The allocation of risk in PPP/PFI construction projects in the UK

By L. Bing, A. Akintoye, P. Edwards, C. Hardcastle. 2005

967 citations recorded by the source corpus.

Abstract Public/private partnership (PPP) procurement is seen as an effective way to achieve value for money (VFM) in public infrastructure projects. The Private Finance Initiative (PFI) in the UK is a form of PPP that seeks to combine the advantages of competitive tender and flexible negotiation, and transfer risk away from the public sector. The final risk allocation agreement is reached along with overall contract agreement. It is important for the public client and the private bidders to assess all the potential risks through the whole project life. A questionnaire survey was conducted to explore preferences in risk allocation. Analysis of the response data shows that some risks should still be retained within the public sector or shared with the private sector. These are mainly macro and micro level risks. The majority of risks in PPP/PFI projects, especially those in the meso level risk group, should be allocated to the private sector. However, there are a few risks where unilateral allocation is not always obvious. The research findings should enable public sector clients to establish more efficient risk allocation frameworks in the early stages of project development.

Subfields: Management Science and Operations Research, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/e66c06dce49dd370e6b0fa292741b86457429e32

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In Management Science and Operations Research

In Strategy and Management

Citations in the corpus

Public–private partnership projects in Greece: risk ranking and preferred risk allocation (2008, background): “( 2005 ) found that the public sector partner should retain site availability and political risks, relationship risks, force majeure risks, while the risk of legislation changes should be shared by both parties; the majority of the remaining project risks, especially the ones directly connected to”
Preferred risk allocation in Chinas publicprivate partnership (PPP) projects (2010, methodology): “Third party reliability risk would normally occur at the construction or operation stage of a PPP project, which is regarded as being out of the control of both parties, after the government and the Project Company reach an agreement on risk allocation and define them in the concession contract (Li ”
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Identifying the critical success factors for relationship management in PPP projects (2014, background): “For any successful PPP/PFI projects, the commitment and responsibility of both public and private participants are important (Li et al., 2005; Zou et al., 2010).”
Cross-country comparisons of key drivers, critical success factors and risk allocation for public-private partnership projects (2015, methodology): “In the United Kingdom, the three most important indicators were CU18 (a strong private consortium), CU4 (appropriate risk allocation and risk sharing), and CU5 (available financial market), with mean values of 4.11, 4.05, and 4.04, respectively (Bing et al., 2005b).”
Closing the AI accountability gap: defining an end-to-end framework for internal algorithmic auditing (2020, background): “Internal audits can also leverage relevant experts from within the company to facilitate such discussions and provide additional insight on potential risks [3].”
Reasons for adopting Public–Private Partnership (PPP) for construction projects in Ghana (2014, methodology): “Varimax is undoubtedly the commonly used orthogonal rotation (Abdi 2003) which has been used in similar studies by numerous researchers (Hardcastle et al. 2005; Li et al. 2005b, 2005c).”
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