The Role of Good Project Governance on the Performance of Toll Road Infrastructure Public-private Partnership (PPP) Projects in Indonesia

Abstract

In Indonesia, the public-private partnership policy is controlled by presidential decree no. 38 of 2015. It sets the framework for government collaboration with these entities for Infrastructure development, establishing clear agreement structures. The use of infrastructure as a catalyst for Indonesia’s economic growth faces significant challenges. One example is the construction projects, which have not reached the intended goal and have led to an increase in investment cost compared to the original plan. Additionally, the interaction between the government and companies involved in toll road construction projects under the public-private partnerships (PPP) mechanism has yet to produce good quality project governance and expected project performance. The toll road construction is needed to improve services to the Citizens because it can speed up travel time and reduce logistics costs considered burdensome for consumers. This study aimed to find empirical data on the determination of project intellectual capital and project ownership structure through good project governance on toll road project performance in Indonesia. This study adopted a quantitative approach that involved data collected through a survey conducted among toll road projects from 2015 to 2019. There were 43 sections for the toll-road project, each embarked on by a distinct company. Reflective research model measurements were carried out on 4 (four) indicator tests. They were internal consistency, indicator reliability, AVE and discriminant analysis. The data was analyzed using Structural Equation Modeling Partial Least Square (SEM-PLS). The results showed that project intellectual capital and project ownership structure significantly affected good project governance. Good project governance significantly affected project performance. Project intellectual capital and project ownership structure influenced project performance through the mediation of good project governance. Conversely, two hypotheses were not supported by the data, i.e., the effect of project intellectual capital and project ownership structure on project performance. The findings of this research contributed to the literature regarding the implementation of collaborative governance in PPPs toll road development projects in Indonesia by providing a framework and assessment tools, which could be valuable for researchers and policymakers in analyzing and evaluating the governance and performance of toll road construction PPP projects.