MINISTRY OF EDUCATION
HANOI ARCHITECTUAL UNIVERSITY
NGO THE VINH
APPLIED RESEARCH ON PUBLIC PRIVATE
PARTNERSHIP IN CONSTRUCTION INVESTMENT
MANAGEMENT OF URBAN TRANSPORTATION
FIELD OF URBAN MANAGEMENT AND BUILDING
ABSTRACT OF DOCTORAL THESIS
Hanoi - 2015
The doctoral thesis is completed at Hanoi Architectural University
Assoc. Prof. Dr. Nguyen To Lang
Dr. Nguyen Thi Binh Minh
Reviewer 1: Assoc. Prof. Nguyen Hong Tien
Reviewer 2: Assoc. Prof. Nguyen The Chinh
Reviewer 3: Dr. Pham Van Bo
Doctoral thesis will be defended at the examination Committee in the
Hanoi Architectural University
A t ..... d a te ......m onth.... year 2015
The thesis could be found at:
- National Library of Vietnam
- Library of Hanoi Architectural University
1. The necessity of dissertation
The demand for constructing urban transport infrastructure
serving economic development in Hanoi capital is very large while
state resources are quite limited. Thus cooperation with private
partners in the form of public private partnership (PPP) is the common
trend that many countries in the world have applied. Besides, the
management of construction investment in traditional form still exist
many shortcomings, not only lack of funds but also human resources,
management skills, technology and budgets for maintain and
operating are limited.
Hanoi is the capital of Vietnam which needs a large investment in
development modern urban transport system. However, capital
investment from the State budget, ODA ... only meet about 50% of the
demand. Thus attracting capital from the private sector is one of the
effective solutions to get city’s tasks. Therefore, the dissertation
“Applied research on public private partnerships in construction
investment management for urban transportation” is necessary and
makes sense in theory and practice.
The purpose of research
Based on the theoretical and practical basis, the dissertation
studies the application of the PPP form in construction investment
management for urban transportation to attracting and efficiently
using of investment resources from private partners, improving quality
uban transportation project in the Hanoi capital in accordance with
development in the future.
Object and Scope of dissertation
a. Objects: public private partnerships in management of construction
b. Scope: the application of the PPP form in management of
construction investment for urban transport in Hanoi capital that is
suitable with development of the overall planning of the Capital 2030
and vision to 2050.
- Dessertation research has focused pedestrian bridge (one of the six
types of building urban transport: roads, railways, bridges, tunnels,
waterways and airports) in order to clarify the feasibility study and
4. Research methodology: The dessertation used 6 research methods:
1) statistical method; 2) Method of surveys and interviews; 3) The
general analysis method; 4) SWOT method; 5) Method of comparison
and contrast; and 6) inherited method.
5. Research content: public private partnerships in in management of
6. Contributions in academic and theoretical issues
Supplementary methodology in applying PPPs in management of
investment construction of urban transport in order to rationally
exploit and optimize the role of stakeholders, contribute to enhancing
the efficiency of investment . Contents of research associated with the
current urgent needs to attract investment resources, improve the
quality and efficiency of construction investment in Hanoi capital.
Research results are useful references for managers, investors,
advisors and teaching materials for educational institutions.
The new contribution of the dessertation
+ By researching on characteristics of the cooperation between the
Public and Private Partners, the dissertation has systematized and
clarified the general concepts including main contents of public
private partnerships (PPP).
+ Base on research experiences (success and failure) in applying
the PPP in management of construction investment in the urban
transportation over the world, especially countries, whose social and
economic conditions are similar to Vietnam; the dissertation has
analyzed the causes of the successful PPP applications.
+ Moreover, by conducting researches, surveys, and assessment in
applying the PPP in management of construction investment for urban
transportation of Hanoi capital’s conditions, this research proposes
specific practical recommendations to remedy shortcomings in terms
of the application.
+ Furthermore, solutions have been proposed by the dissertation on
applying the public private partnership in management of construction
investment for urban transportation based on the scientific basis
associated with the actual condition of Hanoi capital. The dissertation
has proposed detailed solutions and application synchronization for
+ In addition, this dissertation has solved problems in attracting
and efficiently using of investment resources of private investors in
management of construction investment in urban transportation.
