Identifying Risks In Public-Private Partnership Projects

Background

The acceptance and the delivery of the infrastructure projects can be effectively improved by accompanying the project with the public private partnership to establish value for money which in turn helps in improving the gross development profit (GDP) of the nation (Ibrahim, 2014).

Definition: The public private relationship can be defined as agreement signed between the public sector and the private sector to accomplish the desired task.

The identification of the risks at an early stage helps in increasing the value for money of the proposed construction projects because the level of acceptance and success criteria can be improved by managing the complexity of public private partnership in the early stage of the project (Chan, Yeung, Calvin, Wang, and Ke, 2014). The developing countries focus their efforts in the direction of increasing GDP of the nation. The improvement in the operational efficiency of the project helps in setting quality standards to provide quality of services to the end users. The development of the public-private partnership helps in providing infrastructural and financial support to accomplish the targeted project efficiently (Effah, and Chan, 2014). There are gaps in the process of identification of risks associated with the public and private relationship project. The PPP projects do not focus on analysing the impact of uncertainty on the development process of the project. “The identification of the security issues, threats, and others can be effectively determined by developing the effective relationship between the public and private working bodies” (GiHub, 2014). The purpose of this paper is to highlight the risks which are associated in the development of PPP projects and to focus on the severity associated with them. It helps in managing the complexity of the PPP projects effectively. The figure 1 shows the association of public private relationship for using the assets which are owned by the public and private sectors to complete the undertaken project effectively within the given period of time and cost.

The working of the project is accompanied with various risks which should be determined at an early stage so that the project can be completed within the timeline without any delay. The correlation between the public and the private sector helps in minimising the social, political, economic, and labour risks associated with the project effectively. The complexity of the project can be determined by analysing the environments factors which are associated with the projects (Gihub, 2014). The public sector and private sectors projects are equipped with various risks which creates a significant complexity in handling the task. Therefore, the public investment and private investment are done to develop a contractual agreement of public private relationship so as to manage the financial, economic, operational, and construction risks associated with the projects. The hindrance and obstacles in the path of the projects success can be eliminated by developing the PPP projects (Firmanzyah, Veronika,  and Trigunarsyah, 2016). The private sector projects are depends on three stage project life cycle program which is called as build-operate-transfer projects. The BOT projects are majorly implemented for the larger projects. The private sectors starts developing projects in the areas of public sector such as transportation, water supply, gas supply, waste management system, and others (Muller and Oppe, 2012). 

Problem Statements

The construction industry is accompanied with various risks in the development of the projects. The chaos and conflicts is the major concern between the contractors and the clients. The rules and regulations are not followed in completing the project systematically which creates an adverse effect on the performance and the progress of the undertaken projects (Halil, Nasir, Hassan, Shukur, 2016). The need and the requirement arises to develop a contractual agreement between the participating units to settle down the grievances and the complexities among them. The best solution to overcome the scenario of complexity is the development of public private relationship so that the operational, financial, legal, political, social, labour, and others risks can effectively settle down. The proactive determining of the risks helps in accomplishing the desired work in the public benefits within the given timeline (Ibrahim, 2014).

What are the risks associated with the delivery of public private partnership projects?

How the risks can be identified and rated in the PPP projects?

The aim of the research is to identify the risks associated with the public private relationship. The identification of the risks through the study of literature review helps in developing effective methods to settle down the risks effectively (Hyari, and Kandil, 2009). The setting of the priorities to the risks results in the systematic treatment of them in a synchronised manner which helps in completing public private projects within the given duration of time.

The objectives of the research study are as follows:

• To conduct a critical analysis on the literature related to the public and private partnership in construction projects
• To synthesize the literature and provide a list of risks involved in PPP projects
• Identify the risks with top priority as reflected in the literature
• Development of the conceptual framework to present the identified risks and their priority.

The data is collected from the literary sources for identifying the risks associated with the public and private partnership project. The research work of different author helps in providing new direction to my research undertaken. The matrix should be developed for collecting the data from different sources so that the variation in the risks identified can be measured which helps in setting the risks severity, risks likelihood, and risks ranking.

