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Aramali, V, Gibson, G E, El Asmar, M and Sanboskani, H (2023) Novel earned value management system maturity framework and its relation to project performance. Journal of Construction Engineering and Management, 149(06).
Arora, J, Kar, S and Jha, K N (2023) Assessment of the significance of identified attributes affecting the rebar-fixing productivity using multiple regression. Journal of Construction Engineering and Management, 149(06).
Asadi, R, Rotimi, J O B and Wilkinson, S (2023) Analyzing underlying factors of rework in generating contractual claims in construction projects. Journal of Construction Engineering and Management, 149(06).
Hsu, C L, Wang, J T and Huang, Y H (2023) A functional element-naming approach for BIM elements in building envelope systems. Journal of Construction Engineering and Management, 149(06).
Karamoozian, A, Wu, D and Luo, C (2023) Green supplier selection in the construction industry using a novel fuzzy decision-making approach. Journal of Construction Engineering and Management, 149(06).
Long, W, Wang, X, Liang, Y and Ye, K (2023) Characteristics of collusive practices in bidding: Mixed methods study in China. Journal of Construction Engineering and Management, 149(06).
Nguyen, T Q, Yeoh, J K W and Angelia, N (2023) Predicting percent plan complete through time series analysis. Journal of Construction Engineering and Management, 149(06).
Rathnayake, A and Middleton, C (2023) Systematic review of the literature on construction productivity. Journal of Construction Engineering and Management, 149(06).
Tao, Y, Hu, H, Xu, F and Zhang, Z (2023) Ergonomic risk assessment of construction workers and projects based on fuzzy Bayesian network and D-S evidence theory. Journal of Construction Engineering and Management, 149(06).
Tarekegn Gurmu, A (2023) Preconstruction phase management practices enhancing labor productivity in multistory building projects. Journal of Construction Engineering and Management, 149(06).
Tatari, A (2023) Simulating cost risks for prefabricated construction in developing countries using Bayesian networks. Journal of Construction Engineering and Management, 149(06).
Wang, Y, Chen, L and Zhuang, J (2023) Pricing of credit default swaps from the perspective of credit enhancement in PPP projects. Journal of Construction Engineering and Management, 149(06).
- Type: Journal Article
- Keywords: credit default swaps pricing; incentive mechanism; principal-agent theory; public-private partnership project
- ISBN/ISSN: 0733-9364
- URL: http://doi.org/10.1061/JCEMD4.COENG-12803
- Abstract:
The difficulty in financing has become the primary obstacle in the process of promoting a public-private partnership (PPP). Asset securitization is a financial model that can exchange the predictable cash flow of illiquid PPP project assets with the current cash flow, and credit enhancement is crucial in this process. Different from the traditional external credit enhancement of PPP projects based on government guarantees, this paper introduces an innovative credit risk management tool, i.e., credit default swaps (CDS), into the process of asset securitization in the PPP model. In order to avoid opportunistic behavior caused by information asymmetry in the process of financial product transaction, a CDS trading contract between PPP project investors and risk management institutions based on the principal-agent theory and a flexible CDS pricing model is proposed. Through a demonstration case of the Leshan to Rongjiang Expressway in China, the volatility correlation among CDS contract default probability, pricing, and related factors, such as default limits, operation period, compensation amount, project investment return, investment return volatility, and PPP project investors' expected inputs, is obtained. The study shows that (1) appropriate CDS pricing helps to generate investors' high expected inputs and diligence with controls; (2) there is a positive correlation between the change of default limit and compensation amount, and the set value of default limit should not be too high, otherwise it may induce the increase of default probability; and (3) based on the high return on assets and moderate asset volatility of PPP projects, the probability of default of CDS contracts is low. The innovative financial mechanism developed by the principal-agent theory could enrich the credit enhancement methods in asset securities of PPP projects.
Zhang, W, Zhang, H and Yu, L (2023) Collaborative planning for stacking and installation of prefabricated building components regarding crane-collision avoidance. Journal of Construction Engineering and Management, 149(06).