Risk analysis and allocation in public private partnership projects

The application of Public Private Partnerships (PPPs) has become increasingly important in the development and delivery of public projects. Reviews of some completed PPP schemes in the UK and overseas indicate that not all PPP projects can claim to be successful, as a large number of uncertainties still affect this procurement approach. Conducting a comprehensive risk analysis, followed by appropriate positive action, are some of the critical factors contributing to the success of PPP projects. This research is thus aimed at developing a framework to evaluate and manage risk factors critical to PPPs, as they affect construction projects. Literature on risk assessment and management and PPP procurement has been, and is still being, reviewed. The risk associated with private provision of public infrastructure differs according to the nature of the service for which the facility is provided, and is also dependent on perspective. To enhance better understanding of project risks by all PPP participants, a three-tier structure of risks is proposed for the analysis of risk factors in PPP projects. This structure is made up of micro, macro and meso (level) risks. The micro level risks explore the uncertainty factors within a PPP organization. The macro level risks refer to the ecology variables, while the meso risk factors fall between the macro and micro levels, and are especially relevant to the entire project.