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.