Towards an Enhanced Business Case Development for Public–Private Partnership (PPP) Projects: A Comparative Study of China and New Zealand

Abstract

Public–Private Partnerships (PPPs) are widely used for delivering public assets and associated services. A well-developed business case is crucial for the successful execution of PPP projects. This research conducts a comparative study of the critical factors influencing PPP business case development and proposes practical policies and management interventions to enhance this process. Using a systematic literature review and semi-structured interviews with 46 PPP stakeholders from China and New Zealand, the study identifies four key areas essential for an improved business case development: (1) contextual factors, including political support and enabling legal and regulatory frameworks; (2) procedural factors, such as comprehensive service need analysis, robust procurement option assessment, and clear affordability analysis; (3) capability-related factors, including strong public sector capability and credibility; and (4) organizational factors, such as streamlined institutional arrangements and effective governance structures. By adopting the proposed strategies, policymakers can make more informed decisions on PPP-related policies, while public procuring authorities will be better equipped to plan, structure, and manage the business case process effectively. The research focused on PPP practices in two countries, China and New Zealand, with findings derived from a limited number of interviews. This raises questions about the generalizability of the results. Additionally, the recommendations may need to be adapted to account for varying economic, social, and policy contexts when applied in different settings.

1. Introduction

Public–Private Partnerships (PPPs) are increasingly used for delivering public assets and associated services. In a PPP arrangement, a private sector entity enters a long-term contract (typically 20–30 years) with the public sector to provide a service that requires the construction or enhancement of a facility. The private sector is responsible for financing, constructing, operating, and maintaining the facility, with control transferred to the public sector at the end of the contract [1,2].

A typical PPP procurement process consists of three main stages: business case development, tendering, and contract management. Decisions made in the early stages of a project significantly impact later stages in its life cycle [3]. Business case development is an initial stage that consolidates and summarizes the findings of all necessary research and evaluations of a proposed investment, ensuring that the optimal solution is selected for the given circumstances [4]. In PPP projects, an effective and efficient business case stage enables informed and timely decision-making while facilitating smooth implementation [5]. Conversely, a business case process lacking rigor and robustness limits the availability of accurate and sufficient information, often leading to suboptimal decisions [5]. For example, in the Hangzhou Bay Cross-Sea Bridge Project, private sector investors experienced significant financial losses because traffic volume did not meet the initial forecast. Without a well-defined economic assessment at the business case stage, toll revenues could not offset capital and operating costs, resulting in substantial financial losses for private investors [6]. Therefore, preparing an effective business case is crucial in PPP projects [7].

The management of the business case process is a crucial aspect of PPP project management [8]. Rockart defined critical success factors (CSFs) as the “few key areas of activity where favorable results are absolutely necessary for a manager to reach his/her goals” [9]. Since the 1990s, numerous studies have focused on CSFs within the context of PPPs [10,11,12]. Researchers have also applied the CSF concept to various stages of PPP procurement by identifying factors affecting specific processes, such as the feasibility stage [13], PPP briefings [14], the initial design stage [15], the tendering stage [16], contract administration [17], and ex-post evaluation [18]. Therefore, to enhance business case development, it is essential to identify the CSFs that contribute to the success of the process. This study aims to identify the critical factors that contribute to a successful PPP business case and develop policy and management recommendations for improving PPP business case development. To achieve this, a comparative analysis of the key factors influencing the successful development of PPP business case practices in China and New Zealand is conducted. The research seeks to answer the following questions:

• What are the factors that are critical to the success of the PPP business case?
• Based on the critical factors identified, what are the useful and workable policies and management interventions for enhanced business case development processes?

China and New Zealand were selected for this comparative analysis due to their similarities and differences in PPP development. Over the past two decades, both countries have gradually developed active PPP markets, drawing on mature international PPP models such as the Private Finance Initiative (PFI) and Build–Operate–Transfer (BOT). As the dynamics of PPP projects have evolved, so too have PPP practices in both nations. The development of PPP schemes occurs within diverse social, economic, and policy contexts. China, as the world’s second-largest economy, has a substantial pipeline of infrastructure projects, attracting international investors to its PPP market. In contrast, New Zealand has a relatively small economy with lower infrastructure demands, making its PPP market less attractive to private sector players. China operates a centrally planned economy, where the government directs and controls economic activities, including the promotion and implementation of PPP programs. Due to its unique administrative system and construction industry practices, international PPP experiences may not be directly applicable to China’s PPP market. Conversely, New Zealand represents a typical free-market economy and shares significant similarities with mature PPP markets such as the UK and Australia. Its PPP model is largely based on well-established international frameworks. Given the fundamentally different environments, comparing PPP practices in China and New Zealand significantly enhances our understanding of how various contextual factors shape the formation, development, organization, and management of PPPs at the business case stage. Although such fundamental contextual differences present methodological challenges, it is precisely these contrasts that amplify the significance of this comparative study. By examining both similarities and differences in PPP business case processes and analyzing the underlying reasons for these variations, the research uncovers deeper insights into how distinct institutional, economic, regulatory, and cultural environments influence PPP business case development. Cross-national comparative studies inherently aim to highlight how contextual dynamics affect the applicability and adaptability of theoretical models and practical frameworks. Consequently, this comparative analysis uniquely contributes to PPP scholarship by identifying context-sensitive nuances and adaptable best practices that can enhance business case robustness, flexibility, and cross-contextual learning. Thus, rather than undermining validity, these contextual distinctions enrich our findings and offer more broadly generalizable recommendations with meaningful implications, not only for China and New Zealand but also for other jurisdictions seeking to adopt and adapt best practices within their distinctive institutional contexts.

In this research, a comprehensive literature review was first conducted to identify the critical factors affecting the execution of PPP projects. Semi-structured interviews were then carried out to gather insights and perspectives from industry practitioners on key issues related to PPP business case development. Drawing on interviewees’ opinions, this study proposes recommendations to enhance business case processes for PPPs. The findings contribute to the international PPP best practice framework by highlighting core issues specific to the business case development stage. By implementing the strategies and measures proposed in this research, public procuring authorities will be better positioned to initiate, plan, and execute PPP projects effectively.

2. Literature Review

2.1. PPP Business Case Development Stage

According to the Association for Project Management (2017), a business case “provides justification for undertaking a project or program. It evaluates the benefit, cost, and risk of alternative options and provides a rationale for the preferred solution” [19]. Recognized as a best practice in business and organizational management, the business case approach has been adopted in public sector procurement and is now widely used across jurisdictions to support capital project investment decisions [20]. It is a crucial component of the planning, approval, procurement, and delivery of investments. The business case ultimately takes the form of a proposal document outlining the objectives and key aspects of implementation management [21]. The depth and detail of a business case vary depending on the nature and complexity of the proposal. A well-developed business case not only provides the procuring authority with evidence to support decision-making but also assures other stakeholders that the process has been conducted responsibly and transparently.

