Exploring strategies to reduce moral hazard and adverse selection of Ghanaian Public-Private-Partnership (PPP) Construction Projects

Owusu-Manu, D.-G. and Kukah, A. and Boateng, F. and Asumadu, G. and Edwards, D.J. (2020) Exploring strategies to reduce moral hazard and adverse selection of Ghanaian Public-Private-Partnership (PPP) Construction Projects. Journal of Engineering, Design and Technology. ISSN 1726-0531

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Abstract

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 objective of this study was to explore strategies to reduce moral hazard and adverse selection 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 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 signalling; Risk and contract management; and Cooperation and finance factors.

Practical implications: The findings of this 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.

Item Type:	Article
Identification Number:	10.1108/JEDT-05-2020-0195
Dates:	Date Event 3 July 2020 Accepted 10 August 2020 Published Online
Uncontrolled Keywords:	Strategies, moral hazard, adverse selection, Public-Private-Partnership, construction projects
Subjects:	CAH13 - architecture, building and planning > CAH13-01 - architecture, building and planning > CAH13-01-01 - architecture CAH13 - architecture, building and planning > CAH13-01 - architecture, building and planning > CAH13-01-02 - building CAH13 - architecture, building and planning > CAH13-01 - architecture, building and planning > CAH13-01-04 - planning (urban, rural and regional)
Divisions:	Faculty of Computing, Engineering and the Built Environment > College of Built Environment
Depositing User:	Euan Scott
Date Deposited:	07 Jul 2020 13:32
Last Modified:	20 Jun 2024 11:45
URI:	https://www.open-access.bcu.ac.uk/id/eprint/9444

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