The Effect of Implementation Capacity to the relationship between different modes of Infrastructure Financing and Success of Public Capital Projects in Kenya

Purpose: The study investigates the effect of implementation capacity on the relationship between the internal, external and PPP infrastructure financing methods and the success of public capital projects in Kenya. Materials and Methods: Using positivistic approach, the study adopted descriptive cross-sectional design to analyze data from high-impact infrastructure projects in the roads, energy, and water & sanitation sectors under Kenya’s Medium-Term Plans (MTP I and MTP II). A sample of 313 projects were purposively and randomly selected covering the three types of infrastructure projects and ensuring representation across all regions of the country from projects developed in the three sectors over the 10 year period. A response rate of 260 high-impact infrastructure projects (representing 83%) was achieved with secondary data on cost and time overruns, for each of the three identified infrastructure financing methods analyzed using ratio scale, and primary data collected from the project managers' perceptions of implementation capacity using Likert Scale of 1 to 5 where 1 was the lowest and 5 was the highest. Findings: The study findings show that the effect of implementation capacity on the relationship between internal financing and success of public capital project in terms of costs overrun was negative; for external infrastructure financing positive; and for PPP financing negative. In the case of time overruns the effect on internal infrastructure financing was positive; for external financing the effect was negative; and on PPP infrastructure financing the effect was negative. The study also notes that out of the four factors explaining the implementation capacity, payment to the contractors exhibits the highest risk. Unique Contribution to Theory Practice and Policy: The study recommended that the government prioritize external financing over internal financing; strengthen implementation capacity by improving the payment to contractors; and further study be made on PPP financing once more capital projects are developed using this mode of financing.