A typical PPP process broadly consists of project identification, feasibility and structuring (business case stage), tendering, construction, operation and maintenance, and the handover process [5]. HM Treasury outlines that a business case consists of five interconnected but distinct components: strategic, economic, financial, commercial, and management [3]. The development of a business case is an iterative process that unfolds over time in a sequential manner. As the proposal progresses, previous assumptions and analyses are revisited to ensure the continued effectiveness of the work undertaken [22]. The New Zealand Treasury recommends a multi-stage business case development process, which includes the Program Business Case (PBC), Indicative Business Case (IBC), and Detailed Business Case (DBC) [23,24,25]. The multi-stage process and the primary tasks involved in each stage are illustrated in Figure 1.

Like other procurement methods, the PPP procurement process should be integrated with the business case development framework. Procuring authorities planning significant investments are typically required to evaluate all procurement options, including PPPs. In New Zealand, formal consideration of PPPs is required during the development of an Indicative Business Case (IBC), which also impacts the development of the IBC and Detailed Business Case (DBC). For example, if a PPP is included in the shortlist of options, the procuring authority must consult with joint ministers and engage with potential private sector participants during the IBC stage. Additional analyses at the subsequent DBC stage include a second round of market sounding, the development of a performance regime, and both qualitative and quantitative assessments, including the compilation of a Public Sector Comparator (PSC) [26].

PPP business case development faces several potential obstacles. The business case process is iterative and time-consuming, and the adoption of PPPs is highly susceptible to political environments. Procurement option selection is sometimes driven by ideological considerations rather than thorough analysis [27]. Public procuring authorities are often under significant pressure to accelerate project timelines rather than develop a well-articulated and compelling business case [28].

The value-for-money analysis, typically conducted at the business case stage, aims to determine the most cost-effective procurement method by comparing a PPP approach with traditional procurement. This assessment primarily relies on financial analysis and cost accounting principles to evaluate PPPs. However, it often fails to incorporate sustainability goals, which involve contingent and fair value accounting [29,30]. Fully integrating value-for-money calculations with sustainability criteria—such as environmental impact, resource consumption, health and well-being, and social equity—remains a significant challenge due to the complexity of measuring and enforcing sustainability considerations [30].

Additionally, business case development is inherently multifaceted and requires multidisciplinary knowledge, skills, and expertise [20]. Public sector project teams, particularly those within organizations with limited experience in capital projects, often lack the necessary expertise to engage in such complex endeavors [31,32]. Insufficient public sector capacity can significantly hinder the progression of business case development.

2.2. Critical Factors Affecting the Successful Development of PPP Business Case

Critical Success Factors (CSFs) are key elements whose presence at each stage of the project life cycle is essential for successful project management. Identifying CSFs helps improve project management practices by drawing on best practices learned from previous projects [31]. In the context of PPP projects, CSFs highlight key managerial activities that must be effectively executed for successful PPP project management [8]. Over the past few decades, research on CSFs for PPP projects has become a major focus in PPP studies [12,32]. The CSF concept has also been applied to PPP project process management to identify optimal approaches for executing specific PPP processes [13,14,15,16,17,18]. A review of the existing literature on PPP critical factors identifies six key factors influencing the execution of PPP projects, which are particularly relevant to business case development [33]. These factors, derived from the literature review, establish the conceptual foundation for the subsequent empirical investigation.

Prior studies have shown that the presence of a political champion and social support determines whether PPP deals can move forward [15,16]. PPPs are often misunderstood by the public as a form of privatization, which can create challenges in gaining stakeholder agreement. Political and public support are, therefore, crucial for ensuring a fair and transparent procurement option analysis, a core component of business case development [34].

Legal and regulatory frameworks define the boundaries within which public entities operate. The adoption and implementation of PPPs involve various legal and regulatory considerations, including project ownership regulations, authorization of specific PPP models, and restrictions on the private sector’s ability to set service fees. The availability of these frameworks significantly influences decisions on whether to adopt PPP models, as well as the commercial, financial, and contractual arrangements involved [10,11].

Ensuring the existence of a service need is crucial for securing a sustainable PPP project [35]. This requires a thorough service need analysis, which is a key task in the business case development phase of a PPP. Central to this issue is the long-term demand for the proposed project [13,14].

Prior studies have highlighted the importance of value-for-money assessment in evaluating PPP procurement options [36]. Value for money is widely used to justify the adoption of PPPs. This assessment typically follows a Public Sector Comparator (PSC) approach, where private bids are compared against the PSC—a risk-adjusted, life-cycle cost estimate of delivering the project through traditional procurement [37].

PPPs are a relatively novel procurement method and involve inherently complex contractual and commercial arrangements [31,32]. The preparation and management of a PPP business case requires extensive cross-disciplinary knowledge and expertise. Therefore, public sector capacity is crucial to the successful development of a PPP business case [34]. The capability, experience, and commitment of the project team are essential to ensuring that the PPP transaction is well planned and structured.

Researchers have identified good governance as a prerequisite for the smooth progression of PPPs [16]. Establishing clear governance structures at the business case stage is critical to ensure that informed and timely decisions are made at key decision-making points.

2.3. PPP Practices and Policies

2.3.1. PPPs in China

China has extensive experience in the application of PPPs. The development of PPPs in China can be categorized into four stages: pioneer (1990–2003), modern (2003–2013), expansion (2013–2018), and stagnation (2019–present) [38,39]. In the first phase, PPPs were predominantly implemented in the form of Build–Operate–Transfer (BOT) projects. The primary driver was to alleviate the government’s budgetary burden of providing public assets by utilizing private sector financing [40]. The concept of PPPs was officially introduced in China around 2003, when the government began experimenting with PPPs under a new policy objective: achieving value for money by leveraging private sector expertise and innovation in public service delivery [38,41]. The Beijing Metro Line 4 Project is regarded as the first successful modern PPP project in China [16]. Over time, the focus shifted from asset-based to service-based PPPs. Since late 2013, another wave of PPPs has emerged as the new generation of leadership has demonstrated a strong interest in increasing private sector involvement in public services. The government has since outlined an ambitious plan to expand PPP programs. The development of PPPs has entered an expansion phase [42]. However, since 2019, China’s PPP sector has reportedly experienced stagnation [39]. Many projects underperformed, and as of February 2023, a significant number of PPP projects were suspended until an updated guideline for PPP mechanisms was issued in November 2023. The new mechanism now requires local governments to prioritize user-paid franchise schemes, with government subsidies limited to supporting operational expenditures while excluding construction costs. This marks a strategic shift toward a franchising PPP model [39].

