Private Partner Prioritization for Public–Private Partnership Contracts in a Brazilian Water Company Using a Multi-Criteria Decision Aid Method
Abstract
:1. Introduction
- RQ1:
- How do water and sewerage PPP tenders currently take place in Brazil?
- RQ2:
- What aspects should be considered for the technical evaluation of a private partner in a PPP contract?
- RQ3:
- What criteria should be taken into consideration for PPP contracts for companies that provide water and sewerage services, considering the long duration of 20 to 30 years of such contracts, and how to measure them?
- RQ4:
- Why use multi-criteria decision support methods (MCDM) to prioritize private partners in the provision of water and sewerage services?
2. Materials and Methods
2.1. PPP Structuring
2.2. Private Partner Selection
2.3. Defining the Criteria
2.3.1. Financial
2.3.2. Technical
2.3.3. Managerial
2.3.4. Credit Reputation
2.3.5. Health, Safety, and Environment
2.4. Evaluation of the Alternatives
2.5. Trends of PPPs
2.6. Water and Sewerage in Brazil
2.7. MCDM/A
2.8. FITradeoff Method
2.9. Other Potential MCDM/A Methods
3. Results and Discussion
3.1. The Problem
3.2. DMs and Other Actors
3.3. Objectives and Criterion Definition
- Registration with the engineering and agronomy regional council.
- Proof of technical–operational capacity: by holding certificates or attestations, proving technical experience with similar characteristics to the object of the contract, including installation, operation and maintenance, and contract management of PPPs.
- Negative certificate of bankruptcy, judicial or extrajudicial recovery.
- Financial statements for the last fiscal year.
- General liquidity, current liquidity, and general solvency ratio greater than or equal to 1.
- Proof of a minimum net worth of 10% of the value of the price proposal, corresponding to 12 months of the monthly government payment.
3.4. Alternatives and Problematics
3.5. MCDM/A Application
3.6. Limitation of the Study
4. Conclusions
- Among the multi-criteria decision aid methods presented in the literature, FITradeoff was chosen because it presents the advantages of making the elicitation process easier for the DM, since it reduces cognitive effort and reduces the time spent on decision-making processes.
- Despite its advantages, the method is more suitable for one DM, and a group-decision method should be applied to extend the proposed model for cases in which more than one DM participates.
- The criteria investigated are related to financial, technical, credit reputation, managerial, health, safety, and environmental aspects. Besides that, legislation and government prospects are limiting factors.
- The chosen criteria were: human resources, social reputation, historical litigation situation, operating PPPs or concessions, and price.
- The tools provided from the FITradeoff application to evaluate the potential private partners, defined as alternatives, were: the application report to compare the criteria; Hasse diagram to define the ranking of alternatives and the recommended choice, and the graph of boundaries to clarify the boundaries of each criterion.
- Thus, the answers to research questions (ARQs) were obtained:
- o
- ARQ1—the procurement processes of W&S PPPs occur mostly by adopting the judgment criterion of price, but this does not take into consideration the complexity of the decision in context, most importantly in a developing country.
- o
- ARQ2—the aspects that should be considered are: financial, technical, credit reputation, managerial, health, safety, and environmental.
- o
- ARQ3—the chosen criteria for the application were: human resources, social reputation, historical litigation situation, operating PPPs or concessions, and price.
- o
- ARQ4—the alternatives were evaluated from the comprehensive perspective of MCDM, and FITradeoff application provided the ranking of private partners, which led to the procurement winner, considering the set of criteria proposed in this research.
Author Contributions
Funding
Data Availability Statement
Conflicts of Interest
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Country | W&S | Energy | ICT | MSW | Transport | Total |
---|---|---|---|---|---|---|
China | 622 | 646 | 4 | 216 | 357 | 1845 |
Brazil | 164 | 1167 | 34 | 32 | 320 | 1717 |
India | 23 | 512 | 7 | 48 | 548 | 1138 |
Mexico | 44 | 161 | 3 | 9 | 118 | 335 |
Turkey | 215 | 1 | 7 | 41 | 264 | |
Colombia | 46 | 94 | 3 | 1 | 70 | 214 |
Russian Federation | 24 | 101 | 21 | 8 | 34 | 188 |
Peru | 10 | 106 | 6 | 46 | 168 | |
Thailand | 19 | 118 | 6 | 9 | 152 | |
Vietnam | 7 | 126 | 1 | 3 | 15 | 152 |
Philippines | 13 | 96 | 1 | 4 | 28 | 142 |
Argentina | 6 | 90 | 35 | 131 | ||
Ukraine | 3 | 120 | 2 | 1 | 4 | 130 |
Indonesia | 26 | 71 | 3 | 1 | 23 | 124 |
Bulgaria | 1 | 73 | 1 | 36 | 7 | 118 |
South Africa | 5 | 91 | 3 | 4 | 12 | 115 |
Administrative Concession | ||
---|---|---|
Project | State | Judgment Criterion |
Cariacica Sanitary Sewage [23] | Espírito Santo | Lowest price |
Desalination Plant [24] | Ceará | Lowest price |
Mato Grosso do Sul Sanitary Sewage [25] | Mato Grosso do | Lowest price |
Sul | ||
Vila Velha Sanitary Sewage [26] | Espírito Santo | Lowest price |
São Lourenço Water Production System [27] | São Paulo | Lowest price |
Jaguaribe Ocean Disposal System [28] | Bahia | Lowest price |
Rio Manso Water Production System [29] | Minas Gerais | Lowest price |
Alto Tietê Water Production System [30] | São Paulo | Lowest price |
Serra Sanitary Sewage [31] | Espírito Santo | Lowest price |