The thesis is designed by developing the research aim and research question. The literature review section is prepared by analysing different literature resources on the basis of research questions. The next section focuses on the research methodologies used for collecting the data from different sources. The finding is the core part of the thesis because it helps in identifying and evaluating the information gathered from literature review. The final discussion helps in analysing the success of the research completion. 

The authors in their paper focuses on the collaboration of the public and private sector project is generally helpful in providing quality of service and facilities to the common public (Halil, 2016). The public private projects are the agreement signed between the public sector and the private sector to accomplish the desired task within the given period of time and cost by using the assets of public and private sector ((Pribadi and Pageran, 2013). The PPP projects in the developing countries face problems in managing the resources for completing the task on time to the required authorities. The need and the requirement arises to develop a contractual agreement between the participating units to settle down the grievances and the complexities among them. The central governments of the nation take a step forward to develop a contract with the private authority for completing the projects in the public benefits (Effah, and Chan, 2014). The long term and short term development process of the PPP projects are equipped with various risks in relation to the time allocation of business activities, estimation of cost, and setting of quality standards and control (Ke, Wang,  albert, and Chan, 2014). The focus is majorly given on the benefits and competitive advantage to increase the public interest. The identification of the risks associated with the public and private projects helps in resolving the complexities and completing the project efficiently. The negotiation process is deployed for minimising the risks associated with the procurement process ((Ke, Wang,  albert, and Chan, 2014). The life of the project can be effectively improved to gain value for money to ensure risks allocation of the public and private sectors (Kang, 2010). The forecasting of risks helps in bringing changes and innovation in the project plan according to the changing requirement of the business owner. The sustainability and efficiency of the project increases by deploying the public private partnership to be implemented in the private sector projects (Singh, 2017). It helps in completing the project effectively for the benefit of the local people by balancing and minimising the political and legal risks associated with the projects. The smooth working of the private sector projects can be undertaken by enabling the relationship with the government sector (Merrit and Ricketts, 2012). The support of the government helps in aiding financial stability to the private sector projects. The economic stability of the developing countries can be enhanced by developing the Multilateral investment funds. These funds help in managing the contribution of the private and public sectors in completing the project activities (Mouraveiv, 2012). The evaluation of the technical and financial support of the public private partnership projects helps in minimising the cost and quality risks of the undertaken process. The mitigation policies should be developed to enable the free flow completion of the project (Prasad, Reddy, Kumar, Reddy, 2012). It helps in reducing the tax on the infrastructure costs of the projects and which results in completing the project within the approved cost. It provides the new opportunities to the private sector to flourish their project management methodologies to accomplish the project without overrunning of the projected cost (Hall, 2012). The active participation of the private authorities in completing the public projects helps in increasing the GDP of the nations. The PPP programs are mainly implemented by the developing countries to accomplish their infrastructure project effectively in the public benefits by minimising the risks associated with it. The focus should be given on managing the habitat for the people who face difficulty with the development of the PPP projects. The re-settlement of the people is the key responsibility of the government because it will plays a major obstacle in the completion of the PPP projects (Mouraveiv, 2012). The development of the public sector and the private sectors helps in minimizing the risks associated with the projects because the economic risks can be settled down by minimizing the infrastructure tax imposed on the projects ((Jethwa, Bhavsar,  and Malek, 2017). The completion of the projects within the approved cost helps in completing the project successfully.

Research question

Figure 2: Different levels of the private sectors and public sectors

The figure 2 shows the different levels of the private sectors association with the public private partnership projects. It helps in evaluating the association of public and private sector to complete the required project phase for finishing the tasks effectively. The public sector is responsible for identifying the infrastructure need, alternative solution, project design, funding for the project and private sector is responsible for the construction of the project and its associated designing. 

The identification of the risks is the vital role associated with the development of the infrastructure development process (Pribadi and Pageran, 2013).

The PPP projects sets criteria for risks identification and procedures for managing the risks allocated. The contribution from public and private sectors is required for bringing sustainability in completing the long term and short term project plan. The results of the consequences of PPP projects should be measured and evaluated for analysing the success and failure of the construction program (Hall, 2012). The success criteria should be developed in the management of different types of risks associated with the project. The performance standard and key performance indicators should be used for analysing the incentive received from the project completion (Ngoma, Mundia, Kaliba, 2014).

