Identification and Implications of Risk Factors in Public-Private Partnership Projects

Abstract

Earlier research studies on public-private partnership (hereinafter ‘PPP’) indicated that an objective, reliable, and practical risk assessment model for PPP projects and an equitable risk allocation mechanism among different parties are crucial to the successful implementation of these PPP projects. The popularity of PPP projects has been steadily on the rise over the past few years. This upward trend is in large part driven by governmental fiscal austerity, particularly in the aftermath of a prolonged global economic recession. The perceived attractiveness of PPP projects is particularly acute in emerging countries because of population growth and increased urbanization. PPP project developments have encountered critical challenges, particularly the enormous difficulties in attracting private investment. Private investors have to face several risks inherent in the investment environment. Thus, a comprehensive approach to managing such critical risk factors is necessary for attracting private investors. This paper expounds on the risk factors affecting the performance of PPP.

Keywords: Public Private Partnerships, PPP, Risk