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Article

The Impact of Contractual Governance on Project Performance in Urban Sewage Treatment Public–Private Partnership Projects: The Moderating Role of Administrative Efficiency

by
Jialin Gui
1,*,
Jinbo Song
2 and
Wen Xia
2
1
School of Management, Liaoning Normal University, Dalian 116029, China
2
School of Economics and Management, Dalian University of Technology, Dalian 116024, China
*
Author to whom correspondence should be addressed.
Buildings 2025, 15(11), 1858; https://doi.org/10.3390/buildings15111858
Submission received: 27 April 2025 / Revised: 19 May 2025 / Accepted: 23 May 2025 / Published: 28 May 2025
(This article belongs to the Topic Sustainable Development and Coordinated Governance of Urban and Rural Areas Under the Guidance of Ecological Wisdom—2nd Edition)
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Abstract

:
In public–private partnership (PPP) projects, the private sector’s performance is influenced by administrative efficiency, and the impact varies across different contractual dimensions. Existing research mainly focuses on the influence of project governance on project performance, with few scholars delving into the impact of administrative efficiency on the contractual dimensions of PPP projects. To address this gap, this study employs literature analysis to examine the contractual relationships among PPP project stakeholders, identifying four sub-dimensions: responsibility and authority allocation, profit allocation, risk allocation, and accountability. It then investigates the moderating role of administrative efficiency in the relationships between contractual dimensions and project performance, proposing hypotheses and constructing a research model. The findings reveal that all four sub-dimensions of contractual relationships exert significant positive effects on project performance. Specifically, administrative efficiency significantly enhances the positive relationship between responsibility/authority allocation and project performance, as well as between risk allocation and project performance. These results highlight the critical role of administrative efficiency in optimizing contractual mechanisms to improve PPP project outcomes, providing theoretical and practical insights for enhancing contractual governance in PPP projects.

1. Introduction

Given the growing awareness for the need of sustainable development, the environmental protection industry has received much attention. In particular, the development of urban sewage treatment is of widespread concern in China. With the rapid growth of China’s economy and population, urban sewage discharge rates are currently increasing at a rate of 5% per year [1]. To meet the increasing demand for sewage treatment in cities, public–private partnership (PPP) projects have emerged as a market-oriented financing approach. The application of the PPP model to urban sewage treatment ensures that the discharge of sewage meets the required standards. This, in turn, curbs the adverse effects of environmental pollution and improves the efficiency of urban sewage treatment. Since the first PPP sewage treatment project was initiated by the government, the PPP model has played an increasingly important role in the construction of China’s sewage treatment projects [2].
With the continuous expansion of PPP sewage treatment projects, their construction process has become more complex. A number of problems associated with the application of contracts, including unclear incentive mechanisms, unscientific allocation of responsibilities, and unfair risk allocation, have gradually become prominent; these problems may lead to the failure of effective project implementation [3]. Recent research showed that when the government and related departments have high administrative efficiency, stakeholders can avoid delays associated with the project process that are otherwise caused by mutual evasive responsibility and unclear powers and responsibilities [4]. Since the PPP projects are invested by the government, the top-down design of management organization has gained increasing attention. Indeed, in the construction process, the government exerts a direct and powerful role on contract enforcement [5]. However, the side effect is that government administration may cause deviant behaviors. Excessive administrative intervention by the government will affect both the enthusiasm and initiative of the private sector. Entirely conforming to the rules set out by the market may result in lower efficiency and may damage vested interests. Therefore, a systematic analysis of the potential relationships between administration and contract is required.
In contrast to prior studies examining contractual governance as a whole, we investigate their particular contractual relationship dimensions. Moreover, although the effectiveness of contractual governance on the performance in PPP projects has been widely studied [6,7,8], the impact of administration efficiency has been disregarded. Therefore, it has also suffered from a dearth of empirical studies on how administration efficiency moderates these relationships. To address these gaps, this study focused on two research questions:
RQ1. How does contractual governance impact project performance in urban sewage treatment PPP projects?
RQ2. How does administrative efficiency moderate these relationships?
To fill the knowledge gap, this study analyzed the moderating effect of administrative efficiency on the relationships between different contractual governance and project performance. A relevant model is tested using a data sample, obtained from 225 questionnaires. This study empirically examines the impact of differences in contract relationship on project performance. Whether stricter administrative controls lead to more efficient project outcomes in different dimensions of the contract was tested. By focusing on administrative efficiency, this study adds to the literature by focusing on how administrative efficiency can use contractual governance to reduce conflict, while also increasing project performance in the process. The government may benefit from the results of this study by better understanding how risk allocation strategies should be formulated and how administrative control should be exercised under different situations.