The interest of the private sector increases in the developing countries to build public private partnership to overcome the situation of financial crisis and instability. The active participation of the government helps in making balance with the private sector in completing the projects within given duration of time (Firmanzyah, Veronika, and Trigunarsyah, 2016). The improvement in the operational efficiency of the project helps in setting quality standards to provide quality of services to the end users. The financial funding from the government results in the systematic deployment of the project plan without any complexities of balancing the overrunning of the costs. The joints ventures between the public and private sectors help in managing the skills and expertise of the employees according to the requirement of the projects. The government makes contract with the public sector in completing the infrastructure and construction program so that they should be accompanied by resources, equipment, technology, management, and process laid down by the private sector in completing the given project (Monnappa, 2017). The construction and design risks are associated with the long term project of developing infrastructure (Sastoque, Arboleda, and Ponz, 2016). The on-going cost of the project should be determined periodically for analysing the situation of cash inflow and outflow to evaluate the actual condition of the given tasks. The sustainable framework of government laws and legislation should be developed for minimizing the legal, political, and social risks associated with the project.   

The risks associated with the public private partnership based on the build-operate-transfer principles. The risks are divided into two major categories which are classified as general risks and specific project risks. 

The government provides the financial help to the PPP projects to flourish the smooth working operations in ensuring the better performance of the private sector. The infrastructure projects are affected by the external obligations related to payment, change management, innovation in new trends and technologies. The government should take a look of the risks associated with the infrastructure construction projects. The decision making capabilities of the public and private sectors can be improved by analysing the financial stability and overrunning of the cost associated with the proposed projects. The factors which are responsible for attracting the government and public sector organization to invest in the private project program are as follows:

• Values of the Liabilities: The public sector plays a crucial role in providing support to the private sector projects in terms of budget declaration, payments provided to the working staff and association of the other facilities, improving the use of technology in the construction of the infrastructure projects. The revenue can be effectively generated from the commercialised projects. The valuation of the project activities can be optimized by earning profits. The failure of the project can claim the insurance money to stabilize their working project activities which helps in completing the project successfully. The technology support should be used for giving valuation to the contingent liabilities associated with the projects.
• Management process associated with the liabilities: The focus should be given on analysing the methodology to protect the government loss at the time of project failure. The incentives associated with the project plan helps in reducing the financial loss associated with the project working plan. The government should prepare an action plan for managing the balance between the cost distribution so that the financial risks can be effectively handled by managing contribution from various parties.
• Guaranteed Fund: The allocation of the budget and the cost estimation plan to the resources required helps in providing financial stability to manage flow of resources and equipment for undergoing the process of construction of infrastructure. The risks likelihood associated with the financial funding can be minimized. The efficiency of managing contingent liabilities can be improved.

Research aims and objectives

The benefits of providing financial support to the private sector projects by the association of public sector are categorised as enhancement in the process of decision making, development in the good governance for managing the resources and funds according to the scheduling of the project activities plan, the effective management of cost estimation and managing project activities, development of the credit enhancement procedures, and minimizing conflicts and chaos in the working and operational plan of the project. 

The study of literature review and data from other online sources are helpful in measuring the severity of the risks associated with the initialization of the PPP projects. The study of the literature review helps in identifying different types of risks associated with the deployment of the PPP projects. The literature reviews helps in analysing the gaps which exists in the working of the PPP projects in the direction of risks identification process. The authors does not focus on analysing the implication of specified tools in analysing the uncertainty, no legal agreement signed with the contractor, and poor estimation of resources required. The author in their research work does not highlight the impact of negligence to the risks allocation on the development process of the project. The active participation of the public sector and private sector in the development of the infrastructure project are equipped political risks, changes in the laws and legislation, and others (Ngoma, Mundia, Kaliba, 2014). The data collected from literary sources help in analysing the severity of risks associated with the development plan of PPP projects. The sharing of information between the public and private sector results in the loss of confidentiality and sensitivity of the information. The rating of the risks helps in the analysing the severity of the PPP projects.

