development organizations and governments.<sup>1</sup> Lesson-drawing and dissemination is geared towards improving the likelihood of future project success and avoiding some of the most deleterious pitfalls that have caused prior PPP distress and cancellation. Extensive reports have been produced that discuss lessons related to contract design, legal frameworks, modes and approaches to risk allocation, pricing, bidding and award methods, financial structures, public support mechanisms, project preparation, political risks, and other factors relevant to PPP implementation.

Many developed countries with extensive and long-standing PPP experiences have also seen the value of cataloging lessons learned in order to improve the legislative, regulatory and policy environment and associated governmental mechanisms for PPPs. For example, the United Kingdom, whose Private Finance Initiative of the early 1990s has undoubtedly influenced governments, sponsors and lenders, continues to evolve their program to improve how government facilitates and manages PPP contracts. The UK Treasury's 2011 'Private Finance Initiative' report cited a number of weaknesses in the prevailing Private Finance Initiative (PFI) model, including inflexible contracts, limitations in transparency with respect to investor returns, higher than expected risk premiums incurred by government, and questions over public value for money, all leading to the recommendation of an evolved 'PF2' model of PPP.

Given the efforts to evaluate, compile, and disseminate lessons learned through active and concluded PPPs, it is a worthwhile pursuit to ask whether governments do, in fact, learn from PPP experiences to improve future PPPs. While the purview of this paper is not to diagnose learning across all aspects of PPP globally, we more simply ask whether experience has a limiting effect on the most extreme cases of PPP contract failure –premature contract cancellation. To answer this question, we quantitatively model the effect of experience with PPP on future contract performance using a large data set.

# **Data and PPP Country Experience**

The descriptive statistics and econometric models reported in this study are based on data from the World Bank's Private Participation in Infrastructure (PPI) Project Database, which tracks infrastructure projects in developing regions that entail some form of private participation since 1990.<sup>2</sup> As of August 2016, the database includes 7,192 projects across 139 countries with recorded variables for each project, including project status (active, cancelled, or concluded), project sector and subsector, committed investments, contract duration, contract form, multilateral support, and project sponsors, among other variables.

Of the 7,192 projects in the database of projects with some form of private participation in infrastructure (PPI), 5,478 are more narrowly defined as 'public-private partnerships'. This set excludes projects for which the degree of private participation tends toward the extreme-private side of the public-private spectrum. They are either full divestitures (i.e., total privatization of an asset) or 'merchant' projects, where a private sponsor builds a facility for which no government revenue guarantees are provided (thus bearing all construction, operating, and market risks).

A further limitation is imposed on the data set: we include only active or cancelled projects that reached financial closure before 2011. The reason for truncating the data set to include only the

> 1 See http://ppp.worldbank.org/public-private-partnership/lessons-learned-0.

> 2 The Private Participation in Infrastructure (PPI) Project Database is the leading source of PPI trends in the developing world, covering projects in the energy, telecommunications, transport, and water and sewerage sectors. Projects include management or lease contracts, concessions, Greenfield projects, and divestitures.

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