2. Literature Review and Hypotheses

2.1. Contractual Governance

To coordinate the complex interest claims among various stakeholders of a PPP project and reduce disputes associated with different interests, the involved parties usually have to establish a contract-based relationship, which becomes key to the governance of PPP projects. The essence of a public project is the long-term contractual organization concluded by stakeholders for the sharing of public resources around public demands [9]. Non-operating projects are a type of public project with a large number of participants; in such projects, the relationships among stakeholders have always been a focus of research. According to early research on project governance, the essence of the structure of project governance is an institutional framework under which project stakeholders choose transactions through the allocation of rights and obligations [10]. Therefore, formal contractual governance has become the core element and research focus. Research contents, such as “formal contract” [11], “explicit contract” [12], and “legal guarantee” [13], are all within the scope of contractual governance. The common feature of these contents is that they all emphasize that the obligations of all parties are defined by a formal written contract [14]. The reduction of transaction costs is achieved through institutional structure arrangement [7,15].
According to Floricel and Miller [16], a contract in a project explicitly specifies the rights, responsibilities, obligations, rewards, and punishments of all parties of the contract in written form under legal restrictions. When a party commits an act that contrasts with the contract and thus damages the interests of other parties, the committing party will also be punished. From the perspective of institutional arrangement, Williamson [17] suggested that formal contracts can serve as a guarantee for existing specific investment and also represents a commitment to future responsibilities. Consequently, formal contracts promote the improvement of project management performance by influencing the level of specific investment. Roehrich and Lewis [18] concluded that contracts can reduce uncertainties by providing a clear specification of what is allowed and what is not and can minimize the risk of opportunism by enforcing legal rules and standards. Ferguson [19] and Judge [20] recognized that the contract can enhance the performance of the exchange due to restraining opportunistic behaviors. Luo [21] also gave the result that contracts are associated with the performance, and contract completeness drives firms’ performance. The research of Roehrich and Lewis showed that under strict legal provisions and normative standards, the contract can restrain the behavior of contracting parties, thus ensuring the project management effect.
In terms of contractual governance, public projects have been initially systematized. Well-specified formal contracts can help to joint problem solving and mutual support between parties [22]. A contract typically consists of agreements about each party’s rights and obligations, roles, responsibilities, and performance expectations. The discrimination of the formal contract dimensions will have a differential impact on the project performance. Additionally, it details project goals and outcomes [23], monitoring procedures, dispute resolution mechanisms, and penalties for contract violation [6] as well as a specification of how to deal with future developments [24].

2.2. Urban Sewage Treatment PPP Projects

Compared with municipal engineering PPP projects, sewage treatment PPP projects have longer cycles. In contract management, long-term influencing factors, such as price fluctuations, must be considered to address inflation and changes in operational costs. Municipal engineering projects (such as urban road construction) prioritize management during the construction phase, while in the full lifecycle of sewage treatment PPP projects, management in the operational phase is more critical. Contracts must strictly define maintenance standards, performance evaluation indicators, and other details for the operational period. Additionally, the site selection and process equipment customization of sewage treatment plants exhibit high specificity, making assets difficult to repurpose for other uses. This high asset specificity increases transaction costs, requiring detailed contractual clauses to mitigate opportunistic behaviors. Unlike transportation PPP projects whose revenue relies on market demand, sewage treatment projects primarily adopt viability gap funding as the payment mechanism rather than direct user charges. Therefore, the efficiency of government budget approval and cross-departmental coordination directly impact the implementation of contract terms, as well as the cash flow of social capital and project financial performance.
Research in the field of sewage treatment management mainly focuses on its market-oriented form and the related conditions. Ren [25] suggested that the introduction of market-oriented competition mechanisms in the field of sewage treatment can improve the level of sewage treatment services; furthermore, functions of the government and private enterprises should be integrated to learn from and cooperate with each other. Wang [26] established a decision-making model by focusing on the selection of government guarantees in the expansion projects of public-private partnerships (PPP) in the sewage treatment department. This model enables the government to make better decisions when choosing the optimal guarantee mechanism in PPP expansion projects. El-Kholy and Akal [27] found that in the public–private partnership (PPP) wastewater treatment plant (WWTP) projects in Egypt, the financial viability of the key risk factors is affected by the country’s economic, political, and administrative environment, and they also discovered that inflation is the most critical core risk factor. Through risk preference analysis and bargaining game, Song et al. [28] established a risk-sharing game model for sewage treatment projects, and conducted an empirical analysis of the applicability of the risk-sharing mode.
The above-mentioned research results show that the current research on the marketization of sewage treatment mainly focuses on its competition mechanism, partnership selection, and advantages of adopting marketization operation. Although sewage treatment has received considerable research attention already, studies on the governance of urban sewage treatment PPP projects are very rare.

2.3. Administrative Efficiency

Administrative efficiency refers to positive behavioral effects of administrative organizations and their personnel when performing administrative functions and work duties in accordance with scientific and legalized administrative work norms. This concept originated from the administrative system. The main responsibility of the government and related departments is the maintenance and realization of public interests [29]. Early practical and theoretical circles generally realized that in China, many institutions, complicated procedures, and complicated procedures affect the field of administrative management. Institutions represent society and the public, and their goal is to obtain the best administrative benefits at the least administrative cost [30]. Issues, such as procrastination over approval documents and overwhelmed personnel [31], are commonly summarized as low administrative efficiency. This not only severely hinders relevant administrative departments from performing their political functions but also disrupts the service consciousness and handling consciousness of relevant administrative departments. Recently, with the continuous deepening of the reform of the administrative system, the public call for optimizing administrative services has also become more pronounced [32]. The standard for measuring the work of the government and related administrative departments has changed from one-dimensional administrative efficiency to multi-dimensional administrative efficiency [33]. Administrative efficiency can be used to investigate whether the Chinese public management and public service are reasonable and effective. PPP projects are the product of public–private cooperation. An administrative organization can affect the progress and quality of the project. In addition, when the government and related departments have outstanding administrative efficiency, they can reduce the friction between the stakeholders of a construction project [34]. In this case, all stakeholders show a certain degree of responsibility when dealing with risks, which provides a stronger guarantee for the realization of the project.

