2.2.1. Political Factors
A strong political will from the government can only encourage the establishment of PPP projects by reducing resistance and providing a clear indicator of the intention of the government to commit to its contractual obligations. The two CSFs of this component are: (i) political support, and (ii) centralized system for managing PPP [
20].
• Political Support:
The political setting of the host country has a direct relation with PPP as a public policy [
21]. This is because without the required political support no consent is awarded for public expenditure and work on public projects [
20], and thus this factor is introduced as critical to the establishment and success of PPP. Furthermore, in states where political support is weak, many investors consider the political risk to be high and this restricts the number of competitors in the tendering process [
22]. It is also highlighted that of crucial importance are the presence and constant revision of an explicit adopted policy document on PPP, and a clear program for distinct PPP projects. Furthermore, precise and explicit political support for PPP stated by major political parties with some stability over time is necessary [
23]. It can be concluded from what has been mentioned that the existence of an explicit policy document on PPP and a clear program for distinct PPP projects is essential for PPP successful implementation.
• Centralized system for managing PPP:
The United Nations Economic and Social Council identified the need for an authoritative, central government commitment as one of the main ingredients of successful PPP programs. The report stated that the creation of PPP units is the best manifestation of this commitment. This unit is responsible for driving forward PPP projects, providing suitable advice, acting as a point of contact for prospective bidders and becoming a repository for knowledge and experience for PPP within the country. Moreover, a PPP unit can help in addressing limitations of capacity within government and contribute to quality control.
To sum up, the presence of a competent central unit that has the technical competence to put suitable procedures for PPP appraisal and prioritization and implementation is an important factor. Moreover, forming standardized PPP contracts is essential for adopting PPP projects. The previously discussed points lead to the first research hypothesis:
Hypothesis 1 (H1). The existence of favorable, supporting political factors is positively related to PPP success in the educational sector in Egypt.
2.2.3. Economic and Financial Factors
A PPP project attracts investments, if it is sustainable, financially applicable, and profitable. Therefore, to establish PPP in an economy, a market must exist in a way that permits PPP projects to make profits, the private sector has the intention to participate, and the financial market has the will to invest.
Thus, this component has three CSFs: (i) stable macroeconomic conditions, (ii) sound economic policy and (ii) available financial markets.
• Stable macroeconomic conditions:
Stable macroeconomic conditions is the keystone for any successful effort to increase private sector development and economic growth [
27]. The indicators of macroeconomic stability are; low and stable inflation, low budget and current account deficits, stable and predictable exchange rate, low real interest rates, and comfortable foreign exchange reserves. The absence of a stable macroeconomic environment hinders domestic and foreign investments [
28]. Therefore, the desire of private investments to cooperate in PPP infrastructure projects depends mainly on the operational environment of these projects [
27].
• Sound economic policy:
The economic conditions have to be favorable for a financial transaction to be successful [
21]. This can be stimulated to a certain extent through sound economic policy as investors are more expected to consider participating in a market where economic conditions allow for higher certainty. Moreover, private sector firms are unlikely to commit capital within countries where there is uncertainty over economic conditions, particularly repayment of sovereign debts. The favorable economic conditions lie largely outside the control of PPP stakeholders [
24]. However, they are crucial to the growth of any PPP program. Consequently, governments should adopt economic policies that support economic stability and growth required for the private sector to operate with confidence [
28].
• Available financial markets:
In the majority of PPP projects, most stakeholders cannot tolerate unnecessary or extra risks. Therefore, the financial markets nature is crucial in facilitating PPP projects, and unattractive financial markets that are politically unstable or adopt high interest rates, are sometimes a barrier to the success of a PPP [
28]. Many other researchers argue that project financing is an essential factor for encouraging the private sector to invest in public infrastructure projects [
21]. They attested to the fact that the existence of an effective financial market that has low financing costs and different categories of financial products would encourage the private sector to enter into PPP arrangements.
