Commenced in January 2007
Frequency: Monthly
Edition: International
Paper Count: 30067
Public Private Partnership for Infrastructure Projects: Mapping the Key Risks

Authors: Julinda Keçi

Abstract:

In many countries, governments have been promoting the involvement of private sector entities to enter into long-term agreements for the development and delivery of large infrastructure projects, with a focus on overcoming the limitations upon public fund of the traditional approach. The involvement of private sector through public private partnerships (PPP) brings in new capital investments, value for money and additional risks to handle. Worldwide research studies have shown that an objective, systematic, reliable and useroriented risk assessment process and an optimal allocation mechanism among different stakeholders is crucial to the successful completion. In this framework, this paper, which is the first stage of a research study, aims to identify the main risks for the delivery of PPP projects. A review of cross-countries research projects and case studies was performed to map the key risks affecting PPP infrastructure delivery. The matrix of mapping offers a summary of the frequency of factors, clustered in eleven categories: construction, design, economic, legal, market, natural, operation, political, project finance, project selection and relationship. Results will highlight the most critical risk factors, and will hopefully assist the project managers in directing the managerial attention in the further stages of risk allocation.

Keywords: Construction, infrastructure, public private partnerships, risks.

Digital Object Identifier (DOI): doi.org/10.5281/zenodo.1108871

Procedia APA BibTeX Chicago EndNote Harvard JSON MLA RIS XML ISO 690 PDF

References:


