PPP Project Risk Allocation For Value For Money:A Case Of China

Risk perceptions and allocation preferences are important elements of Public-Private Partnerships(PPP);as the fundamental tension in any negotiation between the public and private sector in PPPs usually comes down to the question: who is responsible for managing a particular risk? Yet research literature suggests that these phenomena have not been studied adequately and therefore they remained poorly understood.Previous research studies on Public-Private Partnerships(PPPs)pointed out the need of an objective,reliable and practical risk assessment model for PPP projects and an impartial risk allocation system among different parties is fundamental to the successful implementation of PPP projects.To shed light on these phenomena,the research expedition in this thesis empirically aims at identifying and assessing the principal risks for the delivery of PPP projects in China and how to allocate the risk between the public and private sectors appropriately.It also aims at finding out if there are any significant differences in the perceptions of different stakeholder groups involved in PPPs in China.A questionnaire survey was used to examine the significance of different risk factors as well as to analyze the allocation of risk factors to different parties in PPP projects.The Mann-Whitney U test is used to investigate whether there was a significant difference in perceptions of the private sector and the public sector as well as between the industrial practitioners and the academic sector.The findings show that the top three most important risk factors for PPP projects in China are(1)Inflation,(2)Completion Risk and(3)Government Corruption.These results indicate that the involvement of the Government may be the major barrier to the success of the PPP projects along with the failure to complete projects on time.The empirical findings of the Mann-Whitney U test revealed that the perception of all ten risk factors in China between the private and public sectors as well as between the industrial practitioners and academic sector were not significantly different.With regard to risk allocation,the study shows that six out of the 10 risk factors are preferred to be allocated to the public sector while two are to be allocated to the public sector and the remain two to be equally shared between the two sectors.This research study enables international construction companies to better understand how risks should be assessed and allocated for PPP projects in China.It also assists in risk response planning and control for future PPP projects in China.