Institutional, legal, and policy frameworks have evolved to encourage the application of PPPs. A central PPP unit, the China Public–Private Partnerships Center (CPPPC), was established within the Ministry of Finance to coordinate PPP activities at the national level, provide expert advice to assist procuring authorities in planning and executing PPP projects, and serve as a platform for knowledge sharing [38,43]. China’s National Development and Reform Commission (NDRC) has created a database for PPP projects, offering the market clear information about project pipelines. In 2015, a PPP regulation, Measures for the Administration of Concessions for Infrastructure and Public Utilities, was introduced and enforced, defining PPP concessions in the Chinese context and establishing a common legal foundation for PPP implementation [44]. Various central government departments, along with provincial and municipal governments, have issued policies and guidelines—such as the Note on Standardizing Contract Management in Public–Private Partnership Projects and the Guidelines on Standardized PPP Contracts—to clarify the government’s approach to PPP procurement and its role in transactions [45]. These guideline documents provide practical support to procuring authorities in structuring and managing PPPs, significantly contributing to their widespread and effective application [42].

2.3.2. PPPs in New Zealand

In New Zealand, the private sector has been involved in delivering public infrastructure, related services, or a combination of both for many years [46]. This involvement has taken various forms, including outsourcing, franchising, and privatization. Although several quasi-PPP projects, such as Wellington’s Clear Water Project, were undertaken by local governments, the central government remained skeptical about adopting PPPs [43]. However, since 2009, the New Zealand government has emphasized the effective and efficient provision of public services, as well as improvements in capital asset management and procurement. PPPs have been recognized as a key mechanism for achieving these objectives, leading to the establishment of the New Zealand PPP program. Two pilot PPP projects—the Wiri Prison and Hobsonville Schools—were initiated using the Design–Build–Finance–Operate (DBFO) and Design–Build–Finance–Maintain (DBFM) models, respectively [28]. To date, eight PPP projects have been implemented across the education, corrections, and transportation sectors.

To support PPP development, a dedicated PPP team was established within the New Zealand Treasury, serving as a center of excellence for PPP programs. This team formulates PPP policies and processes, assists public agencies with PPP procurement, and monitors project implementation [47]. Additionally, a database was created to provide basic information on existing PPP projects, as well as those under procurement and consideration. Drawing on precedents from other established PPP markets and insights from New Zealand’s pilot projects, a Standard Form PPP Project Agreement was developed, offering credible and tested contractual positions for future projects. Furthermore, the PPP Procurement Process guidance was issued to outline New Zealand’s PPP procurement framework, serving as a key reference for public sector entities considering or implementing PPPs for major infrastructure projects [26].

3. Research Methods

The choice of research methodology is largely determined by the research problem and purpose [48]. This study aims to conduct a comparative analysis of the critical factors influencing the successful development of PPP business cases in China and New Zealand. Based on these findings, it proposes practical and effective policies and management interventions to enhance business case development processes in PPP projects. A qualitative approach was adopted as it provides an in-depth means of soliciting experts’ insights into PPP practices at the business case stage, and subject matter experts’ perspectives offer detailed elaboration on concepts and best practices [49]. Additionally, qualitative data provide well-grounded, rich, and insightful descriptions and explanations of processes and organizational structures embedded within specific social and economic contexts [50]. This approach was well suited to the study’s objective of exploring the organization and management of PPPs at the business case stage and examining how they are influenced by various contextual factors.

The research began with a systematic review of the relevant literature, including journal articles, conference papers, research reports, and online sources, to establish foundational knowledge on PPP business case development and provide an overview of PPP practices and policies in China and New Zealand. Studies on critical success factors for PPP projects were extensively analyzed to identify those most relevant to the business case stage. The literature review aimed to develop the overall research framework, establish the theoretical foundation for the subsequent empirical investigation, and create a template for interviews [51].

Semi-structured interviews were conducted as the primary research method to provide empirical evidence supporting theoretical explanations by eliciting insights and perspectives on PPP implementation, with a particular focus on the business case stage. Participants were selected through a purposeful sampling process, which enables the identification of information-rich individuals for in-depth investigation [50]. The selection criteria included (1) experience in PPP projects, (2) familiarity with PPP procurement and the country’s policy direction regarding PPPs, and (3) position within their organizations. Detailed information on the interview participants is provided in

Table 1. Background information of interview participants.

Characteristic	Category	China			New Zealand
		N	%	Interviewee Code	N	%	Interviewee Code
Role of organisation in PPPs	National coordinating authority	1	4%	CN1	2	9%	NN1-NN2
	Central government department/agency	2	8%	CG1-CG2	8	36%	NG1-NG8
	Local government	4	17%	CL1-CL4	3	14%	NL1-NL3
	Construction contractor	4	17%	CC1-CC4	2	9%	NC1-NC2
	Operator/facility manager	2	8%	CO1-CO2	1	5%	NO1
	Financier	4	17%	CF1-CF2	2	9%	NF1-NF2
	Advisors (commercial/legal)	3	12%	CA1-CA5	4	18%	NA1-NA4
	Researchers	4	17%	CR1-CR4
Designation	Upper management	6	25%		8	36%
	Middle management	8	33%		10	46%
	Professionals	10	42%		4	18%
Years of experience with PPPs	More than 15 years	3	12%		4	18%
	10–15 years	8	33%		6	27%
	5–10 years	4	17%		2	9%
	Less than 5 years	9	38%		10	46%

.

The interviewees were initially contacted via email and telephone. A face-to-face interview technique was adopted, as it facilitates deeper discussions on the issues and topics raised during the interviews. Based on a series of potential critical factors identified through the literature review, a semi-structured questionnaire was developed and used in the interviews. The interview questions and subsequent discussion areas are presented in

Table 2. Interview questions and discussion areas.

Interview Questions	Discussion Areas or Probes	Purpose
Based on your work/research experience in relation to PPPs, how do you perceive the performance of business case development in PPP projects? [4,22]	A robust case for change that represents strategic synergy	To gain an understanding of the current practices of business case development in PPP projects
	Optimised value for money
	Commercial viability
	Financial affordability
	Management achievability
	Costs and durations of business case development
What are the key issues/concerns encountered in the business case development of PPP projects? What are the initiatives taken to address the issues/concerns emerged? How would you evaluate their effectiveness? [18,32,52,53,54,55,56]	Political and social support	To identify critical factors influencing the successful development of business cases in PPP projects
	Legal and regulatory frameworks
	Service need
	Value for money assessment
	Public sector capacity and commitment
	Governance Structures
Given the nature of your profession, could you identify additional strategies	Open-ended questions	To recommend policies and management interventions for an enhanced business case development process

.

Forty-six participants—24 from China and 22 from New Zealand—were interviewed. The number of interview participants was considered sufficient for generating and elaborating on key themes and sub-themes, as information saturation was reached and the collected data began to exhibit iterative patterns [50]. The interviews lasted between one and one and a half hours. All interviews were audio-recorded and subsequently transcribed by the researchers. The data were coded and analyzed using the qualitative data analysis software NVivo 10. This software facilitated the identification of emerging trends and themes from the interviews and enabled a comparative analysis of text codes within the same category to ensure consistency in coding and interpretation [16]. In this study, the interview data were initially coded into predetermined categories of critical factors derived from the literature review. The researchers then continued to gather and group interview content with shared characteristics, allowing new categories to emerge. The coding process was conducted iteratively to ensure that key concepts and themes were generated from a comprehensive dataset rather than a single round of analysis. Through this process, the critical factors influencing the successful development of PPP business cases were identified and subsequently grouped into four categories. These critical factors are presented and discussed in the following section.