This means there are three important factors that are crucial for the success of PPP projects. First, the existence of macroeconomic conditions that lead to a stable exchange rate as well as low interest and inflation rates; second, the presence of sound economic policy that leads to economic growth, full employment and price stability; finally, the existence of effective financial markets and availability of flexible and attractive financial instruments are essential for PPP success. These intricacies are summarized in the third research hypothesis:
Hypothesis 3 (H3). The availability of economic and financial factors is positively related to PPP success in the educational sector in Egypt.
2.2.4. Managerial and Operational Factors
By managerial and operating factors, the researcher means the favorable and supporting factors, which affect PPP project management and operation directly. This includes the following CSFs: transparency in the procurement process, competitive procurement process, project technical feasibility, strong private consortium, appropriate risk allocation, shared authority, thorough and realistic assessment of costs and benefits, good governance and public/community support.
• Transparency in the procurement process:
Transparency refers to the way in which the design and initiation of projects, procurement and selection process have to be organized [
29]. Thus, transparency depends on cordial and continuous communication between partners and external stakeholders [
21]. Consequently, partners should consult each other for any interpretation concerning the agreement. Similarly, both public and private partners should communicate with external stakeholders or users of the project in a transparent and open way. Moreover, the government has to clear constantly any doubts or rumors that appear publicly concerning the delivery of PPP projects, because negative public perception could have an impact on the success of the project implementation.
Finally, transparency guarantees that the project delivers the expected outcomes and quality services. To conclude, the presence of clear contractual obligations for accountability purposes as well as a proactive public disclosure process to curb corruption and fraud, i.e., to make the process open and public is essential to the PPP project’s success.
• Competitive procurement process:
To guarantee the selection of a qualified concessionaire, any procurement model has to be established with essential elements such as, head-to-head competition, actual competitors’ fair treatment, and a competition open to technological change [
30]. To facilitate this competition, it is necessary to have enough potential bidders in the procurement process. Thus, it is crucial to protect the interests of private sector bidders and ensure that no preference is given to any party [
16].
However, although the selection of the private investor through competition is often the preferred method, sometimes private companies advance to governments new project ideas, known as “unsolicited proposals” [
28]. These proposals are usually controversial if governments conduct direct negotiation with the original proponent concerning the project contract without adequate transparent or competing proposals. To overcome such situations, governments should develop sufficient procedures that embody transparency and competition for proposing unsolicited proposals. The government, therefore, needs to develop a clear and effective policy on unsolicited proposals from the private sector.
Therefore, there are two critical factors for encouraging private investors to participate in PPP arrangements. First, the existence of procedures that guarantee participation of an ample number of capable bidders in the process. Second, developing a clear and effective policy for unsolicited proposals.
• Project technical feasibility (technical knowledge and expertise):
A technical feasibility study usually determines the details of how one delivers a product or service. A project’s technical feasibility usually considers the availability of required technology and resources, that is materials and labor. Thus, the technical aspects for developing a proposed PPP project have to be assessed to ascertain whether they are well within the project team’s capabilities to produce such a product or service [
21]. It has also to be noted that a PPP project is not considered attractive if the necessary requirements and technologies change continuously during the life of the project [
20]. To overcome this problem, sufficient flexibility has to be embedded in the contract to face the continuous changes in a flexible way.
The public and private partners’ experience in a PPP model is also crucial to success, especially when it has a complex and sensitive nature [
20]. Furthermore, the possibility of introducing creative solutions is effective to achieve Value for Money (VFM) [
31].
To conclude, the existence of clear procedures for making a decision requires feasibility studies that have a VFM analysis. Moreover, a Public Sector Comparator (PSC) assessment, and sustainability analysis to ensure that technical aspects are well within the project team’s capabilities is a key factor for PPP success.
• Strong private consortium:
A responsible and organized private sector company is essential for a successful PPP project [
22]. This is because PPP projects have a complex nature that makes it hard most of the time for an individual company to implement the project; thus, companies often unite to set a consortium. Thus, in contracting out PPP projects, it should be guaranteed that the private sector consortium parties are competent and have the financial ability to undertake the project.
Consequently, the selection of an appropriate concessionaire relates to the PPP project’s implementation, which means that if a project has the right actors, who share common objectives, the project will probably be implemented successfully [
21]. Finally, it can be concluded from what has been mentioned before that the selection of a strong private consortium is a crucial factor for PPP success. Furthermore, this consortium has to possess expertise, innovation and good reputation to guarantee success of the partnership.