2.4. Theoretical Model

Although the PPP model alleviates financial pressures in governmental investment projects, it also gives rise to stakeholder opportunism, primarily stemming from unclear rights and responsibilities, and unbalanced interests and risks—a phenomenon rooted in transaction cost economics (TCE) and principal–agent theory [18,35]. To address this, scholars have integrated stakeholder theory [36] and resource dependence theory [37] to analyze how governance mechanisms coordinate multi-party interests. Specifically, TCE explains contractual incompleteness due to asset specificity and uncertainty, while principal–agent theory highlights moral hazard risks from information asymmetry. Stakeholder theory further emphasizes the need to balance economic goals and public welfare, and resource dependence theory underscores the power dynamics between interdependent actors. Many studies have focused on the impact of the contractual governance mechanism on project performance [9,10,11,12,36]. Moreover, these studies have shown that the contractual relationship between PPP project stakeholders can impact project performance. However, the relationships between them have not yet been defined appropriately. With the growing involvement of governments and relevant agencies in PPP projects, the role of administrative efficiency in moderating the relationship between contractual governance and project performance has gained prominence. Thus, this study undertakes theoretical analysis to test relevant hypotheses and develops a corresponding theoretical research model, as shown in Figure 1.

2.5. Research Hypothesis

Williamson [18] posited that contractual governance entails that transaction parties endeavor to anticipate future scenarios, clarify the rights, responsibilities, and interests of all stakeholders, and leverage contractual incentives and penalties to guide behaviors toward transaction objectives. However, the temporary nature of projects inherently weakens the alignment of core interests among parties, thereby increasing the likelihood of opportunistic behaviors driven by information asymmetry as each party pursues self-interest [37]. Drawing on research regarding governance structures in PPP projects, four contractual governance mechanisms have been identified: responsibility allocation, profit allocation, risk allocation, and accountability [38].

2.5.1. Responsibility Allocation

Compared with other construction projects, the private sector side of urban sewage treatment PPP projects shoulders more responsibilities. Based on divergent interest orientations, stakeholders exhibit both market and non-market attributes, with their pursuit of project outcomes characterized by macro-level commonalities and micro-level divergences shaped by project roles. Freeman’s stakeholder theory emphasizes that balancing diverse interests (e.g., government’s environmental goals, private sector’s profitability) is critical for project sustainability [39]. In sewage treatment PPPs, unclear responsibility boundaries amplify transaction costs, as seen in delayed pollution control upgrades due to ambiguous liability. A transparent responsibility framework reduces information asymmetry, aligns stakeholders with project goals, and fosters collaborative behavior. Consequently, throughout the project lifecycle, stakeholders may prioritize short-term self-interest, leveraging information asymmetry for individual gains. Additionally, in practical project contexts, the government often holds an inherent positional advantage [40]. The impact of this advantage on stakeholder cooperation equity hinges on the upfront rational allocation of responsibilities. A transparent and equitable responsibility framework can modulate stakeholder behavior, enhance self-regulation, and foster a fair, transparent, and well-defined project ecosystem [41]. Collectively, these effects constitute a foundational prerequisites for achieving optimal project performance.

2.5.2. Profit Allocation

Contractual governance based on the principal–agent theory emphasizes the incentives of contracts. PPP project contracts typically contain relevant clauses for interest division, and the most fundamental and direct manifestation of interest is remuneration [42]. The degree of due diligence of project stakeholders is related to the benefits associated with the design of the incentive contract of the PPP project [43]. The division of interests is the tie for the cooperation among various stakeholders of the project, as well as the driving force to mobilize stakeholders to actively participate, respond, and invest [44]. Therefore, establishing a reasonable and scientific interest division relationship between stakeholders usually yields a good project and is the fundamental guarantee of performance.

2.5.3. Risk Allocation

In practice, risk events rarely arise from the exclusive responsibility of a single stakeholder. TCE posits that optimal risk allocation assigns risks to the party best able to manage them. Allocating a disproportionate share of risks to the private sector tends to elicit defensive behaviors during project implementation [45,46]. Assuming excessive risk exposes the private sector to potential losses, which may incentivize defensive strategies, such as cutting operational costs, underinvesting in effort, or engaging in opportunistic actions, all of which negatively impact project performance [47,48,49,50,51]. A balanced contractual framework among stakeholders serves dual functions of encouragement and constraint; by clarifying rights and obligations, it motivates stakeholders to proactively mitigate risks through diligent performance of their roles, thereby reducing the likelihood of risk event occurrences [33,52].

2.5.4. Accountability

Sewage treatment, as an important part of public utilities, is an important requirement for the building of an environment-friendly society. Therefore, it is necessary to ensure that the water quality after sewage treatment meets the discharge requirements [53]. To achieve this, the intensity of information disclosure and supervision should be increased, and accountability punishment for the illegal discharge of wastewater should be implemented [54,55]. While accountability is often associated with oversight and punishment, it also serves as a guiding and motivational tool [56]. Its core purpose is to compel stakeholders to assume legal responsibility for their project-related actions [57,58]. Broadly construed, accountability extends beyond single entities; governments may hold private partners accountable for project deliverables, while private entities must incur liabilities for contractual non-compliance. Concurrently, stakeholders’ supervisory capacities must adhere to established standards. Establishing an equitable and objective accountability framework thus fosters stakeholder responsibility, strengthens commitment to project objectives, and ultimately enhances project performance [29]. Based on the above analysis, the following research hypotheses are proposed:
H1: 
The contractual relationship positively impacts project performance.
H1a: 
The allocation of responsibilities positively impacts project performance.
H1b: 
Profit allocation positively impacts project performance.
H1c: 
Risk allocation positively impacts project performance.
H1d: 
Accountability positively impacts project performance.

