5.3  Summary data analysis

This section provides a summary of the data analysis related to disputes. The full data analysis is available in Appendix A (Data Analysis).

Contractual disputes are common in PPPs during both the construction and operational phases. The research found that a formal notice of dispute was issued by one of the contracting parties on 42 projects out of 165 PPPs studied (for which dispute data was available) which is a prevalence of 25%. There was a prevalence of 17% for dispute events occurring in the first four years after financial close. There was an approximately even split between disputes during the construction and operational phases. Construction phase disputes occurred 3.2 years after financial close on average. Operation phase disputed occurred 4.3 years after financial close. The average length of the construction phase for the projects was 3.9 years indicating that the disputes in the operations phase were occurring near the start of that phase.

The prevalence of disputes during the operations phase would have potentially been higher than during construction had the study timeframe been longer and had it included projects which had completed their full contract term. The study was limited to projects that reached financial close between 2005 and 2015 (inclusive). There was only one project which had completed full operations during this period. Given the timeframe, the earliest projects in the study (i.e., those that reached financial close in 2005) have reached a maximum of 13 years after financial close.

The highest prevalence of disputes was in the transport sector, with 27 instances out of 77 projects for which data was available (35%). The energy sector came in at 16%, with 11 instances out of 68 projects for which data was available. There were four disputes found in the water and waste sectors. These numbers are too small to draw any firm conclusions on the prevalence of disputes in these sectors.

The research also indicates that asset condition upon handback is often an under-appreciated risk and there could be several handback-related disputes in the future for the projects studied.

Figure 1: Cause of disputes, based on 30 projects that have dispute causes available