[1] Augenblick M., Scott Custer Jr. B., "The build, operate and transfer (BOT) approach to infrastructure projects in the developing countries," World Bank, Washington, 1990.
[2] Darrin Grimsey, Mervyn K. Lewis, "Evaluating the risks of public private partnerships for infrastructure projects," International journal of Project Management, pp. 107-118, 2002.
[3] A. Akintoye, "Public Private Partnerships for sustainable development of infrastructure in developing countries," in In Okewole, I.A. et al. Eds., Proceedings of International Conference on the Built Environment, Nigeria, 2006.
[4] N. Middleton, Public Private Partnerships: A Natural Successor to Privatisations?, In Public Private Partnerships (2003), Akintoye A., 2000.
[5] L. Gunnigan, Increasing Effectiveness of Public Private Partnerships in the Irish Construction Industry, Doctoral Thesis: Dublin Institute of Technology, 2007.
[6] Li, B., Akintoye. A. Edwards, P.J. Hardcastle C., "The allocation of Risk in PPP/PFI Construction Projects in the UK," International Journal of Project Management, pp. 23 (1), pages: 25-35, 2005.
[7] Li, B., and Akintoye, A., "An overview of public –private partnership," in Public-Private partnerships: managing risks and opportunities, School of the Built and Natural Environment. Glasgow Caledonian University, Blackwell Science, 2003.
[8] Chinyio, E. and Gameson, R., Private Finance Initiative in Use In Akintola Akintoye & Mattias Beck, editors Policy, Finance, & Management for Public- Private Partnerships, Innovation in the Built Environment, Wiley-Blackwell, 2009.
[9] CCPPP, "100 Projects: selected Public-Private Partnerships across Canada," Canadian Council for Public Private Partnerships, Toronto, 2001.
[10] R. Norment, "Executive director of NCPPP, email communication In: Li & Akintoye (2003) An Overview of public-private partnership: Public – private partnerships Managing risks and opportunities (ed. Akintoye, A., Beck, M., and Hardcastle, C,)," pp. 3-30., 2000.
[11] EIB, "Public-Private Partnerships in Europe: an Update," European Investment Bank, 2007.
[12] D. Cartlidge, Quantity Surveyor’s Pocket Book, Oxford, UK: Butterworth-Heinemann, Elsevier, 2010.
[13] De Lemos T., Eaton, D., Betts, M., De Almeide, L. T., "The Nature of PFI," Journal of Structured and Project Finance, pp. 59 - 76, 2003.
[14] D. L. Seader, "The United States Experience with Outsourcing, Privatisation and Public-Private Partnerships," NCPP, p6, Arlington, VA, 2002.
[15] EPPPEC, "Overview of the PPP Legal and Institutional Frameworks in the Western Balkans," European PPP Expertise Centre, 2014.
[16] Ri, Berthomieu, Cingolani, "Priority Investments in the Western Balkans and Croatia: Analysis of medium-term needs, possible impacts and criteria for ranking in terms of efficiency and development potential," STAREBEI Research Program, 2014.
[17] BENEFIT, "Case Studies: Tirana International Airport".
[18] Kappeler, A., Nemoz, M., "Public-private partnership in Europe – before and during the recent financial crisis", European Investment Bank., 2010.
[19] PMI, A guide to the project management body of knowledge: PMBOK Guide.3rd, 2004: Project Management Institute Inc.
[20] Flanagan, R. and Norman, G., Risk management and construction, Victoria, Australia: Blackwell Science Pty Ltd., 1993.
[21] O. A. Awodele, Framework for Managing Risk in Privately Financed Market Projects in Nigeria, Doctoral Thesis, Heriot-Watt University, School of the Built Environment, 2012.
[22] W. D. Rowe, An Anatomy of Risk, John Wiley & Sons Inc., 1977.
[23] IEC62198:2001, "International standard IEC 62198:2001," International Electrotechnical Commission, 2001.
[24] PMI, "A guide to the project management body of knowledge: PMBOK Guide. 3rd ed," Project Management Institute Inc., 2004.
[25] Davis, S.D., and Prichard, R., Risk Management, Insurance and Bonding for the Construction Industry, Alexandria, Virginia: Associated General Contractors of America, 2000.
[26] Xenidis, Y. and Angelides, D, "The financial risks in Build Operate Transfer projects," Construction Management and Economics, pp. 23, 431-441, 2005.
[27] J. Keci, "Practices, Barriers and Challenges of Risk Management Implementation in Albanian Construction Industry," in Urban Planning and Civil Engineering, Athens, ATINER, 2015, pp. 175-187.
[28] Abednego, M. P., Ogunlana, S. O., "Good project governance for proper risk allocation in public-private partnership in Indonesia," International Journal of Project Management, pp. Vol 24, 622-634, 2006.
[29] Shen, L.Y., Platten, A., Dang, X., "Role of public private partnership to manage risk in public sector project in Hong Kong," International Journal of Project Management, pp. Vol 24, pages: 587-594, 2006.
[30] Ibrahim, A.D., Price, A.D.F., Dainty, A.R.J., "The analysis and allocation of risks in public private partnerships in infrastructure projects in Nigeria," Journal of Financial Management of Property and Construction, pp. Vol 11 (3), pages: 149 - 163, 2006.
[31] Yuan, J.F., Peng, X., Li, D.M, "Critical risks identification of Public Private Partnerships in China and the analysis on questionnaire survey," IEEE, 2008.
[32] Yelin, X., Cheng, H., Chan, P.C., "Risk Factors for Running Public Private Partnerships (PPP) – An Empirical," IEEE, 2009.