Thereby improving the quality of management of construction
investment in urban transportation of Hanoi capital that has
harmonized the interest between the Public, Private Partner and social
8. Concepts, term s of public private partnerships
The desseration has analysed 14 different concepts of public
private partnership from educational institutions, scholars in the
world. Thereby the dessertation propose a new concept of PPP in
management of investment construction for urban transport is a form
which state agencies and the private investors are undertaking
construction investment projects or provision of social services
through commitments, constraint by a project contract. In particular
the parties are considered partners, have an equal role, and
contribution the advantages/its strengths to fulfill common objectives
with the highest efficiency.
9. Dissertation structure
The dessertation consists of three major research chapters, and
section Introduction, Conclusion, Recommendations and Annexes
CHAPTER 1: OVERVIEW OF PUBLIC PRIVATE PARTNERSHIP IN
MANAGEMENT OF CONSTRUCTION INVESTMENT
Introduction of public private partnerships
The origin o f public private partnerships
In 63 BC, the Caesar Augustus, a emperor of the Roman Empire
has partnered with Salassi tribe manage Saint Bernhard Pass route
PPP . The first term "PPP" appeared in the United States since the
1950s in the field of education [75, 80]. Then "PPP" is gradually
popularity in many countries in the field o f urban infrastructure.
1.1.2. The difference between traditional investment and PPP
The basic difference
investment form and PPPs
implement a part or all of
work from the state to
private partner, while the
State still holds ownership
Figure 1.2: The difference between
traditional investment and PPP
efficient performance in building and services (Fingure 1.2).
1.2. The situation of applying PPP in the world
The dessertation has studied the application of the PPP form in 8
countries: USA, Canada, UK, Netherlands, China, India, Malaysia,
and South Africa. The dessertation has analyzed and evaluated the
state management systems, legal documents, PPP’s field, ... In each
country, dessertation has research successful and failure reasons in
application of PPPs and comparison with conditions of Hanoi capital,
of H anoi’s management
construction for urban transport
o f Hanoi:
geographic location, characteristics and situation of economic
development - social, situation and investment needs in infrastructure
construction of urban transport in Hanoi capital.
1.3.2. Situation o f management in construction investment
126.96.36.199, construction investment form
In Hanoi, there were 61 projects with the participation of private
investors under the form BOT, BT. These projects have been
implemented with a total investment approximately 155,806 billion
VND, of which 32 were selected investors (51,318 billion, using 6641
hectare of land for the project implementation other capital
reimbursement); 29 projects were approved investment guidelines and
ongoing selecting investors (104 488 billion) .
In the 61 projects listed above, there are 9 projects in urban roads,
the majority of them implemented under BT with the "land for
infrastructure changing", only 01 projects under BOT. However,
projects were implemented under BOT, BTO and BT which is not the
PPP project by not accurately reflect the nature of cooperation
between the State and the Private .
188.8.131.52, Capital o f the construction in urban transport
In recent years, Hanoi has focused on the use of different sources
of capital to invest in the construction of urban transportation projects,
such as ODA, city budget ... In the period 2008 ^ 2013, the city has
invested 41,677 billion for urban transport sector, accounting for 36%
of total investment in developing and 11.5% of total city budget
expenditure . Expecting 2015 ^ 2030 period, investment demand
of construction in city transportation is expected to be 918,224 billion,
of which areas roads will be 442,171 billion (48.1%), Railways will be
433,580 billion (47.2%) , .
Meanwhile, key reasons of 41 projects in Hanoi was delayed due to
lack of funds proposed. The total capital needs for these projects in
2011-2015 period approximately 164,000 billion, but in 2012, the
representing approximately 2% of the demand for capital construction
investment . This shows that the pressure on capital construction
in Hanoi very large, while the government has been applying policies
to reducing public investments.
184.108.40.206. Regarding management o f investment construction o f
Management of investment construction of urban transport in
Hanoi is decentralized by size, characteristics and nature of projects,
the state funds managed by entities (MOT, Hanoi’s Government,
People's Committee of Districts, ...). Projects is divided into two
and operation management.
management of construction investment is stipulated in Decree No.
12/2009/ND-CP on management of construction investment projects.
Content management and operation stipulated in Decree No.
