Do countries learn from experience in infrastructure public-private partnerships? Public-private partnerships practice and contract cancellation

Learning from experience to improve future infrastructure public-private partnerships (PPPs) is a focal issue for policymakers, financiers, implementers, and private sector stakeholders. An extensive body of case studies and "lessons learned" aims to improve the likelihood of success and attempts to avoid future contract failures across sectors and geographies. This paper examines whether countries do, indeed, learn from experience to improve the probability of success of PPPs at the national level. The purview of the paper is not to diagnose learning across all aspects of PPPs globally, but rather to focus on whether experience has an effect on the most extreme cases of PPP contract failure, premature contract cancellation. The analysis utilizes mixed-effects probit regression combined with spline models to test empirically whether general PPP experience has an impact on reducing the chances of contract cancellation for future projects. The results confirm what the market intuitively knows, that is, that PPP experience reduces the likelihood of contract cancellation. However, the results also provide a perhaps less intuitive finding: The benefits of learning are typically concentrated in the first few PPP deals. Moreover, the results show that the probability of cancellation varies across sectors and suggests the relative complexity of water PPPs compared with energy and transport projects. An estimated $1.5 billion per year could have been saved with interventions and support to reduce cancellations in less experienced countries (those with fewer than 23 prior PPPs).