[33] R. Aspin, "Public-private partnerships and effective risk management for local government," in 9th EAROPH World Planning and Housing Congress and Australian National Housing Conference, Melbourne, 2004.
[34] Xiao, H.J., Zhang, G., "Modelling optimal risk allocation in PPP projects using artificial neural networks," International Journal of Project Management, pp. Vol 29, pages: 591–603, 2011.
[35] X. Zhang, "Paving the Way for Public–Private Partnerships in Infrastructure Development," Journal of Construction Engineering and Management, pp. 131(1), 71–80, 2005.
[36] Singh, L. B., Kalidindi, S. N., "Traffic revenue risk management through Annuity Model of PPP road projects in India," International Journal of Project Management, pp. Vol 24, pages: 605–613, 2006.
[37] Wibowo, A., Mohamed, S., "Risk criticality and allocation in privatised water supply projects in Indonesia," International Journal of Project Management, pp. Vol 28, pages: 504- 513, 2010.
[38] Ng A., Loosemore M., "Risk Allocation in the private provision of public infrastructure," International Journal of Project Management, pp. 25(1), pages: 66-76, 2007.
[39] Gallimore, P., Williams, W., Woodward, D., "Perceptions of risk in the private finance initiative," Journal of Property Finance, pp. 8(2), 164– 176, 1997.
[40] Kumaraswamy, M. M., and Zhang, X. Q., "Governmental role in BOTled infrastructure development," International Journal of Project Management, pp. 19(4), 195–205, 2001.
[41] Warburton, W., and Baker, G., "Integrity systems and local government," Australian Journal Public Administration, pp. 64, 62–68, 2005.
[42] Maslyukivska, O., and Sohail, M., "European infrastructure procurement through PPP, "Procurement, Institution of Civil Engineers: Management, Procurement and Law, 2007.
[43] Estache, A., Juan, E., Trujillo, L., "Public–Private Partnerships in Transport," The World Bank, 2007.
[44] F. Medda, "A game theory approach for the allocation of risks in transport public private partnerships," International Journal of Project Management, pp. 25(3), 213–218, 2007.
[45] Zou, X. W., Wang, S. Q., and Fang, D. P., "A life-cycle risk management framework for PPP infrastructure projects," Journal of Financial Management of Property and Construction, pp. 13(2), 123– 142, 2008.
[46] Bing, L., Akintoye, A., Edwards, P. J., Hardcastle, C., "The allocation of risk in PPP/PFI construction projects in the UK," International Journal of Project Management, pp. 25(3), 213–218, 2005.
[47] Hwang, B.-G., Zhao, X., Gay, M.J.S., "Public private partnership projects in Singapore: Factors, critical risks and preferred risk allocation from the perspective of contractors," International Journal of Project Management, pp. 31, 424–433, 2013.
[48] Chou, J.-S., Tserng, H. P., Lin, C., Yeh, C.-P., "Critical factors and risk allocation for PPP policy: Comparison between HSR and general infrastructure projects," Transportation Policy, pp. 22, 36–48, 2012.
[49] Ke, Y., Wang, S., Chan, A.P.C., Lam, P.T.I., "Preferred risk allocation in China’s public–private partnership (PPP) projects," International Journal of Project Management, pp. 28, 482–492, 2010.
[50] Chan, A., Yeung, J., Yu, C., Wang, S., Ke, Y., "Empirical study of risk assessment and allocation of public–private partnership projects in china," Journal of Management and Engineering, pp. 27, 136–148, 2011.
[51] X. Jin, "Determinants of efficient risk allocation in privately financed public infrastructure projects in Australia," Journal of Construction Engineering and Management, pp. 136, 138–150, 2010.
[52] Xu, Y., Yeung, J.F.Y., Chan, A.P.C., Chan, D.W.M., Wang, S.Q., Ke, Y., "Developing a risk assessment model for PPP projects in China – A fuzzy synthetic evaluation approach," Automation in Construction, pp. 19, 929–943, 2010.
[53] Li, J., Zou, P., "Fuzzy AHP-based risk assessment methodology for PPP projects," Journal of Construction Engineering and Management, pp. 137, 1205–1209, 2011.
[54] Heravi, G., Hajihosseini, Z., "Risk allocation in public–private partnership infrastructure projects in developing countries: Case study of the Tehran– Chalus toll road," Journal of Infrastructure Systems, pp. 18, 210–217, 2012.
[55] Cheung, E., Chan, A., "Risk factors of public–private partnership projects in china: Comparison between the water, power, and transportation sectors," Journal of Urban Planning and Development, pp. 137, 409–415, 2011.
[56] Thomas, A.V., Kalidindi, S. N., Ananthanarayanan, K., "Risk perception analysis of BOT road project participants in India," Construction Management and Economics, pp. 21 (4), 393–407, 2003.
[57] AS/NZS4360, "Australian/New Zealand Standard on Risk Management," Standards Australia and Standards New Zealand, 2004.
[58] UNECE (United Nations Economic Commission for Europe), "Guidebook on Promoting Good Governance in Public-Private Partnership," United Nations, New York and Geneva, 2008.
[59] Deloitte Research, "Closing the Infrastructure Gap: The Role of Public- Private Partnerships," 2006.
[60] Risk Management Reports, "Vol. 26, No.12," 1999.
[61] Webb, R. & Pulle, B, "Public-private partnerships: An Introduction. Research Paper No.1 2002-03," Information and Research Services, Department of the Parliamentary Library., Australia, 2002.