Risks with Cost Overruns and Project Completion in Public-Private Partnerships: An Examination of the Sondu-Miriu Hydropower Project

The onset of PPP as a strategy in the management of public service and projects was concisely presented in 1990s as the cornerstone for promoting sustainable development for low income countries (World Bank Report, 1993). This combination is expected to enhance time, quality and cost efficiency of resultant projects (Savas, 2000). The study was anchored on the principal agent theory while adopting pragmatic paradigm to determine the extent to which construction cost overrun related risks influence completion of Public Private Partnership Project in Kenya. The study tested the null hypothesis that: Construction cost overrun related risks do not significantly influence completion of Public Private Partnership Project in Kenya. The study targeted the entire management of Sondu- Miriu Power project totaling 85 obtained from the contracting parties where a sample of 71 was selected through proportionate sampling. Questionnaires and interview schedules were used for data collection while Cronbach Alpha was used as a measure of reliability and established that the overall questionnaire reliability was α = 0.730. Quantitative and qualitative techniques were used in analysis where regression analysis was used to establish the relationship between the variables. The null hypothesis was tested at 95% confidence level and found that there was a strong negative correlation between the variables, r (38) = -0.682 (p<.05) with regression showing that construction cost overrun related risks explained up to 46.5% [R square = .465, F (1, 37) = 32.153; p < .05].This implies that construction cost overrun significantly influences completion of construction projects through PPPs. Thus, the null hypothesis was rejected. The study recommends that the project stakeholders should minimize the number of contractors by vetting and prequalifying contractors with capability to deliver the services. This will prevent outsourcing and minimize cost overrun.