engleski

Assessment of construction risks in PPP projects

Although public-private partnerships (PPP) are widely acknowledged to have a better record of asset delivery than conventional approaches to public-sector procurement, their successful delivery remains dependent on a number of critical prerequisites. PPPs are increasingly employed globally for the procurement of essential public-sector infrastructure assets. Financing needs are dominated by substantial upfront capital-expenditure requirements for asset refurbishment, enhancement, extension, or new build. There is, however, limited published empirical evidence from which the true nature, extent, and prevalence of construction risk associated with PPPs can be gauged. Exposure to construction risk remains highly contingent on the specific characteristics of a project, its contractual provisions and its associated transaction structuring. Market experience so far suggests that the performance gap between PPPs and alternative procurement approaches narrows considerably. Assessments of project bankability based simply on the “ acceptability” of certain asset classes, and the “ unacceptability” of others, have not been proved correct. Market experience suggests weak, if any, correlation between investor exposure to construction risk and the type of project to be financed. Rather, lenders should look to the particular attributes of a construction mandate, and the specific contexts of works that have previously exposed lenders to PPP construction risk. Many of these attributes cut across all asset classes. Starting point to PPP project risk management is establishment of a risk index and than defining a score for each of the risk categories in the Index using the low-risk/high-risk spectrum. Establishment of a risk index allows for focused consideration of risk prevention, reduction, transference, acceptance, or contingency. The article describes construction risk in PPP project and risk index technique for risk assessment and mitigation.

PPP projects; construction risks

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