4. Results and Discussion

Interviews with 46 PPP stakeholders from China and New Zealand identified nine factors influencing the successful development of business cases in PPP projects. These factors are categorized into four groups: contextual factors, procedural factors, capability-related factors, and organizational factors. The interview results are presented and discussed in the following sections under these four headings.

4.1. Contextual Factors

4.1.1. Political Champion

Interviewees from both countries (16 from China and 18 from New Zealand) consistently emphasized the critical role of political leadership in advancing the PPP business case process. The direction set by government policies significantly influences the integration and prioritization of PPP options within public sector delivery models. In China, PPP development has been notably driven by overarching governmental policy objectives. During China’s expansive PPP growth phase (2013–2019), the central government positioned PPPs not merely as an alternative procurement mechanism but also as an essential instrument for deeper economic reforms and improvements in public service delivery. This policy stance resulted in the substantial growth of project pipelines and increased capital investment in PPP projects. However, China’s PPP development entered a period of stagnation after the government shifted toward a more restrictive regulatory framework, emphasizing greater reliance on user-pay models. Reflecting on this transition, participants CR1 and CR2 remarked:

The government tends to use strong administrative power, rather than a rigorous business case framework to push PPP forward. Lacking a systematic thinking, the sustainability of China’s PPPs remains a question mark.

The New Zealand government tends to adopt a cautious approach toward PPPs, primarily due to community concerns that such partnerships represent another form of privatization. Public skepticism often stems from a perceived loss of control and accountability. For example, participant NG2 highlighted concerns within the education sector, stating: “Under a PPP, the responsibilities traditionally held by the school board would shift to the private sector, directly impacting relevant community stakeholders such as parents and teachers”. Such apprehensions, driven by insufficient public understanding and transparency, generate substantial community resistance, placing political pressure on decision-makers who advocate for PPP initiatives. Furthermore, New Zealand’s relatively short electoral cycle introduces additional uncertainty and complexity, causing political leaders to proceed cautiously with PPP commitments. Participants NA1 and NA4 elaborated on these challenges as follows:

Decisions in infrastructure take long time to make. You can have change of politicians during the decision-Making process. That creates some problems. The market did reflect a level of nervousness that due to change of political power, contracting arrangements changed as a result.

This research aligns with previous studies highlighting the importance of political champions as crucial for the successful implementation of PPP projects [32]. Compared to traditional procurement methods, PPPs frequently generate greater controversy and are highly sensitive to shifts within social and political contexts. Consequently, the business case development phase is exposed to considerable uncertainties stemming from political instability or changes in leadership. A primary driver of political opposition is the concern that PPPs could undermine social justice objectives and restrict opportunities for meaningful community participation in decision-making processes. Therefore, ensuring that PPPs are selected through a systematic and transparent procurement options analysis rather than driven by ideological motivations is essential. Without consistent and robust political and administrative support, even well-suited PPP projects risk abandonment or failure. Moreover, the premature or rapid expansion of PPP programs without rigorous evaluation can result in suboptimal outcomes, including contract renegotiations, early project termination, financial inefficiencies, and diminished user satisfaction and public trust.

4.1.2. Enabling Legal and Regulatory Frameworks

All participants from China emphasized that enabling legal and regulatory frameworks are central to initiating and structuring PPP projects. More than 100 regulations and policies have been issued by various government departments at different administrative levels, which, to some extent, have facilitated the development of PPP programs. However, these regulatory and policy documents are formulated and implemented in a fragmented manner, lacking coherence and consistency. Participants CC3, CO1, and CA3 pointed out:

The provisions are sometimes contradictory to each other. Different sectors have varied approaches and procedures. Local governments even have their own requirements. This brings about lots of confusions to the market. When inconsistencies occur, how to interpret the priorities of relevant provisions?

A broad suite of existing laws and regulations applies to the execution of PPP projects, including the Government Procurement Law, Bidding Law, Contract Law, and Corporation Law. However, discrepancies exist between these legal provisions and PPP practices, which must be addressed to establish a consistent and enabling legal environment. Additionally, guidelines and policy documents have been developed to provide practical guidance for PPP participants. Participants CL1 and CL2 noted that such guidelines—such as the Guidance on Value for Money Assessment, the Guidance on Affordability Analysis for PPP Projects, and the Guidelines for the Implementation of PPP Projects—serve as important references for practitioners in developing a business case for PPP projects.

Compared to China’s PPP practitioners, interviewees from New Zealand expressed fewer concerns regarding legal and regulatory issues. The country’s common law tradition, respect for contracts, and transparency instill confidence in the market. Participants NA3 and NA4 mentioned that New Zealand has an established legislative and regulatory framework to support the PPP program. A Standard Contract was developed, incorporating precedents from other well-established PPP markets. The financier (NF2) acknowledged that while the Standard Contract may require significant project-specific amendments, legal precedents demonstrate that commercial principles, risk allocation, and contractual structures are generally enforceable. Moreover, a more robust business case toolkit was developed, integrating the PPP process into the broader business case framework, thereby facilitating informed decision-making.

This research reinforces previous findings that China’s evolving regulatory framework lacks consistency and standardization, creating significant uncertainty for private investors. Prior studies emphasize that a robust and enabling legal and regulatory framework forms the cornerstone of successful PPP program development [57,58]. The findings from this study further confirm that regulatory clarity and stability directly influence practices at the business case development stage. Legislative provisions establish the overarching framework within which PPPs are implemented, significantly affecting their governance and operational viability. For instance, in civil law jurisdictions such as Japan, France, and China—where PPP implementation is guided explicitly by legal codes or statutes—high-level legislation clearly delineates government approval authorities, defines PPP development and management processes, outlines exit strategies, and sets dispute resolution mechanisms. Such regulatory clarity, combined with well-defined commercial structures and standardized contractual terms, provides essential foundations for PPP transactions, enhancing the quality, transparency, and effectiveness of the PPP business case.

4.2. Procedural Factors

4.2.1. Sound Service Need Analysis

Eleven interviewees (seven from China and four from New Zealand) emphasized that the adequacy of service need analysis is a prerequisite for ensuring a robust business case. Participant NA3 reflected on previous unsuccessful PPP experiences in Australia and advised, “Focusing on confirming the need first, making sure you’ve got your service need absolutely known before you start going to your solution”. In China’s public procurement, there is a tradition where project decisions are not always based on rigorous evaluation. Participants CA2 and CR1 argued:

It is common to see the construction of a project has commenced whilst the service need not being adequately confirmed. It also happens to PPP projects. Some local governments just want to get a PPP built without asking: “Do we really need it? Whether the option is cost effective”.

