Impacts of Risk Factors on the Performance of Public-Private Partnership Transportation Projects in Vietnam

Abstract

The rapidly increasing demand and the inefficacy of financing transportation infrastructure project investments have contributed to various challenges for Vietnam in recent decades. Since the country’s budget is inadequate for investing in all necessary infrastructure projects, the Vietnam government has been inviting other economic sectors, especially the private sector, to participate in infrastructure development. The cooperation between the government agencies and the private entities, called PublicPrivate Partnership (PPP), must encounter various challenges leading to difficulties in attracting private investors. A main reason is that private investors must deal with critical risks concerning PPP investment environment. It is a challenging task for the government to optimally manage such risks to enhance the attractiveness of PPP projects for private investors. This paper examines the critical risk factors that influence the private sector’s investment decisions on PPP transportation projects in Vietnam. Risk factors inherent in typical PPP projects were compiled by comprehensive literature review. To reflect unique characteristics of PPP projects in Vietnam, the compiled risk factors were reviewed by a group of PPP experts from both the public and private sectors in Vietnam through indepth interviews and questionnaire surveys. In addition, ten PPP project case studies in Vietnam were analyzed to derive the risk profile of PPP transportation projects of the nation. These risk factors were quantitatively assessed based on their probabilities and impact levels. We found that the critical risk factors of PPP infrastructure projects in Vietnam are acquisition/compensation problems, approvals and permits, inadequate feasibility studies, finance market issues, subjective evaluation methods, and change in laws and regulations. By performing factor analysis, these critical risk factors were grouped into four categories: (1) bidding process, (2) finance issues, (3) laws and regulations, and (4) project evaluation issues. These critical risk factors represent the obstacles that repel private investors from PPP transportation projects in Vietnam. Thus, the Vietnam government agencies should meticulously address these issues to attract both domestic and foreign private investors in PPP projects.

Developing a Risk Management Process for General Contractors in the Bidding Stage for Design–Build Projects in Vietnam

“…These identified risk factors formed the basis of a questionnaire survey that was delivered to a suitable target group. The main purpose of this phase was to collect data to identify the risk factors specific to GCs in DB projects by analyzing the results of the survey, as per the method in the previous studies by Tran et al [8], Sy, Likhitruangsilp, Onishi and Nguyen [10], and Yuni, Norken, Sudarsana and Adnyana [29]. At step 2, an RMP (including a workflow, rules, risk factors checklist, and assessment) was designed for use during the bidding phase of DB projects, based on a synthesis of the bidding process, the risk management process mentioned in previous studies by Öztaş and Ökmen [31] and Adnan, Jusoff and Salim [3], and the analysis results from the survey in this study.…”

“…Among the existing studies on the risks in DB projects, two fields have been the main focus: the risk identification and assessment (estimation and evaluation) field, and the risk response/treatments field. The most common is a group of studies that identify the risk factors to develop risk assessment models to support the decision-making process, such as the simplified schedule and risk analysis model by El-Gafy [22], a risk assessment from the perspective of an owner in the research by Tsai and Yang [26], the critical factors list for contractor bidding decisions in the Jarkas, et al [27] study, the risk comparison of public owners and design-builders in choosing DB delivery [8], the classification study on three risk groups (cost, time, and quality) by Ogunsanmi [28], Yuni, et al [29] list unacceptable risk factors and undesirable risk factors along with risk mitigation, the critical risk factors that influence the private sector's investment decisions on Publish Private Partnership transportation projects in Vietnam [10], the contractor perspective related to risk factors in a design-build project in Rostiyanti, et al [30], and so on. Although targeting many different research objects, these studies all identify risks and their relationships through the analysis of interview and survey results, thereby building risk assessment models to support the decision-making process.…”

“…In the US, the FHWA's Design-Build Contracting Final Rule (2002) has allowed DB projects to move from an experimental status to the mainstream for federally funded projects [9]. During the last few years in Vietnam and in other developing countries, the number of projects implementing a transfer to DB has increased significantly, and it has gained considerable attention from government, owners, and main contractors [10].…”

“…The respondents were asked about their level of agreement for each risk agent in the following two statements: "Risk factor [A] influences the GC in the DB project" and "Risk factor [A] often occurs in the DB project". To collect the frequency and extent of influence measurements of each risk factor in DB projects in Vietnam from surveyors, this study used a five-point Likert scale, similar to that used in the Adnan, Jusoff and Salim [3] and Sy, Likhitruangsilp, Onishi and Nguyen [10] studies. The five-point Likert scale is defined as follows: "A type of psychometric response scale in which responders specify their level of agreement to a statement typically in five points:…”

Prioritization of risk events in PPP wind power projects using integrated FMEA and Monte Carlo simulation

“…The third most significant risk event is "interest rate volatility". Interest rate volatility has major effects on the rate of return and the potential profit generated by the project [43]. Since most wind power generation investments are performed by using bank credits, there is a strong correlation between the interest rate and total project cost.…”