Risk Misallocation in Public–Private Partnership Projects in China

Performance Risks Allocation in Bot Infrastructure in Nigeria: A Case Study of Lagos Infrastructure Project

“…It was further deduced that availability of resources for risk control was the highest consideration for risk allocation. This is in tandem with risk management principle that risk should be allocated to the party that is most suitable to mitigate it (Arndt, 1999;Akintoye et al, 1999;PMI, 2000;Jefferies et al, 2002;Demirag et al, 2011;Jin and Doloi, 2007;& IISD, 2015). This implies twelve out of twenty two (55%) of risks were allocated based on this criterion.…”

“…The strategy of risk allocation is pertinent to assessing the VFM potential of a PPP project as distinct from other procurement methods. Jin and Doloi (2007) reported that ineffective risk allocation has the capacity to damage the VFM proposition of a BOT deal because approximate measures of the life cycle cost [Public Sector Comparator (PSC) and Private Financing Predictor (PFP)] are highly sensitive to risks allocation. If contractual risks are absorbed inappropriately by the public sector, government would raise taxes or reduce services to pay for its obligations when the risks occur.…”

“…This is due to the impression that the private sector is more positioned to manage those risks better, at cheaper cost and higher-quality infrastructure services may be provided than if the government develops the project in conventional way. According to Jin and Doloi (2007), managing risks in PPP projects are becoming more complex as social infrastructure projects, including courts, hospitals, prisons, schools and public housing, have are now procured via PPP. The participants are increasingly getting large (Demirag et al 2012) comprising international financial institutions, insurance companies, construction organisations, operating & maintenance organisations in different legal jurisdictions.…”

“…Optimal allocation of risks are intended to minimize both project costs and the risks to the project by allocating particular risks to the party with the highest capability to control them. This is based on the principle that the party with the greatest control or possessing the best capability of management with respect to a particular risk, has the best opportunity to reduce the likelihood of the risk eventuation and to control the consequences of the risk, if it materializes, and thus should assume it (Rahman and Kumaraswamy, 2002;Jin andDoloi, 2007, Vu et al 2015). The principle of optimal risk allocation is often not followed in many BOT projects because of inadequate analysis of the outcomes of some events.…”

Analysis and Countermeasures of PPP Project Implementation Difficulties

“…At the same time, ineffective government regulation will affect the implementation of the PPP construction model. Based on this, this paper analyzes the current implementing situation and the problems occurring of the PPP construction mode, puts forward the corresponding countermeasures, and aims at improving the implementing effect of PPP construction mode [5].…”