The slowdown in China’s PPP development since 2019 has been partly attributed to a strategic reassessment of service requirements for proposed PPP projects. Authorities implemented a more rigorous evaluation process designed to ensure the long-term viability and relevance of service needs. Similarly, interviewees from New Zealand strongly emphasized the importance of assessing whether services provided by PPPs remain meaningful and sustainable over the project’s entire lifecycle. Participant NG8 highlighted international experiences, noting that many unsuccessful PPPs globally were not necessarily failures of the PPP model itself but rather due to inadequately justified or poorly defined service needs from the outset. He posed critical sustainability-focused questions to guide this assessment, including: “Will the infrastructure and associated services still be necessary in 20 years? Who will the users be at that time? Could the land and resources allocated for these projects be effectively repurposed if required?” Participants NN1, NG4, and NA3 further stressed the value of adopting a programmatic, systematic approach when conducting the service-need analysis, ensuring robust and comprehensive decision-making at the planning stage. During the business case for the Wiri Prison Project, significant doubts were raised about the necessity of building a new prison, given the projected decline in offender numbers. However, the project was expedited as part of the Department of Corrections’ broader strategy to modernize the country’s prison network, particularly as some aging prisons were nearing the end of their operational lifespan.

Conducting a well-developed service-need analysis is crucial for ensuring a viable PPP [34,37]. This research reinforces that such analysis is also a vital component of a successful business case. PPPs involve long-term contractual agreements and partnerships, making it essential to address sustainability concerns before finalizing decisions in the service need analysis [30]. Factors such as shifting economic and social conditions, technological obsolescence, and stakeholder and community satisfaction are closely tied to the long-term demand for the infrastructure or service. It is widely accepted that a well-articulated service need analysis is a fundamental practice in capital project procurement [13], and this research confirms that PPPs are no exception.

4.2.2. Robust Procurement Option Analysis

Most interviewees (18 from China and 15 from New Zealand) emphasized that conducting a robust procurement option analysis—characterized by a systematic and comprehensive evaluation of the merits, risks, and implications associated with PPPs—is essential to developing a strong business case. In China, the Ministry of Finance (MoF) explicitly encourages public procurement authorities to conduct a rigorous value-for-money assessment when preparing PPP proposals. When reliable preliminary project estimates are available, the Chinese government further recommends performing a quantitative analysis using the Public Sector Comparator (PSC) method. Interviewees acknowledged ongoing criticisms regarding the quantitative PSC method, particularly relating to its complexity and assumptions. However, they strongly maintained that applying such a structured, transparent, and evidence-based approach significantly enhances the robustness and credibility of procurement decisions, ultimately strengthening stakeholder confidence in PPP projects.

Beyond quantitative value-for-money analysis, the interviewees reiterated the importance of considering qualitative criteria, particularly sustainability factors. Although these factors are challenging to measure and enforce, they should be seriously considered in the procurement option analysis. Key questions to address include: What are the environmental impacts of PPP options, such as energy conservation effects, efficient use of natural resources, and optimal land utilization? Do PPPs contribute to improving public service quality, as well as citizens’ health and well-being? Do PPPs encourage community engagement and stakeholder participation, which are fundamental to social justice?

Participant CO2 commented:

The “surname” of Public-Private Partnerships is “Public”. The goal of PPPs is to achieve benefits for general public. You build a characteristic town PPP project. Will the local community gain better access to facilities? Will they have more job opportunities? Will their well-beings improve due to the town’s development?

Two senior managers from local government authorities (CL3 and CL4) stressed:

At the current stage, we shall at least have a comparison so that our decisions-making can be grounded in reasons. We can mainly adopt a qualitative method, assisted with the PSC. It is a progressive process from a general appraisal to a systematic and comprehensive evaluation. It is a balance we are seeking.

New Zealand utilizes the PSC as a primary analytical tool to assess whether a PPP is the most suitable procurement approach for a given project. Although participants acknowledged certain limitations inherent in the PSC, the New Zealand interviewees emphasized that it provides a rigorous, systematic, and structured framework for objectively evaluating PPP proposals. Compared to China, New Zealand benefits from its ability to incorporate established best practices from international experiences—particularly those of countries with mature PPP markets such as the United Kingdom and Australia. However, participants also stressed the importance of including qualitative factors—such as stakeholder satisfaction, social outcomes, and broader community benefits—in the PPP decision-making process. Illustrating this perspective, Participant NG1 argued that significant community benefits could be achieved by leveraging private sector innovation:

The long-term nature of the contract means that they (the private sector) have an opportunity to earn revenues that can be used to offset project costs. Say you have a school PPP. They might build a recreational center open to the public to generate more revenue, and at the same time, the facilities will be fully utilized, and the adjacent communities also benefit.

Participant NA1, who provided advisory services for the Hobsonville Schools project, believed that a higher level of stakeholder satisfaction could result from improved service quality. He commented, “With someone else (the private sector partner) looking after the maintenance services, the board can focus on achieving better educational outcomes. Everyone is happy”.

Proponents of PPPs frequently emphasize value-for-money outcomes as evidence of superior PPP performance [37]. Internationally, the PSC method is widely adopted as a quantitative tool for comparing life-cycle costs between PPPs and traditional procurement approaches [16]. However, the recent literature indicates growing skepticism towards the PSC approach, criticizing its limited accuracy in forecasting long-term costs over concession periods and highlighting its sensitivity to assumptions regarding the selected discount rate [36]. These methodological constraints of the PSC approach were also acknowledged in this research. Specifically, Chinese interviewees emphasized significant challenges due to inadequate historical data, complicating accurate risk-adjusted forecasts and informed discount rate selection. This finding underscores the necessity for more robust and context-sensitive evaluation methods when assessing PPP viability and performance.

Beyond the challenges associated with the PSC, the value-for-money analysis has also been criticized for focusing primarily on financial considerations while overlooking other important criteria [29]. Kweun et al. (2017) found that value-for-money studies fail to quantify social benefits and costs beyond the specific project examined [59]. Vining and Boardman (2008) advocated for a “comprehensive social accounting” approach to PPPs, arguing that the effectiveness and desirability of PPPs depend on their ability to generate social benefits [60]. Hueskes et al. (2017) introduced a sustainability-based (fair value) perspective in evaluating PPP performance, incorporating social, ecological, and economic considerations into PPP procurement [30]. The interviewees in this research agreed that qualitative factors, particularly those related to achieving sustainability objectives—especially the social dimensions of sustainability—should be considered when conducting procurement option analyses.