• Appropriate risk allocation and risk sharing:
Risk allocation is a main component of any PPP [
20]. There is argument about how much risk should be transferred from the public to the private sector partner. In general, the more risk transferred to the private sector partner, the more financial reward the private partner will claim. Moreover, one of the distinguishing features of a PPP is its high level of risk, which is principally due to the long term of the contract and the various participants included in the partnership [
32]. Accordingly, achieving the best risk distribution should be undertaken using well-established rules [
16]. These rules should stress that the risk is only given to those who are understand clearly the risks they are taking. That is, they are capable (including expertise and authority) of manage the risk in an effective and efficient manner; have the resources and capability to deal with the risk if it happens; and have the opportunity to charge a fair and appropriate premium for taking on the risk.
Accordingly, from what was mentioned previously, it could be concluded that the existence of procedures to ensure risk allocation between parties of PPP is an important factor for its success. Moreover, risks have to be transferred to the party capable of controlling them. Furthermore, risks that are considered out of the control of both public and private sectors have to be shared between them.
• Shared authority between public and private sector (trust and openness between parties):
Nelson and Zaldek [
33] recommend that both public and private sectors should respect each other during the negotiations of the procurement process. Furthermore, discussing individual expectations and agendas with clarity and openness as well as balancing between desired participant benefits and societal benefits ensure a PPP’s successful implementation. Therefore, it is necessary that the public and private sector work together, focus on the project outcomes rather than maximizing their own interests, and cooperate for mutually permanent value.
Therefore, negotiations during the procurement process should guarantee mutual respect and cooperation between the various participants in the partnership all over the stages of the project. This is a crucial factor for the success of the partnership and its sustainability.
• Thorough and realistic assessment of the costs and benefits (value for money):
PPPs should produce equivalent or better VFM than a pure public sector project approach. The VFM can be realized through risk transfer, innovation, better asset utilization and integrated whole-of-life management [
34]. From this, it is concluded that resorting to PPP projects is justified only when such projects are economically superior to the traditional public procurement approach, which means that it should not give rise to costs that go beyond the associated benefits. Consequently, the presence of a process that assess PPP bids against the public sector comparator (PSC) to demonstrate VFM for a PPP project is of critical importance.
• Good governance:
Good governance in a PPP refers to a number of interlinked ingredients, such as public accountability, public management, sustainable development and dispute resolution [
29]. Therefore, the government’s irrelevant involvement or the government’s incapability to run PPP projects may lead to failure of the project [
33]. To administer the complex procedures and expected risks of PPP, governments should be clear, devoted, and technically capable of managing governance issues. Thus, good governance is crucial for managing PPP as this guarantees that the involvement of the private sector produces the maximum benefit for the public. To conclude, it is a necessity that the public sector possesses the capacity and knowledge to devise, implement and manage PPP agreements in the long run. This means that without this capacity the PPP project fails.
• Social support:
The support of society or the public community is essential for PPP projects. By public community, we mean the media, trade unions, civil society and other non-governmental organizations. This is supported by previous studies. For instance, Osei-Kyei and Chan [
21] stated that public and community support at the beginning of the project help in eliminating any kind of delay such as that of land acquisition for project establishment. Moreover, it decreases the production cost because local people could be employed as workers. Furthermore, social acceptance nowadays is crucial, because citizens have expectations regarding the quality of the service, its environmental effect as well as the job opportunities a project would present. Therefore, public involvement makes them understand the possible impacts and benefits of a PPP project through certain procedures that ensure public awareness and education would be of significant importance. Thus, for PPP development, we propose the fourth research hypothesis:
Hypothesis 4 (H4). The existence of a favorable, supporting managerial and operating environment is positively related to PPP success in the educational sector in Egypt.
Finally, it could be concluded that the CSFs of PPP projects success in education in Egypt can be grouped into four groups with lists of sub-factors under each group. These four groups are: political, legal, economic and financial, as well as managerial and operating. Consequently, a conceptual framework has been formed and adopted by this research study in
Figure 1.