were transparent process and contract, incentives and monitoring, screening and technical assistance, unbundling and benchmarking, funding and small liabilities, information clarification and signaling, risk and contract management and cooperation and finance factors. Practical implications The findings of this study have identified the most significant strategies to reduce MHAS on PPP construction projects to serve as a guide to PPP practitioners in reducing MHAS. Originality/value The output of this research contributes to the checklist of strategies that reduce PPP project failures arising from MHAS and contributes to the development of the agency theory.

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An empirical examination of moral hazards and adverse selection on PPP projects

Cited by 35 publications

References 34 publications

Perception on challenges impacting bid decision of indigenous building contractors in Dar Es Salaam, Tanzania

Perception on challenges impacting bid decision of indigenous building contractors in Dar Es Salaam, Tanzania

Attributable indicators for measuring the level of greenness of cities in developing countries: lessons from Ghana

Exploring strategies to reduce moral hazard and adverse selection of Ghanaian public–private partnership (PPP) construction projects

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