Risk Allocation in Public-Private Partnership Infrastructure Projects

Public-Private Partnership in Infrastructure Projects 1
A RESEARCH PROJECT ON
RISK ALLOCATION IN PUBLIC-PRIVATE PARTNERSHIP INFRASTRUCTURE
PROJECTS
By
Name of the Student
Name of the Professor
City/State
Date/Month/Year

Public-Private Partnership in Infrastructure Projects 2
Table of Contents
INTRODUCTION...........................................................................................................................................3
Fuzzy theory............................................................................................................................................4
Research Questions.................................................................................................................................4
Limitations of PPP projects in Australia...................................................................................................4
RESEARCH AIM AND OBJECTIVE..................................................................................................................5
Aim..........................................................................................................................................................5
Objective.................................................................................................................................................5
Significance of Research..............................................................................................................................5
Is the PPP value for money?....................................................................................................................5
Risk factors leading to the success of PPP projects.................................................................................6
Risk factors leading to the failure of PPP projects...................................................................................6
RESEARCH APPROACH.................................................................................................................................6
Concept map...............................................................................................................................................6
Timeline.......................................................................................................................................................7
LITERATURE REVIEW....................................................................................................................................8
Risk management in PPP projects...........................................................................................................8
Risk management in PPP project.............................................................................................................9
Risk allocation........................................................................................................................................10
Comparative study on risk allocation in PPP project for Australia and Hong Kong................................12
CONCLUSION.............................................................................................................................................13
Bibliography..............................................................................................................................................14

Public-Private Partnership in Infrastructure Projects 3
LIST OF TABLES
Figure 1: Concept Map for the PPP in Infrastructure ................................................. 8
Figure 2: Project Timeline ................................................................................ 8
Figure 3: The risk management process ................................................................ 10
Figure 4: Probability versus severity .................................................................... 11
Figure 5: Risk allocation process ........................................................................ 12
LIST OF FIGURES
Table 1: Allocation of risk according to Australian standard ....................................... 13
Table 2: Comparative study on risk allocation in PPP project for Australia and Hong Kong ... 13

Public-Private Partnership in Infrastructure Projects 4
INTRODUCTION
The public-private partnership is increasing in number worldwide and is applied when it comes
to building and managing the public projects which are large in size. It assists the countries more
so the one having financial restrictions to erect a construction for the public whereas reducing the
financial problem incurred investment segment. Both the private and the public sector should
start the risk allocation strategies for the Public-Private Partnership (PPP) projects.
According to Australian guidelines, the party which is in a position of managing the risk
effectively should be considered most. One of the greatest benefits for the government is
involving the private sector to participate in certain projects where the transfer of risk can be
done to the private sector (Demande, 2008). The government develops the project in a more
conventional way thus the private region should be in a position of handling those risk
accordingly, inexpensively and delivery of infrastructure services of high quality. The
management of risk in PPP projects is sounding a little bit composite since social infrastructure
projects have begun to appear in the PPP market.
The PPP will only create the value for money if there is private sector efficiency compensate
sufficiently for the difference in price arising from risk-free rate and the weighted average cost of
the project
In PPP projects, the public sector perceive risk as any event which jeopardize the quantity or
quality of service that they have acquired for and from the government while private sectors
view PPP project as an event which brings about the flow of cash profile of the project to depart
from the base case and endanger the project debt ability to service (Thomas, 2003).