A Decision Support Model for Optimizing Capital Structure in the Jayapura–Wamena Trans-Papua Road Public–Private Partnership (PPP) Project: The Mamberamo–Elelim Segmen
Abstract
Infrastructure development through Public–Private Partnerships (PPP) has become a key strategy for addressing infrastructure financing constraints. Successful PPP implementation depends not only on selecting an appropriate partnership scheme but also on designing an optimal capital structure that ensures financial feasibility and resilience. This study develops a Decision Support Model (DSM) that integrates PPP scheme evaluation, capital structure formulation, financial performance assessment, and sensitivity analysis. A quantitative approach was applied through several stages, including evaluation of PPP scheme alternatives, Life Cycle Cost (LCC) analysis, identification of capital structure determinants, development of leverage-based financing alternatives, financial feasibility assessment, and sensitivity analysis. The results show that three PPP schemes—Design–Build–Finance–Maintain–Operate (DBFMO), Design–Build–Finance–Maintain (DBFM), and Operation and Maintenance (O&M)—met the criteria for further evaluation. Among nine combinations of PPP schemes and capital structures, only the DBFMO scheme with Debt-to-Equity ratios of 80:20 and 75:25 satisfied the financial feasibility criteria based on Weighted Average Cost of Capital (WACC), Internal Rate of Return (IRR), and Net Present Value (NPV). Sensitivity analysis identified Availability Payment as the most influential parameter affecting NPV, followed by LCC, while Cost of Debt had a relatively smaller effect. The proposed DSM provides a systematic framework for evaluating financing alternatives and supporting capital structure decisions in PPP infrastructure projects.
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