Special Purpose Entities in Megaprojects: Empty Boxes or Real Companies?
However, despite being extremely
relevant to megaprojects, SPEs are
under-investigated in project management; specifically, it is not clear how
to design SPEs to deliver successful
megaprojects. This article sets the background for a new research stream by
bringing together the scattered knowledge that exists on SPEs in a “project
management–friendly article.” Four
main outcomes are presented: the
definitions of SPEs, the typology of
existing SPEs, comparisons of existing
SPEs, and a description of SPE use in
First, SPEs do not have a uniform
definition across the legal, financial,
and project management domains.
Behind the acronym “SPE” exists a
wide range of companies, ranging from
virtual organizations, such as mailbox
companies, to large construction joint
ventures for infrastructure megaprojects. This research provides a general
definition of SPE, which is consistent
with all domains considered.
Second, ten main features differentiate the existing types of SPEs from
one another: legal status, lifetime,
purposes, activities, capabilities assets
and liabilities, financial structure, risk
characterization, ownership and control, reporting and accounting, and
venue. For each of these features, the
research identifies a list of possible values; their combination allows the different types to be represented and for SPEs
to be classified.
Third, the research presents a comparison of the types of SPEs prevalently
described in the legal, financial, and
project management domains.
The legal domain views SPEs mostly
as off-balance sheet instruments enabling
tax optimization and balance sheet management. Typically, SPEs are considered
as mailbox companies; in other words,
an empty box or virtual company without
staff and physical venue.
The financial domain focuses on
advanced financial products and trans-
actions, which involve the SPE (usu-
ally a mailbox company) functioning as
a financial vehicle able to isolate and
channel financial assets and cash flows.
The project management domain
focuses on SPEs owning physical assets,
employing people, and undertaking
activities, including design, construction, financing, and operating infrastructure megaprojects.
Fourth, the research further specifies the use of SPEs in megaprojects.
The SPEs enable resources and capabilities from different project stakeholders
to be assembled. In project financing,
the SPEs are used for risk management
purposes and are typically associated
with vast debt in conjunction with off-take contracts or concessions, which are
necessary to securing revenue streams.
A megaproject often involves a wide
range of SPEs at the same time: some
well-staffed SPEs and other mailbox
SPEs permit fiscal and financial opti-
mization. Even in such a complex net-
work of SPEs and contracts, there are
SPEs that are more critical than others
because they retain most of the assets or
determine the governance of the mega-
project. These critical SPEs manage the
project resources and risks and their
governance becomes the governance of
the megaproject itself. For this reason,
SPEs are so important for megaproj-
ects and deserve further investigation to
fully clarify their role, specifically in the
• The existing mechanisms by which
SPEs determine the governance of
• SPE ability to align and coordinate
critical project stakeholders;
• The barriers and preconditions limit-
ing the use of SPEs; and
• The potential threats associated with
the misuse of SPEs in megaprojects.
Aaltonen, K., & Kujala, J. (2010).
A project lifecycle perspective on
stakeholder influence strategies in
global projects. Scandinavian Journal
of Management, 26( 4), 381–397.
Akbıyıklı, R. (2013). Performance
assessment of a private finance initiative
road project. Transport, 28( 1), 11–24.
Akintoye, A., Beck, Matthias, &
Hardcastle, Cliff. (2008). Public-private
partnerships: Managing risks and
opportunities. Hoboken, NJ: John Wiley
Akintoye, A., & Beck, M. (2009). Policy,
management and finance for public-private partnerships. Hoboken, NJ: John
Wiley & Sons.
Basel Committee on Banking
Supervision (BCBS). (2009). The
Joint Forum–Report on Special Purpose
Entities. Basel, Switzerland.
Baudistel, K. J. (2013). Bankruptcy-remote special purpose entities: An
opportunity for investors to maximize the
value of their returns while undergoing
more careful and realistic risk analysis.
Southern California Law Review, 86( 6),
Bluhm, C., & Overbeck, L. (2006).
Structured credit portfolio analysis,
baskets and CDOs. Boca Raton, FL: CRC
Brealey, R. A., Cooper, I. A., & Habib,
M. A. (1996). Using project finance to
fund infrastructure investments. Journal
of Applied Corporate Finance, 9( 3),
Brookes, N. J., & Locatelli, G. (2015).
Power plants as megaprojects: Using
empirics to shape policy, planning, and
construction management. Utilities
Policy, 36, 57–66.
Brookes, N., Locatelli, G., & Mikic, M.
(2015). Learning across megaprojects.
Brussels, Belgium: Megaproject COST
Bruyere, R., Copinot, R., Fery, L.,
Jaeck, C., & Spitz, T. (2006). Credit
derivatives and structured credit: A guide
for investors. Hoboken, NJ: John Wiley &
Cartlidge, D. (2006). Public private
partnerships in construction. New York,
NY: Taylor and Francis.
Caselli, S., & Gatti, S. (2005). Structured
finance: Techniques, products and