4.2.3. Articulated Affordability Analysis

Fourteen interviewees (eight from China and six from New Zealand) emphasized the importance of conducting a comprehensive affordability analysis—carefully assessing the government’s fiscal position throughout the concession period—to ensure the sustainability of PPP business cases. Historically, before the current period of stagnation, availability-based payment mechanisms were frequently adopted in PPP arrangements, with governments committed to providing periodic unitary payments to private sector entities. However, following the rapid expansion phase of PPP development, the Chinese government has increasingly recognized the long-term fiscal implications for local governments, as prolonged payment obligations significantly strain their financial stability. Consequently, China’s PPP model has evolved towards a user-pay system, where private partners recoup their investments predominantly through third-party user charges. Furthermore, government subsidies for PPP projects have been restricted, only permitting support for specific operational costs rather than covering initial capital investments [39]. This strategic shift reflects a deliberate effort to manage fiscal risks and reinforce financial sustainability in PPP development.

Recognizing the significant implications of PPP projects on public-sector affordability, China’s Ministry of Finance mandates that government bodies at various administrative levels undertake a thorough affordability analysis prior to adopting a PPP model. If the proposed PPP project successfully meets affordability criteria, the responsible government entities must explicitly incorporate the corresponding financial obligations into their annual budgets and long-term fiscal planning. Chinese interviewees broadly concurred that such proactive measures emphasizing affordability greatly benefit the development and sustainability of PPP projects, enhancing financial transparency and promoting fiscal discipline across governmental agencies.

In New Zealand, most PPP projects are concentrated within the social infrastructure sector. However, transport projects have also increasingly employed PPP models. Notably, the Transmission Gully motorway was delivered through a PPP using an availability-based payment mechanism. This approach shifts focus toward long-term affordability and budget predictability rather than short-term capital investment alone. Consequently, New Zealand interviewees highlighted the significance of affordability implications, stressing that careful financial planning is essential to sustain public support and fiscal responsibility. Participants NG5 and NG6 further elaborated on these affordability concerns:

Compared to traditional procurement, the affordability of PPPs is about cost of finance and efficiency differentials. The current capital asset management guidance and practices require care for affordability. If analysis shows PPPs are unaffordable, possible remedies like adopting a different design can help to close the gap.

Affordability plays a critical role in determining the long-term performance and success of PPP projects [5,8]. Closely tied to affordability is the issue of fiscal sustainability, which underpins the concept of intergenerational equity [30]. If affordability is inadequately assessed, PPP procurement may lead to intergenerational inequity, wherein future generations inherit unsustainable levels of public debt or taxation required to finance today’s infrastructure investments. The findings of this study highlight governments’ increasing awareness of the significant financial implications PPPs have on their long-term budgetary practices. Specifically, China’s shift toward a user-pay PPP model illustrates the government’s prudent stance in thoroughly evaluating affordability risks associated with PPP arrangements. To safeguard the long-term viability and fiscal sustainability of PPP projects, it is imperative for the public sector to carry out a rigorous and accurate affordability assessment at the business case stage. Moreover, PPP structures should remain flexible enough to allow adjustments or reconfigurations that address any identified affordability gaps, thus securing equitable outcomes for both current and future generations.

4.3. Capability-Related Factors

4.3.1. Strong Public Sector Capability

The interview findings strongly suggest that public-sector capability is instrumental in developing robust and defensible PPP business cases, as indicated by the interviewees (18 from China and 20 from New Zealand). Given that both China and New Zealand are still developing their PPP markets, public procurement authorities often lack sufficient knowledge, expertise, and practical experience to effectively manage the complexities involved in PPP business case development. While participants from both countries demonstrated a general awareness of PPP principles, misconceptions and misunderstandings remain widespread.

For instance, participant CF2 highlighted persistent misconceptions within China’s public sector: “There are some people in public sector entities supporting PPPs for the wrong reasons. They think it is about free private sector money”. Similarly, participant NA3 from New Zealand noted that some public-sector officials mistakenly equate PPPs exclusively with Australia’s toll road concession model, failing to appreciate the broader spectrum of available PPP frameworks—particularly the availability-based payment model, which offers distinct advantages in terms of risk allocation and public accountability. These misconceptions underscore the critical need for enhancing public-sector capability through targeted education, training, and knowledge-sharing initiatives to support informed decision-making and ensure successful PPP implementation. Participant NN2 further emphasized:

In terms of providing output specification, it is very difficult with [the public sector] have been used to. They are happy with the concept of it but find it very hard to do in practice. How to specify the outcomes through setting up a series of KPIs?

The interview findings indicated that the novelty of PPP procurement and the absence of widely shared practices are not the sole factors contributing to the capability gap within the public sector. More critically, prevailing cultural attitudes and procurement approaches in the public sector act as significant barriers to developing necessary capacities. Effective PPP implementation requires proactive collaboration among public-sector entities, builders, operators, facility managers, and financiers, enabling comprehensive discussions and the co-creation of solutions prior to the procurement phase. However, as highlighted by Participant NA2, the public sector often exhibits discomfort with these collaborative practices: “(The public sector) is not comfortable with the level of detail required. It is problematic for them to adapt to the discipline required for long-term asset management and operational solution development”. Consequently, participants emphasized that a fundamental cultural shift within public institutions is essential to establish a robust and sustainable PPP framework. Furthermore, the initiation and planning stages of PPP projects were recognized not only as opportunities for delivering infrastructure but also as catalysts for broader public-sector reform, driving systemic improvements in capability, accountability, and operational efficiency.

Participants NG3, NG7, and NF1 opined that expert advice from external legal and financial advisors effectively supplements public sector experience and skills. This is largely because New Zealand’s PPP framework is modeled after those of the UK and Australia, allowing international advisors to enter the market with minimal barriers. Once involved in a particular PPP, these advisors can leverage overseas experience to address challenges. In contrast, while Chinese interviewees acknowledged the benefits of engaging advisors, they expressed concerns about the capability and business ethics of the profession. For example, Participant CC2 reported:

Some consultancy firms’ areas of expertise are not in PPPs. They know PPPs are very popular and decide to transform their business. Some of them learn the basics about PPPs and go ahead working on projects. I highly doubt the quality of their professional services.

A highly skilled and experienced public procuring authority is essential for effective PPP implementation throughout the procurement process [16,28]. This research aligns with previous findings and underscores its particular significance in business case development. Unlike traditional procurement, which is often limited to a design-and-construct brief, PPPs integrate design, service delivery, and the asset’s operational functionality. The whole-of-life focus—achieved through the full integration of upfront design, construction, and ongoing service delivery—necessitates a more rigorous analysis at the business case stage.

The public sector project team must mobilize the necessary resources to establish the fundamentals of PPP agreements. Guidance and support from the central PPP unit, along with external advisors, are crucial for addressing capacity gaps. This research also recommends fostering a cultural shift across the public sector to enhance the adoption of PPPs, which could improve overall procurement decision-making—even in cases where a PPP model is ultimately not implemented.

