Risk allocation in public-private partnership water supply projects in Ghana

Abstract

Appropriate risk allocation (RA) between public and private sectors according to their risk management (RM) capabilities is crucial for the success of public-private partnership (PPP) projects. The RA process in PPP water projects is examined, and a methodology based on fuzzy set theory is outlined with RA principles that can be used by public-private participants to arrive at fair RA decisions. Empirical data based on an industry-wide threeround Delphi questionnaire survey is used in this study to outline the methodology. The fuzzy set theory is employed for the RA analysis because it deals well with the complex multi-criteria problem of, and precisely accounts for the fuzziness inherent in human cognitive process that characterize, RA decision-making. Five risk factors are evaluated on each RA principle, analysed and assigned between the public and private sectors. The results show that it is appropriate to allocate risks according to both sectors' RM capability to manage them, using established RA principles and fuzzy set theory. The methodology renders the decision-making process more systematic and practical because the fuzzy theory approach allows decision makers to express their evaluations of both sectors' RM capabilities in descriptive qualitative terms. The results should assist public clients to establish efficient RA strategies and develop balanced RA schemes for PPP contracts, with a view to achieving a mutually acceptable RA with the private sector.

Model for predicting the success of public–private partnership infrastructure projects in developing countries: a case of Ghana

“…Appropriate risk allocation and sharing is the most significant predictor in the substantive . In PPPs, risks are to be properly identified and allocated to the party with better mitigation measures (Ameyaw and Chan, 2015;Xu et al 2010). In recent times, quite a number of PPP projects in developing countries particularly Ghana and other African countries have failed to meet their objectives due to the misallocation of risks.…”

Stakeholders’ Perspectives on the Success Criteria for Public-Private Partnership Projects

“…There are PPP projects which have failed to live up to expectations primarily because of the misallocation and incomplete transfer of risks Chan, & Cheung, 2008). Misallocation and incomplete transfer of risks in PPPs often end up increasing the total project cost and could also result in improper abrogation of contracts (Ameyaw & Chan, 2015b). It is therefore very essential for risks to be appropriately identified, shared and transferred completely to the best party so that an effective risk management would be achieved (Roumboutsos & Anagnostopoulos, 2008).…”

Identifying Significant Risks and Analyzing Risk Relationship for Construction PPP Projects in China Using Integrated FISM-MICMAC Approach

“…Jin combined fuzzy logic with artificial neural network techniques to design a neuro-fuzzy model to help the effective allocation of risks in PPP projects [31]. Ameyaw and Chan's approach based on fuzzy set theory outlined the risk allocation principle, explained the fuzziness inherent in the human cognitive process, and made a case study of risk allocation in a PPP water supply project in Ghana [32]. According to the findings of Jayasuriya et al, there has often been disagreement between PPP regulators (public partner) and operators (private partner) about the preferred risk allocation [28].…”