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A life‐cycle risk management framework for PPP infrastructure projects

Patrick X.W. Zou (The University of New South Wales, Sydney, Australia)
Shouqing Wang (Tsinghua University, Beijing, China)
Dongping Fang (Tsinghua University, Beijing, China)

Journal of Financial Management of Property and Construction

ISSN: 1366-4387

Article publication date: 22 August 2008

8686

Abstract

Purpose

The purpose of this paper is to develop a life cycle risk management framework for public private partnership (PPP) infrastructure projects that lead to the realization of value for money and balance of interests between different partners including the public and end users.

Design/methodology/approach

This paper draws on extensive theoretical research and literature reviews, coupled with case study methodologies. A comprehensive review of current literature in the field was first carried out. Then three PPP infrastructure projects, two from Australia and one from China, are studied to scrutinize reasons leading to their dilemma and articulate the valuable lessons learnt in relation to risk analysis and mitigation.

Findings

The paper found that properly assessing risks (financial, government's political and public's acceptance/rejection risks), ensuring value for money and protecting the public (and end users') interests are essential in PPP infrastructure projects and this can only be achieved through optimal risk identification, assessment, allocation and management from a life cycle perspective and balanced interests between the Government/public and private partners as well as product end users.

Research limitations/implications

The paper was limited to proposing the framework; therefore the next step should be testing the framework.

Practical implications

The framework proposed in this paper should be practical and useful for professionals in managing the risks associated with the procurement of PPP infrastructure projects.

Originality/value

The PPP method has been increasingly used to procure large‐scale infrastructures such as freeways, railways, tunnels and bridges worldwide. While there have been many successful PPP projects, unsuccessful cases abound and studying them can help people better manage the risks in future PPP infrastructure projects. To ensure the success of PPP infrastructure projects, it is important for all partners to manage the risks from a project life cycle perspective, in which risks are identified and assessed in the earliest possible project stage and are allocated to the parties who are in the best position to control them. Furthermore, it is also important to continuous monitor the risks and develop proactive risk respond strategies throughout the project life cycle. To this end, this paper provides a life‐cycle risk management framework for PPP infrastructure projects.

Keywords

Citation

Zou, P.X.W., Wang, S. and Fang, D. (2008), "A life‐cycle risk management framework for PPP infrastructure projects", Journal of Financial Management of Property and Construction, Vol. 13 No. 2, pp. 123-142. https://doi.org/10.1108/13664380810898131

Publisher

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Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited

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