Penalty mechanisms for enforcing concessionaire performance in public–private partnership contracts in Nigeria

Abstract

Purpose

The purpose of this study is to develop penalty measures against concessionaires’ defaults as a mechanism for protecting the interests of parties (public and private) in public–private partnership (PPP) contracts for enhancing project delivery.

Design/methodology/approach

The research methodology is a mixed qualitative and quantitative approach. This study commenced with an in-depth literature review, which provided the basis for identification of penalty measures in construction contract management. The qualitative assessment was based on semi-structured face-to-face interviews, which were aimed at identifying the underlying pattern of the penalty measures, and the quantitative assessment was based on a structured questionnaire. In both cases, respondents were stakeholders’ organizations that had been involved in PPP contracts in the southwestern region of Nigeria. These include industrial practitioners from government-based organizations (ministries, agencies, corporations/parastatals, etc.), private developers/concessionaires, law firms, banks, etc. The sample size was selected using a respondent-driven sampling approach, as the comprehensive lists of the participants in PPP contracts are not readily available in the Nigerian construction industry. Responses from the interview were analysed using interpretative phenomenal analysis via ATLAS.ti7. The quantitative data were analysed using percentile for flexibility between “most” and “more” preferred mechanisms.

Findings

This study developed mechanisms that defined the rights of the public party to redress underperformance of PPP contracts consequent to the defaults of the private party. “Step-in-right” and “termination of the contracts” were preferred against specific cases of “delayed execution”, “abandonment of the project”, “bankruptcy of the concessionaire” and “non-compliance with design and specifications”. With respect to “shortfall in performance against established dates”, the results converged on “monetary fine” and diverged on “step-in-right” and “termination of the contracts”.

Practical implications

The study contributes to literature on mechanisms for enforcing PPP project performance. Besides, defining rights and obligations of the parties in specific events of underperformance of the concessionaires in PPP contracts is a significant step towards the development of standard conditions of contract for managing PPP projects in which the model is being newly adopted.

Originality/value

Project management studies on PPP were extended by defining the liabilities that are consequent to the defaults of the private party and the mechanisms for their enforcement.

Citation

Opawole, A. (2018), "Penalty mechanisms for enforcing concessionaire performance in public–private partnership contracts in Nigeria", Journal of Engineering, Design and Technology, Vol. 16 No. 1, pp. 161-191. https://doi.org/10.1108/JEDT-04-2017-0030