The "water-specific PPP risk model"
Abstract
Risk assessment is one of the key success factors of public-private partnerships (PPP)
water projects. Factors such as utility condition problems, unsustainable increase in water
supply requirements, socio-technical issues and changes in government policies can cause
such capital-intensive projects to overrun planned budget and schedule allocations.
Where the project is a commercial asset, delayed completion time and cost overruns
usually have significant impact on the profitability of the project as well as the estimated
returns on investment over the operational phase of the project. Understanding the
specific risks involved in PPP water projects can be very crucial in designing containment
measures to deal with their likely impact on the projects. Through the combination of
review of literature and questionnaires, different risk elements in PPP water projects were
first identified. The identified elements were then rated and prioritized using the
Analytical Network Process (ANP) to demonstrate the complex interactions among those
risks and to establish the most salient Value-for-Money (VFM) variables on PPP water
projects. The outcome of this research is an innovative ANP-based model known as the
“Water-Specific PPP Risk Model” that offers a platform to incorporate tangible and
intangible risk variables into a risk assessment process in water infrastructure projects.