2.5.5. The Moderating Role of Administrative Efficiency

Administrative efficiency refers to the comprehensive manifestation of the extent to which national administrative organs and administrative personnel perform and complete governmental tasks and administrative goals; moreover, administrative efficiency refers to the extent to which these stakeholders perform public administrative activities as well as their efficiency [59]. The effect of administrative efficiency on sewage treatment projects is particularly obvious and plays an indispensable role in people’s livelihood and environmental protection. With the continuous deepening of the reform of administrative systems, the public call for optimizing administrative services has become stronger. The standard for measuring the work of the government and related administrative departments has also changed from a single-dimensional administrative efficiency measure to a multi-dimensional administrative efficiency measure. Administrative efficiency has become an important index for examining whether China’s public management and public services are reasonable and effective [60,61,62]. Administrative agencies and relevant authorities, such as firefighting, civil air defense, transportation, environmental protection, and gardening, can impact the progress and quality of a project. When the government and related departments have high administrative efficiency, PPP project stakeholders can avoid the delay of the project process because of mutual evasion of responsibilities and unclear rights; thus, the progress of the project is smoother. In addition, when the government and related departments have high administrative efficiency, they can reduce the conflict between the stakeholders of the PPP project. Therefore, each stakeholder shoulders a certain responsibility when negotiating potential risks and responding to risks. Administrative efficiency may be an important contingency factor in the contractual relationship and performance of urban sewage treatment PPP projects. Based on the above analysis, the following research hypotheses are proposed:
H2: 
Administrative efficiency strengthens the positive relationship between contractual relations and project performance.
H2a: 
Administrative efficiency strengthens the positive relationship between power and responsibility allocation and project performance.
H2b: 
Administrative efficiency strengthens the positive relationship between profit allocation and project performance.
H2c: 
Administrative efficiency strengthens the positive relationship between risk allocation and project performance.
H2d: 
Administrative efficiency strengthens the positive relationship between accountability and project performance.

3. Research Methodology

3.1. Data Collection

This study tested all eight hypotheses using questionnaire survey data from urban sewage treatment projects in China. Data were collected through the field distribution of paper questionnaires as well as the online distribution of electronic questionnaires. The questionnaires were distributed through members of the urban sewage treatment association, government officials, and companies that have a cooperative relationship with urban sewage treatment PPP projects. The issuance and collection of questionnaires started in April 2023 and ended in May 2023, thus lasting two months. A total of 289 questionnaires were issued and 276 were recovered. After excluding invalid questionnaires (because of, e.g., incorrect answers, missed answers, and extremes), a total of 225 valid questionnaires were obtained, representing an effective response rate of 81.5%.

3.2. Questionnaire Survey

The questionnaire was designed in accordance with the principles recommended by Gerbing and Anderson [63]. First, 56 cases of urban sewage treatment PPP projects were studied to understand industry practices. Combined with prior studies, an initial questionnaire was then developed. Second, 21 in-depth interviews with representatives from urban sewage treatment PPP projects were conducted to meaningfully refine the questionnaire. Third, three practitioners with more than 15 years of experience in relevant fields were invited to provide suggestions on the overall design of the questionnaire. Fourth, during questionnaire administration, supplementary interviews were conducted with the 68 respondents, including 31 government officials (from Water Affairs Bureaus and PPP Management Centers) and 37 private-sector managers (from environmental protection companies and investment firms). The interviews probed respondents’ interpretations of each variable. Through content analysis of interview transcripts and questionnaire responses, demonstrating that the indicators yield consistent results regardless of the respondent’s institutional background. Additionally, the differentiated design of research subjects is rooted in the core logic of stakeholder theory [36]: PPP project governance must balance the heterogeneous interests of the government and private sectors. Although indicators for different subjects focus on distinct dimensions, such differentiation is a theoretical necessity of governance research [36,64] and thus poses no inherent logical conflicts in data analysis. Therefore, the validity of the measurement of questionnaire variables was verified. After a pre-test, the questionnaire was finalized. The constructs and their measurements are shown in Table 1.

3.3. Variables and Measurement

The contractual relationship between urban sewage treatment PPP project stakeholders was used as the explanatory variable in this study. Based on reading and sorting of a large number of relevant documents, this research is based on the results of literature analysis. Multi-item measures were developed based on existing scales, identified from the literature, and minor modifications were implemented to suit the purpose and context of this research. All multi-item measures were based on a 5-point Likert scale, from 1 (strongly disagree) to 5 (strongly agree). The items are shown in Table 1.

3.4. Reliability and Validity Test

3.4.1. Reliability

Initially, reliability and validity of all constructs were examined. Generally, the value of Cronbach’s alpha was used to measure internal consistency and reliability. Nunnally and Bernstein [68] recommend that the value of Cronbach’s alpha should exceed 0.7. All constructs in the developed model have Cronbach’s alpha values exceeding 0.7. Convergent validity was measured using factor loadings, composite reliability (CR), and average variance extracted (AVE), which should exceed the threshold value of 0.5. Assessment of all constructs regarding factor loadings, CR, and AVE, which exceed the threshold of 0.5 (Table 2 and Table 3).