4.3.2. Public Sector Commitment and Credibility

During the business case stage, market-sounding exercises are conducted with potential market players. Incorporating market feedback to refine key aspects of PPP transactions (e.g., contractual and financing structures) helps ensure a well-founded business case. New Zealand participants reported that, due to the country’s high standards of public sector governance, they had confidence in the government’s commitment to projects. The credit quality of public authorities is sufficient to support their commitments. Despite this, Participants NG5 and NN2 reiterated:

When we initiate a PPP program, it is crucial that we adhere consistently to our stated intentions. Any commitments made during the market sounding process must be rigorously upheld. If we deviate from these promises or demonstrate uncertainty, it creates anxiety within the market and undermines stakeholder confidence.

We indicate to people at the time we are going to detailed business case. That is prior to being approved as a PPP. The market knows that we are undertaking a serious investigation as opposed to a preliminary one. We are careful with what we publicize so people don’t have to run around.

The Chinese interviewees highlighted significant concerns regarding the credibility and trustworthiness of public sector entities, citing a historical pattern of government bodies neglecting contractual obligations and reputation when interacting with market participants. Participant CC1 articulated these frustrations from the perspective of a construction contractor:

As a construction contractor, we frequently experience frustrations in our dealings with public sector clients. They often lack what we refer to as the ‘contract spirit’, meaning commitments outlined in contracts are not consistently respected. When disputes arise, we encounter considerable obstacles; we cannot even pursue legal action effectively, since, under current Civil Law, these public sector bodies are often not recognized as fully accountable legal entities.

This sentiment underscores deeper institutional challenges in China’s PPP environment, particularly the need for strengthened legal frameworks and improved governmental accountability mechanisms to support successful PPP implementation.

In addition to the credibility issue, private sector participants further emphasized that having a committed public sector procurement team is instrumental in leading the business case process. Participant CF4 elaborated: “You have many challenges throughout the process. If the project team doesn’t commit to overcoming the challenges, PPP proposals can be easily called off”. Involving high-level government officials provides a useful means of addressing various challenges, such as coordinating with different government departments and enhancing the level of public sector commitment.

The research results align with conclusions that a dedicated, committed public sector procurement team with a high level of credibility is desirable in PPP projects [61]. Compared to the contract management stage, where public sector commitment and credibility are primarily reflected in fulfilling contractual obligations and maintaining partnerships, the development of the business case requires the procurement team to be proactive in driving the process forward and consistent in the messages they deliver to the market. PPPs represent complex contractual structures and unique commercial principles, which place considerable pressure on the public sector to prepare the business case. Only with a committed and credible team can an optimized PPP profile be achieved, ensuring that market appetite is accommodated.

4.4. Organisational Factors

4.4.1. Streamlined Institutional Arrangements

Institutional arrangements, specifically defined roles and authorities in relation to capital asset procurement, attracted significant attention from fifteen interview participants (nine from China and six from New Zealand). They emphasized the need for streamlined arrangements to facilitate informed and efficient decision-making. Participant CA1 believed that lacking a coherent and consistent approach toward PPPs would create considerable confusion for line agencies and local governments. Streamlined institutional arrangements are strongly needed.

Compared to China, New Zealand’s central coordinating authority has a clearly defined role in PPPs. However, interview participants expressed significant doubts regarding the decentralized institutional arrangements for capital asset procurement. Participant NL1 stated: “The Treasury may be there telling the Department what to do. But lots of expenditures are not placed by the Treasury”. The independence of decision-making at various levels of public sector bodies is not conducive to advancing a PPP. Participants NC2 and NA1 argued:

PPPs would be difficult where there are many local boards involved in the decision making, such as the current practices with the education sector. The Ministry of Education is responsible for the provision of school assets. But the school boards take charge of the maintenance based on its annual maintenance fund. The fragmentation of procuring power makes it difficult to take a whole of life perspective towards capital asset delivery.

In the health sector, we’ve got multiple DHBs (District Health Boards). When it comes to PPPs, we need centralized power to make decisions, rather than many DHBs as we’ve got.

This research identifies institutional arrangements, which have not been mentioned in the existing literature, as an important factor affecting the business case stage of PPP projects. Business case development falls under the responsibility of government departments, public agencies, or local governments. Typically, multiple organizations have direct or indirect influence on public service provision, such as the central coordinating authority, the public procuring authority, and the Board of Trustees. The involvement of multiple entities is likely to result in role duplication, overlapping responsibilities, and decentralized decision-making power. This research, therefore, recommends the establishment of streamlined institutional arrangements for capital asset procurement.

4.4.2. Effective Governance Structures

Thirteen Chinese and eight New Zealand interviewees stated that effective governance structures should be established to ensure a smooth business case process. The progression of PPP proposals requires approvals from various government departments. Project development involves coordination with a wide range of departments, including finance, development and reform, construction, and taxation. Therefore, it is crucial to establish a steering committee comprising the public procurement team, officials from different departments, representatives from various government levels (e.g., municipal, provincial, and/or central), and external expert advisors. The steering committee oversees the process, coordinates with relevant parties to obtain necessary approvals, and addresses issues that arise at different stages.

The New Zealand participants agreed with their Chinese counterparts that clear and responsive governance structures are essential to ensuring appropriate actions are taken in a timely manner. Participant NG7 elaborated on the four-level governance structure adopted in existing PPP projects, as shown in

Table 3. Recommendations based on the identified critical factors.

Category	Critical Factor	Recommendations
Contextual factors	Political champion	Governments should take a reasonable and fair view towards the adoption of PPPs. Governments must fully understand the nature of PPP projects and the country’s social, economic and legal environments to set out policy directions of PPPs. Following clear policy directions, governments must develop PPP model and policy suited to the country’s specific contextual elements.
	Enabling legal and regulatory framework	For countries with civil law system, a systematic legal framework should be established with a national, high level PPP law providing the basic features of the country’s PPP model. Guidance and standardized documents should be established to provide practical guide to undertake PPP procurement.
Procedural factors	Sound service need analysis	Public procuring authorities must endeavor to conduct a well-elaborated service need analysis to make sure the service is viable in the long run. Sustainability requirements that must be answered during the service need analysis. A program-level view is preferred when evaluating the service need to ensure the proposed project is in line with the government’s wider capital asset procurement framework and overall policy objectives.
	Robust procurement option analysis	A robust value for money assessment is required to be undertaken for procurement option analysis. A quantitative analysis method, the PSC, is recommended to be adopted. Qualitative factors, especially the sustainability considerations should be considered in evaluating PPPs.
	Articulated affordability analysis	Public procuring authorities need to rigorously examine the financial implications of a PPP proposal on the government’s long-term budgetary position. When proposal exceeding the affordability threshold, PPPs will be excluded from the option list, or alternatively, supporting measures such as reconfiguring the service scope and change of outcome specifications may be adopted to close the affordability gap.
	Public sector commitment and credibility	The public project team should be committed to the business case process and value their reputation and credibility during market sounding.
Organisational factors	Streamlined institutional arrangements	Streamlined institutional arrangements, with clearly defined roles and responsibilities in capital asset procurement are desirable to achieve an efficient business case process.
	Effective governance structures	Effective governance structures and clear lines of reporting should be established with different levels of government officials positioned at right levels of the governance structure.