CORSAN Sanitation [32] | Rio Grande do | Lowest price |
Sul | ||
High Part of Maceió Sanitary Sewage [33] | Alagoas | Lowest price |
Divinópolis Sanitary Sewage [34] | Minas Gerais | Lowest price |
Piracicaba Sanitary Sewage [35] | São Paulo | Price and technique |
Rio Claro Sanitary Sewage [36] | São Paulo | Price and technique |
Guaratinguetá Sanitary Sewage [37] | São Paulo | Price and technique |
RMR and Goiana Sanitary Sewage [38] | Pernambuco | Price and technique |
Atibaia Sanitary Sewage [39] | São Paulo | Price and technique |
Rio das Ostras Sanitary Sewage [40] | Rio de Janeiro | Price and technique |
Agreste Adductor System [41] | Alagoas | Price and technique |
Mauá Water Supplier System [42] | São Paulo | Price and technique |
Guarulhos Sanitary Sewage [43] | São Paulo | Price and technique |
Sponsored Concession | ||
Project | State | Judgment Criteria |
Paraty Water and Sewage [44] | Rio de Janeiro | Price and technique |
Macaé Sanitary Sewage [45] | Rio de Janeiro | Price and technique |
Criteria | Description | Measurement |
---|---|---|
Human resources (HR) [12] | The talent reserve of the service provider determines the innovation ability of service providers. | Experience of the technical team |
Water environment treatment project process design ability (OA) [10] | Investigates the service provider’s water environment treatment process and level, process design means, personnel, and other aspects of the service provider’s ability. | Quantity of work performed in the area under study/quantity of units in operation by the company in the area under study/quality of operation (evolution in meeting index targets) |
Water environment treatment project engineering design ability (PA) [10] | According to the requirements of water environment control project construction, comprehensive analysis, and demonstration, the ability to prepare construction engineering design documents. | Quantity of projects developed in the area under study (proven through certificates) |
Development and use of new technologies for water environment treatment (TE) [10] | Ability to apply scientific research techniques to projects to produce benefits. | Existence of an innovation sector in the company/investment in innovation |
Quality management capability (QC) [20] | The service provider is willing to strictly abide by the construction specifications for the quality control of the building during the construction process. | Certifications in quality standards such as ISO or other reference standards in the area of civil construction |
Credit rating (CR) [12] | Credit rating is an important indicator reflecting the credit information of the service providers. | Credit rating (rated by financial institutions) |
Social activities (SP) [12] | An important indicator that reflects the social responsibility, corporate culture, and humanistic care of the service provider | Number of local development programs |
Social reputation (SR) [12] | Whether the service provider has reputational problems, such as default. | Customer complaint rates |
Historical litigation situation (LS) [12] | Reflects the credibility level of the service provider and their ability to resolve disputes. | Number of open court cases/number of finalized cases |
Criterion | Measure | Type | Objective |
---|---|---|---|
Human resources (HR) | Experience of the technical team | Natural | Max |
Social reputation (SR) | Percentage obtained through the number of complaints responded to and the number of total complaints | Natural | Max |
Historical litigation situation (LS) | Number of judicial processes | Natural | Min |
Operating PPPs or concessions (PC) | Number of PPPs or concessions in the project’s area of interest | Natural | Max |
Price (GP) | Proposal price provided by each participant regarding the government pays (in BRL millions) | Natural | Min |
Max | Min | Max | Min | |
---|---|---|---|---|
Criteria/ Alternatives | Social Reputation (SR) (%) | Historical Litigation Situation (LS) | Operating PPPs or Concessions (PC) | Price (GP) (Millions of R$) |
A1 | 80.0 | 295 | 49 | 2.5 |
A2 | 26.9 | 101 | 14 | 2.0 |
A3 | 99.2 | 241 | 18 | 4.0 |
Cycle | Consequence A | Consequence B | Answer | Number of Levels |
---|---|---|---|---|
0 | Ordering… | 2 | ||
1 | 3000 of price (GP) | 99.2 of social reputation (SR) | Consequence A | 2 |
2 | 3000 of price (GP) | 49 of operating PPPs or concessions (PC) | Consequence A | 2 |
3 | 31,500 of operating PPPs or concessions (PC) | 101 of historical litigation situation (LS) | Consequence A | 2 |
4 | 198,000 of historical litigation situation (LS) | 99.2 of social reputation (SR) | Consequence A | 2 |
5 | 3500 of price (GP) | 49 of operating PPPs or concessions (PC) | Consequence A | 3 |
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Corrêa, T.L.; Morais, D.C. Private Partner Prioritization for Public–Private Partnership Contracts in a Brazilian Water Company Using a Multi-Criteria Decision Aid Method. Mathematics 2024, 12, 2041. https://doi.org/10.3390/math12132041
Corrêa TL, Morais DC. Private Partner Prioritization for Public–Private Partnership Contracts in a Brazilian Water Company Using a Multi-Criteria Decision Aid Method. Mathematics. 2024; 12(13):2041. https://doi.org/10.3390/math12132041
Chicago/Turabian StyleCorrêa, Thaís Lima, and Danielle Costa Morais. 2024. "Private Partner Prioritization for Public–Private Partnership Contracts in a Brazilian Water Company Using a Multi-Criteria Decision Aid Method" Mathematics 12, no. 13: 2041. https://doi.org/10.3390/math12132041