3.4.2. Validity Test

This study used AMOS23.0 software to assess the validity of the questionnaire.
Table 3 shows that the AVE values of the four dimensions of responsibility allocation, profit allocation, risk allocation, and accountability in the contract relationship scale all exceed the square of the correlation coefficients between the dimensions. Therefore, the discriminative validity of the contract relationship scale can be accepted.

4. Results

This study used the Person correlation coefficient to analyze the correlation between variables. This method is mainly used to measure the close degree of correlation between variables. The value of the correlation coefficient ranges between 1 and −1, where 1 means that both variables are completely linearly correlated, −1 means that both variables are completely negatively correlated, and 0 means that neither variable is correlated at all. At the same time, the closer the absolute value of the data is to 0, the weaker the correlation. Table 4 shows that there is a positive correlation between the variables.

4.1. Regression Analysis

4.1.1. Direct Effects of Contractual Relationship on Project Performance

To examine the influence of the contractual relationship on project performance, this study designated project performance as the dependent variable. After controlling for demographic variables, the contractual relationship was incorporated as the independent variable. The regression analysis results are presented in Table 5.
In Benchmark Model 1, which only included demographic control variables, none of these variables demonstrated a significant effect on project performance, suggesting that they may not be strong predictors of the outcome. Subsequently, four dimensions of the contractual relationship were introduced into the model. The regression equation for this augmented model yielded an F-value of 14.375 (p < 0.001), indicating a highly significant overall fit. Specifically, the dimensions of power and responsibility allocation (β = 0.255, p < 0.001), profit allocation (β = 0.227, p = 0.001), risk allocation (β = 0.240, p = 0.001), and accountability (β = 0.214, p = 0.002) all exhibited significant positive associations with project performance. These findings provide strong empirical support for Hypotheses H1a, H1b, H1c, and H1d, confirming that each dimension of the contractual relationship contributes positively to project performance.
Furthermore, the variance inflation factor (VIF) values for all independent variables ranged from 1.058 to 1.471, well within the acceptable threshold of being greater than 1 and less than 10. This result indicates that there is no evidence of multicollinearity among the independent variables, ensuring the reliability and validity of the regression estimates.

4.1.2. Moderating Effect of Administrative Efficacy on the Relationship Between Contractual Relationship and Project Performance

(1) Moderating effect of administrative efficacy on the relationship between responsibility allocation and project performance
Firstly, each independent variable and moderating variable in this research are processed centrally. The interaction terms between each independent variable and moderating variable are obtained, and then, hierarchical regression analysis is used to test four research hypotheses, H1a, H1b, H1c, and H1d.
Secondly, the five control variables of the basic information survey, namely project role, job position, education, working years, and number of projects, are used as independent variables. Project performance is used as an dependent variable, and Model 1 is constructed as a benchmark model to represent the relationship between the control variable and the dependent variable. Then, based on Model 1, responsibility allocation as well as administrative efficiency are added as independent variables to construct Model 2.
Finally, based on Model 2, “responsibility allocation × administrative efficiency” was added to build Model 3 for testing the moderating effect of administrative efficiency. The profit allocation, risk allocation, and accountability in the remaining three assumptions all repeat the above operations. Table 6 shows the results of the regulatory test analysis of administrative efficiency on the responsibility allocation and project performance.
The data in Table 6 shows that after adding the interaction term of “responsibility allocation × administrative efficiency” in Model 2, the R-square value of Model 3 increases significantly, indicating that the explanatory power of Model 3 has been enhanced. The regression coefficient β = 0.155, p = 0.026 < 0.05 of the interaction term of “responsibility allocation × administrative efficiency” indicates that administrative efficiency has a significant moderating effect on responsibility allocation and project performance. Furthermore, administrative efficiency has a significant effect on the relationship between responsibility allocation and project performance. This supports H2a.
To further explain the moderating effect of administrative efficiency on the responsibility allocation and project performance, the average score of administrative efficiency is used as an index to distinguish the low administrative efficiency group from the high administrative efficiency group. Responsibility allocation is drawn under different administrative efficiencies. The differences in project performance are shown in Figure 2. The responsibility allocation of the high administrative efficiency group exerts a greater impact on project performance than the low administrative efficiency group. This means that with the improvement of administrative efficiency, the impact of the responsibility allocation on project performance increases.
(2) Moderating effect of administrative efficacy on the relationship between profit allocation and project performance
The results of the analysis are presented in Table 7.
Table 7 shows that the regression coefficient is β = 0.129, p = 0.074 > 0.05 when the interaction term of “profit allocation × administrative efficiency” is added to Model 2. This implies that administrative efficiency exerts no significant effect on the relationship between profit allocation and project performance. Administrative efficiency also has no moderating effect on the relationship between risk allocation and project performance. Therefore, H2b is not supported.
(3) Moderating effect of administrative efficacy on the relationship between risk allocation and project performance
The results of the analysis are shown in Table 8.
Table 8 shows that after adding the interactive term “risk allocation × administrative efficiency” to Model 2, the R-square value of Model 3 increases significantly, indicating that the explanatory power of Model 3 has been enhanced. The regression coefficient β = 0.145, p = 0.041 < 0.05 for the interaction term of “risk allocation × administrative efficiency” indicates that administrative efficiency exerts a significant moderating effect on risk allocation and project performance. Moreover, administrative efficiency has a positive relationship with risk allocation and the project performance regulation effect. This supports H2c.
To further explain the moderating effect of administrative efficiency on risk allocation and project performance, the average administrative efficiency is divided into the next standard deviation as the indicator. This division enables the low administrative efficiency group to be distinguished from the high administrative efficiency group, and thus, the performance of responsibility allocation under the different administrative efficiencies is drawn. The difference in project performance is shown in Figure 3. The risk allocation of the high administrative efficiency group exerts a stronger impact on project performance than the low administrative efficiency group, i.e., with the improvement of administrative efficiency, the impact of risk allocation on project performance increases.
(4) Moderating effect of administrative efficacy on the relationship between accountability and project performance
The results of the analysis are shown in Table 9.
Table 9 shows that the regression coefficient is β = 0.007, p = 0.920 > 0.05 when the interaction term “accountability × administrative efficiency” is added to Model 2. This indicates that administrative efficiency does not exert a significant effect on the relationship between accountability and project performance. Effectiveness does not exert a moderating effect on the relationship between accountability and project performance. Therefore, H2d is not supported.

