An evaluation of the impact of risk cost on risk allocation in public private partnership projects

Abstract

Purpose A unique aspect of PPP is the opportunity for the transfer of risk ownership to the private sector. The purpose of this paper is to investigate how risk cost influences risk allocation. Design/methodology/approach A questionnaire survey was used to collect data. The questionnaire included nine sub-categories of risks. To quantify the influence of risk cost on risk allocation, a dependency risk matrix was employed. Heat maps techniques were used to visualise the results of the survey. Findings The findings show which risks within the endogenous or exogenous groups are to be allocated to the public sector, the private sector, or to be shared. The finding from this research provides a baseline for the PPP stakeholders in developing guidelines for estimating the value of risk costs in the risks register as well as serving as a mechanism for risk allocation. Research limitations/implications The context of the study may limit the generalisability of the results. Practical implications The study provides practical guidance to PPP stakeholders on risk allocation appetite. Originality/value This study extends the processes and methods by which PPP project’s risk is allocated to create a better value for all the stakeholders.