130/2013/ND-CP on supplying public services. For example, when
the projects (urban road construction) is finished contruction phase,
the investors would hand over the project to the Department of
Transport has responbility on road and bridge parts; Department of
Construction has responbility on drainage, tree; Hanoi’s Power
Corporation will manage streetlights, lighting... One shortcomings in
management of construction investment for urban transport is
decentralization and division to seperate part/work that leads to poor
investment performance, lack of uniformity in the capital, manpower
and management apparatus.
1.3.3 Assessment o f conditions’s application PPPs
220.127.116.11. Investigate, examine reality
Dessertation establish questionnaire form including 20 questions
relating to the application of PPP and conduct investigations,
interviews directly with 120 subjects, divided into 04 groups: (i) state
management agencies , (ii) investors (unit represents state investment
in construction projects, provide public services), (iii) private
investors (private enterprise) and (iv) Other subjects.
18.104.22.168. The survey, fieldwork
- Quality of respondents: 86.9% respondents have professional jobs
related directly to a PPP with the level of interest to 89% PPPs.
- The environment application of PPP in Hanoi capital is evaluated
according 5 contenst:
+ The legal framework: there were legal documents on the PPP
(since September 2014), that caused psychological apprehension in
applying PPP, 82.6% thought that it should be have a Decree on PPP,
17.4% of respondents (including 80% of respondents are private
partners) has opinion that it should be have separate Law on PPP. In
14th February 2015 the Government has approved Decree No.
15/2015/ND-CP on investment in the public private partnerships form,
but this policy also has been existing some shortcomings.
+ State management apparatus: Hanoi has not specialized agency
of PPP (since March 2013). The capital has established PPP
Committee (operational as part-time organization), but the survey
shows that 87% of respondents do not know or know very little about
this PPP Committee, only 13% of respondents has information about
the PPP Steering Committee.
+ In terms of investor capacity: evaluation on two criteria
manpower and finances: 92% of companies surveyed do not have
inadequate staffs, experts who have knowledge and experience in
applying PPP projects. About financial capacity: 83% of companies
surveyed are now medium-sized and small. These businesses operate
primarily based on loans from bank or trade institutions.
+ Awareness for PPPs: results of the survey show that the majority
of respondents understood "not right" about PPP, they said that this is
a form of "socialization" or "privatization". There is 83.69%
respondents said that BOT, BT and BTO is not PPP. Even in some
legal documents of government has same mistake on PPP (eg Decree
No. 37/2015/ND-CP of Government, Circular No.10/2013/ TT-BXD
of the Ministry of Construction, Decision No.9/2012/QD-UBND of
Hanoi People's Committee, Document No.135/QD-MPI of Hanoi
Department of Planning and Investment, ...).
+ On the time of applying PPP: there is 29% of respondents said
that PPP can be apply at this time; 59% suggested that only can be
applied in the future in conditons of complete additional state
legislation, guidelines on PPP; 12% suggested that it is difficult to
applying PPP in practice because of balance costs and benefits
between investors and the state. Besides, 60% of private enterprises
are not willing to participate in the implementation of PPP projects,
they said that they are interested and will only participate in PPP form
in the near future.
1.4. The scientific researches in public-private partnerships
Dessertation has analysied on 16 studies from an indigenous and
foreign authors related to applying PPP in the field of urban transport.
These studies contribute to the theoretical and practical basis for the
proposed solutions about PPPs in management of construction
investment for urban transport which matching the conditions of the
1.5. Problems exist to study
- Systemize and clarify the concept of PPPs;
- To study theoretical and practical basis for applying PPP form in
management of construction investment for urban transport;
- Research, analyze and evaluate public-private partnership models
consistent with the investment objectives, construction management in
urban transportation projects associated with the conditions of
economic - society in Hanoi.