5. Discussion

This research follows a standard empirical research paradigm and empirically tests the relationship between contractual governance and the four sub-dimensions of administrative efficiency and project performance. The test results of the hypotheses are presented in Table 10.
In this study, all four sub-hypotheses of H1 are supported. That is, responsibility allocation (0.255), profit allocation (0.227), risk allocation (0.240), and accountability (0.214) all exert a significant positive impact on project performance. All four sub-dimensions of contractual relationship exert a relatively even influence on project performance, and each offers corresponding advantages in the contractual governance process of PPP projects.
Moreover, the four sub-hypotheses of H2 are only partially supported. On the one hand, administrative efficiency exerts a significant positive moderating effect on the relationship between responsibility allocation and project performance, as well as between risk allocation and project performance. Both related hypotheses are supported. On the other hand, the moderating effect of administrative efficiency on the relationship between accountability and project performance, as well as between profit allocation and project performance is not significant. Both related hypotheses are not supported.

6. Conclusions

The primary objective of this study was to investigate the impact of contractual governance on project performance in PPP projects. Using a questionnaire survey of 225 urban sewage treatment PPP projects in China, we examined the direct effects of contractual governance on project performance, the interactions between contractual dimensions, and how these relationships are moderated by administrative efficiency.
The results revealed that the four sub-dimensions of contractual relationships, responsibility allocation, profit allocation, risk allocation, and accountability, have a significant positive impact on project performance. This indicates that each sub-dimension of contractual governance assumes distinct and essential roles in PPP projects. Given the government’s regulatory mandate to protect aquatic environments, stakeholders in urban sewage treatment projects initiatives must proactively foster robust contractual frameworks. Specifically, in terms of responsibility allocation, the government should refine operational responsibilities. For example, clarifying enterprises’ obligations for lifecycle maintenance of equipment can prevent short-term operational behaviors (such as cutting corners) and reduce long-term operation and maintenance costs. In profit distribution, it is essential to ensure that enterprises can recover costs and obtain reasonable returns. Take the Hefei Wangxiaoying TOT Project as an example, where the government and Berlin Water agreed on a “stepwise payment based on treatment volume plus penalties for exceeding standards” mechanism. This not only motivates enterprises to operate efficiently but also constrains service quality. In risk allocation, the government should proactively assume policy risks. For instance, committing to bearing incremental costs caused by enhanced environmental standards can prevent enterprises from suffering losses due to policy changes. Regarding accountability, public disclosure of environmental information (such as real-time water quality data and sludge disposal trajectories) and the introduction of third-party audits can both meet public supervision needs and urge the government to fulfill its regulatory responsibilities.
Notably, this study found that administrative efficiency exerts a significant positive moderating effect on the relationships between responsibility allocation and project performance, as well as between risk allocation and project performance. However, administrative efficiency did not exhibit significant moderating effects on the relationships between profit allocation and project performance or between accountability and project performance. When government agencies involved in project oversight demonstrate high administrative efficiency, they help stakeholders avoid process delays caused by inaction or blame-shifting. Additionally, by streamlining collaborative processes, administrative efficiency reduces conflicts, thereby strengthening collective responsibility and enhancing project outcomes. In contrast, profit allocation is inherently linked to market dynamics and internal stakeholder negotiations, while accountability is rooted in the structural design of contractual obligations and mutual supervision, neither of which is directly influenced by administrative efficiency.
There are still some limitations in this research. First, future research can adopt mixed research methods, combining quantitative questionnaires with qualitative case analyses (such as in-depth interviews and process tracing), and introduce longitudinal research designs to track the full lifecycle of PPP projects. This approach aims to capture the dynamic evolution of contractual governance and project performance, addressing the limitations of cross-sectional data in depicting contextual complexities. Second, the research scope can be expanded to other infrastructure PPP projects in sectors, like transportation and energy, comparing differences in contractual governance mechanisms under varying industry regulatory models. Meanwhile, cross-regional comparative studies (e.g., developed vs. emerging markets) can analyze how institutional environments (such as policy stability and rule of law) influence the moderating effects of risk allocation and administrative efficiency. Finally, scholars may introduce the dynamic capabilities theory to explore how flexible contractual clauses (such as renegotiation mechanisms) respond to uncertainties like policy changes and technological innovations. Alternatively, integrating a digital transformation perspective, research can examine how technologies, such as IoT monitoring and blockchain authentication, reshape contract execution transparency and stakeholder accountability mechanisms, expanding the contemporary applicability of governance theories.

