RESEARCH PAPER System dynamics approaches to public–private partnerships: A literature review Eirini Grammatiki Pagoni | Patroklos Georgiadis Industrial Management Department, School of Mechanical Engineering, Aristotle University of Thessaloniki, Thessaloniki, Greece Correspondence Eirini Grammatiki Pagoni, Industrial Management Department, School of Mechanical Engineering, Aristotle University of Thessaloniki, PO Box 461, Thessaloniki 541 24, Greece. Email: egpagoni@meng.auth.gr Abstract Increased complexity has been recognized as a dominant characteristic of public–private partnerships (PPPs). In this article, we review system dynamics (SD) approaches to the PPP field because SD modelling can support the policymaking process in systems with increased structural and functional com- plexity. Although papers published in journals and conferences have docu- mented SD approaches to PPP problems, there appears to be a lack of systematically reviewing what they have already provided. The objectives are to compare the findings of the studies to provide insights for directing further PPP research with the use of SD. To achieve the review objectives, we catego- rize the papers by the problem topic raised and provide a summary of par- ticular insights. Problem topics include construction risk assessment, risk allocation, project financing, performance of infrastructure, demand forecast, procurement strategies, and strategic policy at national levels. The paper con- cludes with recommendations for future SD applications. KEYWORDS literature review, public‐private partnerships, private finance initiative, system dynamics modelling 1 | INTRODUCTION Restrictions on capital budgets have been leading govern- ments to establish the public–private partnerships (PPPs) since the early 1990s. PPPs are “forms of cooperation between the public and private sectors for the funding, construction, renovation, management or maintenance of infrastructure, or the provision of a service” (European Commission, 2004). Simply put, in PPPs, the private sec- tor is responsible for the financing, design, construction, and operation of a project, whereas the public sector has to guarantee for the social acceptability of the project, improve the legal environment, and keep its supervisory role (Burger & Hawkesworth, 2011). Since the late 1990s, there has been an increasing interest in the adoption of PPP policy by governments in both developed and developing countries to minimize their infrastructure deficit (Kang, Mulaphong, Hwang, & Chang, 2019). The attractiveness of PPPs had not only been based on the financial shortages of governments, but also in the allocation of risks between the partners. Risk transfer has always been a crucial aspect of PPPs because the allocation of the most expensive risks to the private partner offers better “value for money” (VfM) to taxpayers. The achievement of VfM gained emphasis in response to an amendment of Financial Reporting Standard 5 that stated that the purchaser (public sector) had to demonstrate that the involvement of the private sector offered VfM when compared to alternative ways of providing the services (Accounting Standards Board, 1998). In result, risk allocation became the critical element when deciding which party should record the related asset on its balance sheet (Connolly & Wall, 2011). Received: 17 January 2019 Revised: 8 July 2019 Accepted: 17 August 2019 DOI: 10.1002/sres.2626 Syst Res Behav Sci. 2019;1–15. © 2019 John Wiley & Sons, Ltd. wileyonlinelibrary.com/journal/sres 1