CHAPTER 2: SCIENTIFIC BASIS OF THE APPLYING PPP IN
MANAGEMENT OF CONSTRUCTION INVESTMENT
2.1. Theoretical foundations on PPP
2.1.1. Features o f PPP
Features of PPP are parties (State
and Private) work together in project to
providing public services to serve
people (beneficiaries) with the aim of
achieving the highest investment
effectiveness (Figure 2.1). PPPs assign
Picture 2.1 : Features o f PPP
appropriate responsibilities and obligations of the partners involved in
the project must be implemented base on capacity and resources at
their disposal. The involvement and support of the state to help
improve more efficiency of the project that will not increasing
investment spending is a key factor to compare PPP with other forms
PPPs has four main characteristics : (i) the relationship
between partners is equality, (ii) the contribution of resources, (iii)
risk sharing, and (iv) contract PPPs. PPPs have the advantage:
Speeding up project implementation, progress raise capital; Improving
the efficiency of investments; Risk Management; Improving the
quality of service; Capacity management of public services; PPPs
have drawbacks: increased costs of investment preparation;
Investment Benefits difficult to determine; Difficulties in contract
negotiations; Environmental risk investment [34, 36, 50, 71].
2.1.2. The form s o f cooperation in public-private partnership
Some scholars in the world, as Idelovitch (1995), Faulkner (1997)
has classified the cooperation between public and Private partners in
PPPs under 4 forms: Form of service; Forms of management and
operation; Concession Form; and franchise form .
2.1.3. PPP contract
Contract PPPs ensure the long-term cooperation relationship in
which the responsibilities and obligations of the parties shall be
determined in proportion to the contributions, shared resources
project. Within the PPP’s project, contract has high legitimacy to bind
the parties, especially the private partner on the right and the duty to
fulfill the commitments to the state .
2.1.4. The management apparatus in charge o f PPP
Many countries have successfully used PPPs established by the
agencies in charge of PPP. The agency helps guide the procedures,
consultation, monitoring the implementation process or having the
authority to approve, license for PPP projects. According to their
functions, PPP agencies have different roles in the project
Some scholars in the world have research related risk
management in PPP, such as Nguyen T.B.M (2002), ADB (2003).
PPP projects often have 6 main risk categories: business risks; legal
risks/contracts; political risk; technical risks; environmental risks;
risks are not accepted by the community . To minimize the
negative impact on PPP projects, partners conduct process of risk
management in PPP under 5 basic steps, namely: Identifying risks;
Assessment and Risk Analysis; Allocation of risk; Mitigate and
overcome risks and Monitoring, adjusting risk .
2.2. Common issues on management of construction investment
for urban transport
2.2.1. Features o f management o f construction investment
Management of construction investment of urban traffic
management entities (state agency authorized) can make to guest
(MOET project) or among entities related to each objective to ensure
effective implementation of the project in terms of constraints on
resources invested. These relationships are reviewed on the following
aspects: the scale and nature of construction investment (static traffic,
mobile traffic); purpose (outbound traffic and inbound traffic); funds
for construction investment or type of works (roads, waterways,
2.2.2. Management o f investment construction fo r urban transport
PPPs include many models of cooperation between public and
private partners depending on the purpose and content of cooperation.
PPP model represents the characteristics of co-operation between the
partners, whereby one part or the whole of the work is transferred to
private partners which is conducted with the support from public
partners . Table 2.1 represents 5 characteristics of the PPP model.
Table 2.1 : characteristics o f the PPP model
With various PPP models but own property, work still belongs to
the State. Depending on the goals of state agencies, such as attracting
investment, management experience, cutie
select PPP in the
construction management accordingly. For investment managers build
urban transport projects 4 PPP model is usually applied, as:
2.2.2.I. Service Model:
Picture 2.4. Service Model - Source , 
22.214.171.124. Operational Management
Picture 2.5. Operational Management Model - Source , 
126.96.36.199. Commission Management
Picture 2.6. Commission Management Model - Source , 
188.8.131.52. Franchise Management
Picture 2.7. Franchise Model - Source , 
2.3. The legal basis of the application form PPP
The application of PPPs in management of construction investmen
for urban transport is subjected by the regulation of legal documents
as: Construction Law, Investment Law, Procurement Law, Land Law,
on investment in
Procurement of selected investors,... and other related documents.
2.4. International experience on applying PPP
Dessertation has analysed specific examples of 8 countries in the
world in the application of PPPs in urban transport. These cases were
analyzed according to group problem: selecting PPPs; agency
management construction of urban traffic; management and upgrading
urban transport building; The legal framework; Risk sharing between
the State and the Private.