Author Contributions

Conceptualization, J.G. and W.X.; methodology, J.S.; software, W.X.; validation, W.X.; investigation, W.X.; data curation, W.X.; writing—original draft preparation, W.X.; writing—review and editing, J.G.; visualization, W.X.; funding acquisition, J.S. All authors have read and agreed to the published version of the manuscript.

Funding

This research was funded by the National Natural Science Foundation of China (Grant No. 72271042), the National Social Science Foundation of China (Grant No. 22&ZD068 and 23VRC040), the Project of Philosophy and Social Sciences Research, Ministry of Education (Grant No. 22JHQ093), and the Fundamental Research Funds for the Central Universities of China (Grant No. DUT23RW303 and DUT24RW305).

Data Availability Statement

The data used to support the results in this article are included within the paper. If you have any queries regarding the data, the data of this study can be available from the correspondence upon request.

Conflicts of Interest

Authors declare that they have no conflicts of interest regarding the publication of this paper.

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Buildings 15 01858 g001
Figure 1. Theoretical research model.
Figure 1. Theoretical research model.
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Buildings 15 01858 g002
Figure 2. Interaction of administrative efficiency and responsibility allocation.
Figure 2. Interaction of administrative efficiency and responsibility allocation.
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Buildings 15 01858 g003
Figure 3. Interaction between administrative efficiency and risk allocation.
Figure 3. Interaction between administrative efficiency and risk allocation.
Buildings 15 01858 g003
Table 1. Measurement scale of the contractual relationship for urban sewage treatment PPP projects.
Table 1. Measurement scale of the contractual relationship for urban sewage treatment PPP projects.
FactorsCodeMeasurement ItemsReferences
Responsibility allocationC11There is no overlap of responsibilities among project stakeholdersFaisol and Dainty [40]
C12There is no responsibility vacuum in the project
C13There is no unauthorized use or abuse of power by any of the stakeholders in the project
C14An equivalent relationship exists between the rights and responsibilities of project stakeholders
Profit allocationC21The benefits received by project stakeholders match the size, complexity, and special requirements of the project.Crocker and Masten [65]
C22The contract price is adjusted and compensated according to price fluctuations, engineering changes, and related policy changes
C23Corresponding penalty clauses for failure to effectively perform the contract are set up
C24Corresponding reward clauses for early completion, investment savings, or project awards are set up
Risk allocationC31Project stakeholders understand the project risks or changes that may occur in the future
C32Project stakeholders understand the procedures and principles for sharing the responsibility for project risks and changes that may occur in the futureFischer [52]
C33When dealing with project risks or changes, the reasonable interests of project stakeholders are consideredJin and Doloi [47]
AccountabilityC41Project management issues have corresponding standards and basis for accountability
C42Irregular behavior of stakeholders in the project is strictly investigatedBovens [55]
C43Project stakeholders accept and approve the results of an accountability investigation
G1Project stakeholders are able to achieve the expected goals
Project performanceG2Incentives obtained by project stakeholders can effectively drive positive behaviorsWallace et al. [49] Pinto et al. [59]
G3Project stakeholders are satisfied with their cooperation with other partiesNejatyan et al. [66]
G4Project stakeholders can be effectively restrained
P1Project stakeholders are satisfaction with the government and the affairs of related governmental departments
Administrative efficiencyP2The governing ability and level of governmental affairs of the government and related departmentsSu [67]
P3Administrative efficiency of the government and related departmentsData survey
Table 2. Construct reliability and discriminant validity.
Table 2. Construct reliability and discriminant validity.
ScaleSubscaleMeasurement ItemsCronbach’s αCRAVE
Contractual relationshipResponsibility allocationC11-C140.8520.8590.607
Profit allocationC21-C240.8570.8510.590
Risk allocationC31-C330.7990.8050.581
AccountabilityC41-C430.8220.8330.626
Project performance G1-G40.8380.8210.538
Administrative efficiency P1-P30.8150.8200.607
Table 3. Distinctive validity analysis of the contractual relationship scale.
Table 3. Distinctive validity analysis of the contractual relationship scale.
Responsibility AllocationProfit AllocationRisk AllocationAccountability
Responsibility allocation0.607
Profit allocation0.3160.590
Risk allocation0.3530.3650.424
Accountability0.3300.2700.3480.255
Table 4. Results of the correlation analysis.
Table 4. Results of the correlation analysis.
Responsibility AllocationProfit AllocationRisk AllocationAccountabilityAdministrative EfficiencyProject Performance
Responsibility allocation1
Profit allocation0.313 **1
Risk allocation0.361 **0.362 **1
Accountability0.330 **0.268 **0.385 **1
Administrative efficiency0.394 **0.266 **0.343 **0.401 **1
Project performance0.496 **0.433 **0.474 **0.443 **0.330 **1
Note: ** means p < 0.01.
Table 5. Regression analysis results of contractual relationship on project performance.
Table 5. Regression analysis results of contractual relationship on project performance.
ModelStandard T-ValueSignificance Level R2F
βDeviationBetaCSVIF
1(constant)3.0750.349 8.8190.000 0.0270.863
Project size−0.0020.028−0.007−0.0830.9340.8711.148
