Does choice of procurement contract matter for cost and quality of infrastructure?

The union government of India as well as the state governments lack financial resources and expertise needed to provide adequate infrastructure and maintain it. To augment their capacity and effectiveness, government agencies at the center as well as at the state level have been resorting to private funding and management of infrastructure services through the ‘Public Private Partnerships’ (PPPs)  – under PPP, the private partners are required to fund the project and maintain it during operational phase. The largest number of PPPs have been formed in the road sector.

The study under this project will compare performance of different types of contracts used for procurement of national highways in India, with respect to project costs, and quality of road services for completed national highways. The study is expected to have considerable policy implications for the context-specific design of PPP projects. Therefore, the findings of the study will be of interest to all of the stake holders – project planners, designers, government officials, investors, creditors as well as private partners. Specifically, the focus of the study will be on the following issues:

1. The effect of the degree of risk allocated to private sector on project costs and quality of roads.
2. The effect of the contract duration on project costs and the quality.
3. Relative performance of different types contracts with respect to project costs and quality of roads.
4. Performance of PPP contracts relative to traditional procurement contracts with respect to cost and quality of roads.