From the experience of PPPs, the desseration draws lessons learned
in the application of PPPs in management of construction investment
for urban transport in Hanoi capital.
2.5. Orientation on PPP applying in Hanoi
The application of PPPs is determined by capital government
which specified in the program of social-economic development,
development of the city of Hanoi in 2020, orientation to 2030
(Decision 1081/2011/QD-TTg dated 7thJun,2011), decision No 1259/
2011/QD-TTg dated 26th July 2011, document No.81/2011/KHUBND dated 11 Jun 2011, ...
Hanoi has established PPP
concurrently), despite remaining shortcomings, but this is the first step
to help the city in the study and promote the applying PPP in practice.
CHAPTER 3: PROPOSED APPLICATION ON PPP FORMS IN
MANAGEMENT OF CONSTRUCTION INVESTMENT
FOR URBAN TRANSPORT IN HANOI
3.1. The viewpoints, the principle of PPP application
3.1.1. Viewpoints o f PPP’s application
- PPP ’s applications must: attracting investment resources from
private partners to building and enhancing effective management of
investment construction for urban traffic; Consistent with economic
social conditions of Hanoi in every period of development till 2050;
Minimize the use of state capital which contributing to reduce public
debt; The partners have an equal role, contribute and share resources
to implement the project; The application is done in conditions of an
open investment environment, transparency.
- Application of PPP projects in urban transport projects, initially
to study for the project are small, simple.
3.1.2. Principle o f PPP application
The PPP application is done under 5 principles: 1) PPP project
must be economically effective financial, economic and social; 2) The
partners involved in the project are responsible for and benefits of
implementing PPP projects; 3) The division of the risk to the public is
capable of the best risk management, minimize the negative impact of
the project; 4) There is no mechanism o f "begging-giving", the
partners have an equal relationship jointly implement the project; and
5) ensure competitive factors, transparency during the implementation
of PPP projects as possible.
3.2. Conditions of PPP application
- PPP application in management of construction investment for
urban transport projects must be consistent with the planning,
development planning, economic-social development of the capital.
- PPP must have economic efficiency, the ability to attract and
receive funding and management experience from private partners, the
PPPs must meet the needs of users.
- PPP project has to have minimum capital of 20 billion (except for
application of the O & M).
3.3. M anagement of construction investment for urban traffic
Selection o f public-private partnership model
The collaboration between the public and private sector in the
management of construction investment for urban is expressed
through many different models. The selection of the PPP model must
be suitable with investment objectives of management for construction
of urban transportation projects in each phase of the project.
Figure 3.1. Selection model public private partnership
Review selected model public-private partnership
184.108.40.206. Application object model public-private partnership
Based on assessment of the environmental investment of PPP
application (Section 1.3.3) and Viewpoint, principle of applying PPPs
(Section 3.1), the dessertation has analyzed the application of the PPP
model by type urban transport building (bridge) in accordance with
characteristics of Hanoi capital shown in Table 3.1.
Table 3.1: PPP model in construction investment management
Applying P P P ’s model
2 Rail bridge
3 Pedestrial bridge
4 Vehicle bridge
The dessertation has analyzed the project investment construction
on 18 bridges for pedestrians under project infrastructure development
of urban transport in Hanoi (the first phase) for researching.
The economic and financial indicators
The dessertation analyzed, evaluated on the basis of comparing the
economic indicators and financial efficiency (Net present value
(NPV), internal rate of return (IRR), ... PPP models of Franchise in
accordance with the socio-economic conditions, the development
orientation of Hanoi (Figure 3.2)
Figure 3.2: Management o f construction investment
Franchise model is selected base on the cooperation between
public partner (Department of Transportation) and private investor in
220.127.116.11. The economic and financial indicators
that the project
1 Fund (billion VND)
2 NPV (million VND)
5 Time of
investment (Table 3.2).
The dessertation uses the comparison method (value for money) to
assess the efficiency of economic and financial aspects (Table 3.3) by
studying the sensitivity analysis to changes in the quantities calculated
(change capital contribution ratio, price, incentives, change script
project has common
issues which are low
long payback period
support from public
partners to improve
10 Profit’s risk
efficiency. It is showed that PPP options has more advantage than the
others. The project is feasible on legal, economic efficiency finance.