Sensitivity analysis of key factors influencing concession period estimation in PPP wastewater treatment projects: a system dynamics approach

Population growth, combined with a lack of adequate financing, has led to the need for innovative infrastructure financing solutions in developing countries. The mechanism for dealing with these challenges has been, to a certain degree, made viable through the establishment of public–private partnerships (PPPs). This study aims to develop a system dynamics (SD) model using AnyLogic to determine the optimal concession period for wastewater treatment PPPs. The model incorporates construction costs, discount rates, construction duration, and pre-construction expenses to provide an integrative mode of decision-making. This model's application is demonstrated through a case study of the New Cairo Wastewater Treatment Plant, where the optimum concession period turned out to be 19 years. Sensitivity analysis showed that construction costs and discount rates are the most significant factors impacting the estimation of the concession period. The benefits of the SD approach were further validated through comparison with Monte Carlo simulations and agent-based modeling regarding capturing dynamic feedback mechanisms. The paper emphasizes the essence of adaptive governance and flexible contract structures that can help mitigate financial risks and build stakeholder confidence. The study presents practical recommendations to policymakers and practitioners.