Job position0.0820.0580.1301.4270.1560.7661.305
2(constant)0.3810.361 1.0550.293 0.46314.375 ***
Project size0.0170.0210.0530.8240.4110.8581.166
Job position0.0840.0440.1331.9300.0550.7581.319
Responsibility allocation0.2250.0610.255 ***3.6930.0000.7521.329
Profit allocation0.2000.0590.227 **3.3700.0010.7901.265
Risk allocation0.2080.0620.240 **3.3650.0010.7061.417
Accountability0.1880.0590.214 **3.1710.0020.7851.274
Note: ** means p < 0.01, *** means p < 0.001.
Table 6. Results of the moderating effect of administrative efficiency on the relationship between responsibility allocation and project performance.
Table 6. Results of the moderating effect of administrative efficiency on the relationship between responsibility allocation and project performance.
VariableProject Performance
Model 1Model 2Model 3
Project size−0.0070.0160.009
Job position0.1300.1130.115
responsibility allocation 0.431 ***0.415 ***
Administrative efficiency 0.154 *0.180 *
responsibility allocation × administrative efficiency 0.155 *
R20.0270.2830.306
∆ R2−0.0040.2500.270
F0.8638.581 ***8.339 ***
Note: * means p < 0.05, *** means p < 0.001. R2 = Coefficient of Determination, Δ R2 = Change in Coefficient of Determination.
Table 7. Results of the moderating effect of administrative efficiency on the relationship between the profit allocation and project performance.
Table 7. Results of the moderating effect of administrative efficiency on the relationship between the profit allocation and project performance.
VariableProject Performance
Model 1Model 2Model 3
Project size−0.007−0.018−0.008
Job position0.1300.1450.143
profit allocation 0.394 ***0.383 ***
Administrative efficiency 0.216 **0.219 **
Profit allocation × administrative efficiency 0.129
R20.0270.2720.287
∆ R2−0.0040.2380.249
F0.8638.108 ***7.603 ***
Note: ** means p < 0.01, *** means p < 0.001. R2 = Coefficient of Determination, Δ R2 = Change in Coefficient of Determination.
Table 8. Results of the moderating effect of administrative efficiency on the relationship between risk allocation and project performance.
Table 8. Results of the moderating effect of administrative efficiency on the relationship between risk allocation and project performance.
VariableProject Performance
Model 1Model 2Model 3
Project size−0.0070.0300.039
Job position0.1300.1200.101
Risk allocation 0.445 ***0.448 ***
Administrative efficiency 0.171 *0.189 *
Risk allocation ×
Administrative efficiency		 0.145 *
R20.0270.3010.320
∆ R2−0.0040.2680.284
F0.8639.331 ***8.869 ***
Note: * means p < 0.05, *** means p < 0.001. R2 = Coefficient of Determination, Δ R2 = Change in Coefficient of Determination.
Table 9. Results of the moderating effect of administrative efficiency on the relationship between accountability and project performance.
Table 9. Results of the moderating effect of administrative efficiency on the relationship between accountability and project performance.
VariableProject Performance
Model 1Model 2Model 3
Project size−0.007−0.008−0.007
Job position0.1300.1600.159
Accountability 0.385 ***0.384 ***
Administrative efficiency 0.174 *0.176 *
Accountability × administrative efficiency 0.007
R20.0270.2570.257
∆ R2−0.0040.2220.217
F0.8637.497 ***6.518 ***
Note: * means p < 0.05, *** means p < 0.001. R2 = Coefficient of Determination, Δ R2 = Change in Coefficient of Determination.
Table 10. Summary of research hypothesis test results.
Table 10. Summary of research hypothesis test results.
NumberResearch HypothesisTest Results
H1The contractual relationship positively impacts project performance.Supported
H1aResponsibility allocation positively impacts project performance.Supported
H1bProfit allocation positively impacts project performance.Supported
H1cRisk allocation positively impacts project performance.Supported
H1dThe accountability relationship positively impacts project performance.Supported
H2Administrative efficiency positively regulates the relationship between the contractual relationship and project performance.Partially Supported
H2aAdministrative efficiency positively regulates the relationship between responsibility allocation and project performance.Supported
H2bAdministrative efficiency positively regulates the relationship between profit allocation and project performance.Not Supported
H2cAdministrative efficiency positively regulates the relationship between risk allocation and project performance.Supported
H2dAdministrative efficiency positively regulates the relationship between accountability and project performance.Not Supported
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Gui, J.; Song, J.; Xia, W. The Impact of Contractual Governance on Project Performance in Urban Sewage Treatment Public–Private Partnership Projects: The Moderating Role of Administrative Efficiency. Buildings 2025, 15, 1858. https://doi.org/10.3390/buildings15111858

AMA Style

Gui J, Song J, Xia W. The Impact of Contractual Governance on Project Performance in Urban Sewage Treatment Public–Private Partnership Projects: The Moderating Role of Administrative Efficiency. Buildings. 2025; 15(11):1858. https://doi.org/10.3390/buildings15111858

Chicago/Turabian Style

Gui, Jialin, Jinbo Song, and Wen Xia. 2025. "The Impact of Contractual Governance on Project Performance in Urban Sewage Treatment Public–Private Partnership Projects: The Moderating Role of Administrative Efficiency" Buildings 15, no. 11: 1858. https://doi.org/10.3390/buildings15111858

APA Style

Gui, J., Song, J., & Xia, W. (2025). The Impact of Contractual Governance on Project Performance in Urban Sewage Treatment Public–Private Partnership Projects: The Moderating Role of Administrative Efficiency. Buildings, 15(11), 1858. https://doi.org/10.3390/buildings15111858

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