PRIVATE FINANCE INITIATIVE FOR CONSTRUCTION PROJECT DELIVERY IN DEVELOPING ECONOMIES: STRATEGIES FOR MITIGATING ASSOCIATED RISKS

Due to most developing countries' low gross domestic savings, the infrastructural needs have been hardly met. This has led to seeking alternative routes for financing construction projects, intending to shore up the infrastructural deficit. The Private Finance Initiative (PFI) has been proven to be a viable tool for infrastructural investment in some developed countries; hence, it has been recommended for developing countries such as South Africa. However, this infrastructure funding model is attributed to some risks that might inhibit the attainment of benefits from the funding model. This study assesses the strategies for mitigating risks associated with PFI for construction project delivery in South Africa. A quantitative approach was employed, aided by collecting data from purposively sampled respondents using a closed-ended questionnaire. The method of data analysis used was exploratory factor analysis (EFA). The results derived four primary constructs as mitigation strategies for PFI construction project financing risks. These are operations optimization, finance-inclined strategy, contractual clarity, and regulatory-driven strategy. The study contributes to the body of knowledge by mapping out credible constructs with which risks associated with PFI are abated. Furthermore, it deepens the theoretical discussions on viable methodologies for financing infrastructure needs in the face of economic downturns in developing economies.