Quantitative Assessment of the Likelihood of Disputes in PPP Projects Using Fault Tree Analysis

Abstract

Disputes involved in public–private partnership (PPP) projects destroy the relationship between governments and private partners and generate huge losses. To multiply the chances of successfully preventing disputes, a holistic understanding of how a PPP dispute occurs is necessary. This paper contributes to the PPP dispute studies domain in (1) identifying various contributors that lead to the formation of PPP disputes at different levels, (2) proposing a fault tree (FT) framework of a PPP dispute, and (3) evaluating the likelihood of a PPP dispute and displaying the weakest part of a PPP project. First, three basic components that drive the development of PPP disputes are identified: project uncertainty, opportunistic behaviors, and contractual incompleteness. Second, scenario modeling of PPP disputes through fault tree analysis (FTA) depicts a more intelligible structure of PPP disputes. Furthermore, the fuzzy sets evaluation method was employed to compute the fuzzy occurrence likelihood of a PPP dispute. The results indicate that dispute is inevitable in PPP projects (with an occurrence likelihood of 0.9464). Additionally, opportunism is the dominant dispute inducer in PPPs. Our findings are expected to help PPP participants understand how various drivers contribute to the occurrence likelihood of PPP disputes where past data is inadequate. Then, more cost-efficient and appropriate preventive strategies can be developed based on the assessment to minimize the occurrence of PPP disputes.