Principal-Agent Theory: An Examination of Success Variations in Government-Funded Highway Infrastructure Projects in the United States

This quantitative, nonexperimental, analytical, and cross-sectional study examined the extent to which procurement models, financial risk allocation, and principal-agent communication complexities influenced the success of government-funded highway infrastructure projects in the United States (US). Data were collected from 84 completed highway infrastructure projects (N = 84) between 2001 and 2024 from the US Major Projects Database. Regression analysis and bootstrapped standard errors showed that the procurement model selected significantly affected project success. Public-private partnerships (PPPs) were shown to effectively reduce time overruns with a strong relationship potential for controlling project time growth. There were no statistically significant indirect effects of financial risk allocation on the relationship between procurement models and project success (time and cost growth), indicating that financial risk allocation alone does not influence time and cost growth. In the PPP and alternative contracting method procurement models, communication complexities influenced the impact of procurement models on financial risk allocation. It underscores the importance of having robust communication frameworks to mitigate agents' opportunistic behavior in complex procurement arrangements. There was no statistically significant interaction between financial risk allocation and communication complexities, which were not significantly associated with time or cost growth even when controlling for the Coronavirus Disease 2019 (COVID-19). It supports the need for further research with other potential variables. These findings highlight PPPs' effectiveness in controlling project time growth while emphasizing the need to align financial risk with communication frameworks to optimize public resources in infrastructure projects.