Research On Risk Management Path Of PPP Projects Based On System Dynamics In The Western Region

Public-Private Partnerships(hereinafter referred to as PPP) has been closely concerned since the 3rd Plenum of the 18 th Communist Party of China(CPC), which make a decision on " leaving the market to play the decisive role in allocation of resources", especially Chongqing——the western City in China——firstly issues the PPP financial reform programme, to speed up the city infrastructure construction and improve the supply level of public goods or service, so as to reduce the government budget pressure and promote the sustainable development of the city. However, the harsh natural conditions, backward economic foundation, the government financial accumulation and serious shortage of investment, the contradiction between the social development and the infrastructure funding needs, these become the uncertain factors in the sustainable development of the western region. Meanwhile, the domestic and foreign scholars have conducted extensive research on the PPP, from the initial concept definition, research has been deep into the research of risk management, but the study on the risk management of PPP projects in the western region is less, and public-private partnership is a systems engineering, a systematic, comprehensive and effective risk management is the critical element of the PPP projects in the western region.Based on the review of PPP risk management, it is found that most of literatures focused on the risk period or the factor, and pay less attention to the PPP project system and the relevance of risk factors. Then, the typical and representative PPP project risk factors is refined based on the system theory, System dynamics theory, project risk management and its application, and explicates how PPP can be viewed and analyzed as a system and especially highlights the metric of SD in PPP project risk management. Moreover, the possibility, that risk factors exist in PPP projects, is analyzed theoretically. The next section refines the PPP project risk factors based on status quo(especially the Chongqing) and study on PPP projects, and constructs the risk index system or its questionnaire. The next section analyses the PPP project risk factors system including cooperation subject effectiveness, cooperation environment and build-operate. Moreover, the author construct the SD causal model of PPP projects risk factors, and then, the way of risk resource is identified, that is cooperation subject, cooperation environment and build-operate. Finally, the important risk factors of PPP projects on western region are cooperation subject efficacy, policy and regulation, supervision, and so on. Meanwhile, owing to the correlation and transmissibility of risk, the build-operate risk factor derives from cooperation subject, cooperation environment and the building or operation capability of Special Purpose Vehicle. The critical point of risk management lies in improving cooperation subject efficacy and optimizing the cooperation environment. Based on the analysis, some propositions are developed.