. A procuring authority establishes a dedicated project team to manage the process, led by a qualified Project Director and a Project Governance Group. This team consists of in-house personnel and external advisors, covering technical, service, commercial/legal, and project management aspects.

The Treasury PPP advisors work closely with the project team to provide an understanding of the New Zealand PPP model and policy and to assist with developing the economic, financial, and commercial cases of a project’s business case, such as risk analysis and the development of a PSC. At key milestones, approvals are required from Joint Ministers (the Minister of Finance and the Minister responsible for the procuring authority). A subcommittee within the Cabinet is established once the business case is submitted to the Cabinet agenda. Participant NN2 commented:

The project steering committee was formulated at the outset. They meet monthly. The core project team meet every week. Any existing or potential barriers can be addressed in time. The Treasury PPP team holds their [the project team] hands to make sure they are on the right track.

The research results align with prior studies, confirming that good governance is essential for managing the procurement process in PPPs [12,32]. Compared to traditional procurement, the whole-of-life focus of PPPs inherently requires a greater upfront investment of time and resources. Therefore, it is crucial for the public procuring authority to adequately resource its project team and establish effective governance structures. In contrast to the service delivery stage, where governance structures typically involve establishing clear reporting lines for contract administration and service performance monitoring, the business stage focuses on setting up responsive governance structures. This involves resourcing different levels of governance with the right individuals (e.g., PPP specialists, ministers) to facilitate informed and efficient decision-making.

4.5. Comparative Analysis and Recommendations

A comparative analysis of PPP practices in China and New Zealand, drawing on insights from experienced industry practitioners, reveals both notable similarities and distinct differences in the implementation approaches adopted by the two countries.

Both nations have actively pursued PPP programs in recent years, with their respective practices significantly shaped by domestic legal, regulatory, and policy frameworks. In China, PPP implementation initially experienced rapid growth marked by varied regulatory practices and shifting policy directives. However, recent refinements in policy objectives, especially the clear transition towards the user-pay PPP model, have resulted in a more disciplined and stringent project-selection process. Consequently, there has been a marked reduction in the volume of PPP projects progressing to the procurement phase.

In contrast, New Zealand’s approach to PPPs has evolved more incrementally. The government has continuously adapted and enhanced the PPP model based on lessons learned from completed projects. Recent modifications in risk allocation, affordability thresholds, and collaborative tendering practices have collectively contributed to significant improvements in the government’s approach to planning, procuring, and delivering future PPP initiatives.

Practitioners from both countries emphasized the critical importance of clearly defining the service need prior to embarking on PPP projects. China’s expansive economy and substantial infrastructure development demands led initially to a significant pipeline of PPP projects. Nevertheless, participants noted that during the rapid expansion phase, local governments occasionally expedited service-needs analysis prematurely, pushing projects into the national PPP database without thorough vetting. Many of these projects were later abandoned during the stagnation stage, creating problematic PPP arrangements. In comparison, New Zealand has pursued a notably more selective approach, successfully completing only eight PPP projects since 2011. Given the relatively limited project pipeline, New Zealand has prioritized a streamlined procurement process and attractive project packages (such as bundling several smaller-scale projects together) to reduce transaction costs and maintain the interest of private-sector investors.

Both countries have recognized the significant long-term financial implications of PPPs on government fiscal positions. China has explicitly shifted toward a user-pay model to mitigate government fiscal liabilities. New Zealand, on the other hand, has increased the affordability threshold within the Public Sector Comparator (PSC) analysis to ensure the economic sustainability and fiscal prudence of PPP arrangements.

Finally, interviewees from both contexts strongly agreed that successful PPP implementation fundamentally depends on the capability, commitment, and credibility of public sector entities. Besides leveraging advice and support from central PPP units or external legal and commercial consultants, public procuring authorities need continuous investment in enhancing internal procurement capability. Additionally, they must foster a culture receptive to innovation, collaboration, and flexibility within public-sector procurement systems to ensure successful, sustainable PPP outcomes.

5. Conclusions

PPPs have gained increasing popularity worldwide for the provision of public assets and associated services. The success of PPP execution largely depends on the effectiveness and efficiency of business case development. Therefore, this research aims to conduct a comparative analysis of the critical factors influencing the successful development of PPP business cases in China and New Zealand. Based on this analysis, useful and practical policies and management interventions are proposed to enhance business case development processes.

Through a systematic literature review and semi-structured interviews with forty-six PPP stakeholders from China and New Zealand, this study identifies nine key factors, categorized into four groups, that are crucial for business case development in PPP projects: (1) contextual factors, including political champions and enabling legal and regulatory frameworks; (2) procedural factors, comprising sound service needs analysis, robust procurement option analysis, and well-articulated affordability analysis; (3) capability-related factors, consisting of strong public sector capability, as well as public sector commitment and credibility; and (4) organizational factors, such as streamlined institutional arrangements and effective governance structures.

5.1. Implications

This research extends the growing literature on critical success factors (CSFs) for public–private partnerships (PPPs) by identifying the key factors that affect the successful development of a business case. These identified factors serve as a foundation for determining the essential policy and management activities that must perform well during the business case stage. This study contributes to PPP project management practices by highlighting the “good practices” specific to the business case process. By adopting the recommended strategies, governments can make more informed decisions regarding the introduction and updating of PPP policies. Additionally, public procuring authorities will be better positioned to plan, structure, and implement business case development, thereby enhancing current practices.

It is important to note that PPPs are one of the procurement options available to governments. Therefore, the strategies and measures proposed in this research not only serve as indicative guidelines for business case development in PPP projects but also apply to broader public-sector capital asset and service provision, with appropriate adjustments based on specific contexts. It is hoped that the insights gained from PPP business case development will benefit wider public-sector procurement practices.

5.2. Limitations and Future Research

This research has limitations that future studies can address and expand upon. Based on semi-structured interviews, a list of critical factors for the successful development of a PPP business case was derived. However, the relative importance of each factor remains unknown. Additionally, the forty-six interviewees do not fully represent the population from which they were drawn, raising concerns about the generalizability of the research findings.

Future research could employ a large-scale questionnaire survey to collect quantitative data and statistically assess the importance of these factors. Furthermore, this study conducts a comparative analysis of PPP business case development practices in China and New Zealand based on the perceptions and insights of PPP stakeholders from both countries. It remains uncertain whether the identified critical factors and proposed recommendations are applicable to other economic, social, and policy contexts. Future research could explore PPP business case practices in other jurisdictions to facilitate meaningful comparisons with the present study, thereby enhancing the generalizability of the findings.

Moreover, this paper does not focus on specific industry sectors. Future studies may adopt case study approaches to identify critical factors for PPP business cases that are specific to sectors.