Research Design

The descriptive approach was designed for bringing transparency in the analysing the risks and setting associated priority to it. The detailed study of literature review helps in providing a systematic generation of the risks which are accompanied with the public private partnership projects. The categorisation of the risks helps in developing the plan for the division of risks among the private and public parties to settle down the risks to achieve project success. The acceptability criteria of the risks identification and management plan can be increased by developing the effective design for carrying out the research plan. The face to face interaction helps in revealing the problems which the member participant faced in completing the PPP projects. The matrix was developed for collecting the data from different sources so that the variation in the risks identified can be measured which helps in setting the risks severity, risks likelihood, and risks ranking (Kang, 2010). The risks severity was measured on four parameters which are classified as 4 for very high, 3 for high, 2 for medium, and 1 for low. The risks likelihood was measured on four parameters which are classified as 4 for very high, 3 for high, 2 for medium, and 1 for low. The rank and rating of the classified risks can be allocated by adding the values of the risks severity and risks likelihood which helps in analysing the risks impact on the performance and carrying over construction program of PPP project. The parameters which are used for measuring the risks impact depends on the risks rating and ranking. The 1 and 2 is used for signifying the low impact, 3 and 4 signifies the medium impact, 5 and 6 signifies the high impact, and 7 and 8 signifies the very impact in the completion of PPP projects with the association of public and private sectors.

Research Methodology

The systematic synchronisation of the data and information collected from the literature review helps in analysing the problems faced by the public and private sector in bringing stability in the working PPP projects.

The study of literary sources and other newsletters and magazines articles helps in analysing the risks associated with the construction program deployed by the public private partnership projects. The experience and knowledge of the authors are shared for analysing the risks and setting the priority for rating it to severity. The data collected for different research questions are highlighted below:

Question 1: What are the risks encountered by the researchers in determining the efficiency of the public and private sectors in the development of the project?

Data collected: The data is collected for the undertaken research questions from the literary sources. The major portion of data is covered from the research paper Risk analysis in feasibility study of building construction project and Risk allocation in public-private partnership: Maximising value for money.

Research Question 2: What is the process used for identifying and allocating the risks in the PPP projects?

Data Collected: The analysis of the web articles, newsletter, and literature review of the research paper helps in evaluating and identifying the risks in PPP projects. The major portion of data is collected from the analysis and allocation of risks in public private partnerships in infrastructure projects in Nigeria and Critical review on risks management in PPP based Infrastructure projects  

The qualitative and quantitative methodologies should be deployed for analysing the impact of the risks associated with the PPP projects. The surveys and interviews were conducted with the top executives and experts of the construction projects to gather data related to the risks associated with the infrastructure projects (Jethwa, Bhavsar,  and Malek, 2017). The characteristics of the project is defined by focusing on the availability of the resources, financial forecasting, defining the complexities of the project, managing design and requirement of the project, development of contract agreement  with the contractors, and development of project management functions. The analysis of the risks can be identified by three processes which are categorised as deployment of factor analysis theorem, inclusion of fuzzy sets, and deployment of the fuzzy synthetic evaluation process. The overrunning of the cost and time can be identified by deploying the fuzzy algorithms and procedures (Mansfield community, 2013). The dependency of the risks in completing the project can be identified and measured by fuzzy theorems. The decision making capabilities of the public and private sectors can be improved by analysing the probability of risks occurrence. The fuzzy functions are used for evaluating the probability of risks occurrence. The traditional framework of the risks identification was majorly depends on analysing the financial stability of the company. The efficiency of the project increased by getting approval of time and cost allocated to complete activity schedule of the projects. The delivery of the project gets affected by the public private partnership because the financial stability of the organization helps in measuring the infrastructure construction of the projects. The success and failure of the project depends upon the risks allocation and its management (Ngoma, Mundia, Kaliba, 2014). The efficiency of the project can be improved by developing the work breakdown structure of the project activities. The investment from the private sector in completing the project should be less than the public sector which helps in improving the GPD of the nation. The focus should be given on analysing the previous performance of the private sector and the contractor company because the good services provided by them will affect the construction program of the infrastructure laid down by the government to be completed on time. The ranking of the risks associated with the project should be done accurately so that the setting of priority to the risks helps in developing effective risks management plan to improve the efficiency of the proposed project. The analysis of the risks helps in drawing conclusion about the risks which have a greater impact on the construction program of the infrastructure development laid down by the government (Patanakul, 2010). The selection of the private company is based on passing the tender. The minimum cost of the quotation amount for completing the construction project should be given because the selection of the private partner is based on the bidding process. It will help in reducing the corruption risks associated with the project. The efficiency of the project enhanced by the active participation and contribution from the public and private sector. From the study of literature review, we can categorise the risks into following major risks:

Table 1: Categorisation of risks

Thesis Structure

Risk Identification	Description
Technology risks	The detection of risks in the development of the engineering design helps in identifying the technical and technological risks associated with the project. The success and failure of the project depends upon the implementation of the advanced technology in the working plan of the construction projects (Oteino, 2014).
Construction program risks	The construction phase of the infrastructure projects are mainly equipped with the overrunning of the construction activities. The time required to complete the project plan is actually more than the expected work of time. The delays in the work done by the labour can affect the time allocated to complete the projected activities (Patanakul, 2010)
Financial Risks	The variation in the cash inflow and outflow can affect the supply and demand of resources which can results into overrunning of time and cost than the estimated schedule. The changes in the market price than the expected price of the resources can increase the variation percentage (Monnappa, 2017).
Political risks	The implication of the government laws and policies can increases the political risks in completing the project activities within the dedicated time. The change in the government policies can affect the working schedule of the project (LLveskoski, 2014)
Legal risks	The changes occurred in the laws and regulations results in the obstacles in completing the flow of project activities.
Operational risks	The inefficiency of the employees skills and talents in completing the project activities will results in the delay of the project. The poor design of the infrastructure can be major cause for the failure of the projects. The design not able to meet the requirements of the project owner.
Environmental risks	The changes in the locality and environmental condition will results in lowering down the project working speed which can have direct impact on the project sustainability.
Natural Disaster risks	The occurrence of natural disaster such as floods, forest fires, droughts, and others can affect the working of the project activity plan.
Organization risks	The development of the process and the information flow in constituting the organization hierarchy can be gets associated with the hindrance and obstacles in circulating the information. The collaboration of the organization culture of public projects and private projects can feel difficulty in developing coordination and cooperation among the business processes.
Process risks	The gaps and flaws can occur in determining the processes and procedures undertaken for completing the flow of information between the different participating units. The collaboration of the organization culture of public projects and private projects can feel difficulty in developing coordination and cooperation among the business processes (Raz, Shenhar, and Dvir, 2011).
Role played by the public and private sector	The difficulties in managing coordination in work breakdown structure and division of roles and responsibilities among the public and private employees to get desired output of the processes. The contribution of the public and private organization should be measured in completing the tasks.
Skills and expertise of the employees	The inefficiency of the employees in completing the give task can affect the project working structure (Kharaiweish, 2013).
Measuring and monitoring risks	The inefficiency of the parameters to measures the risks associated with the project working schedule. The limitation of monitoring and identification of risks results in failure of the project in completing the processes within the given timeframe.
Design risks	The focus should be given on designing the project activity schedule and setting of duration of time so that no variation in completing the project activities takes place. The uncertainty of risks occurrence should be measured with respect to the project site.
Demand and supply risks	The allocation of the resources and its management according to the demand and supply raised in the construction program of required infrastructure building.
Asset risks	The sharing of public and private assets can create a complex scenario in managing the resources
Failure of technology	The use of old technology can affect the construction program of the infrastructure laid down by the PPP projects.
Occurrence of corruption	The corruption can results into the use of lower quality construction material, delay in the proposed projects, and others.
Interruption of the public sector	The policies and construction program laid down by the private sector is get affected by the interruption caused by the public sector and development of new government policies and legislation laws
Reliability on the government policies	The construction program of the private sector depends on the policies and principles developed by the government
Reliability from the third party	The future risks can be resolved by the third party during operation
Development and implementation of the new laws	Changes in the laws and legislation procedures will affect the working program of the PPP projects
Opposition raised by the political parties	The working of the construction program get affect due to the obligations imposed by the political parties
Rising rate of interest	The delay in the construction project will increase the cost estimation plan because of the increasing rate of interest
Foreign exchange currency	The huge loss can occur due to the occurrence of foreign exchange currency
Immature legislation system	The laws developed are not relevant for improving the condition of PPP projects
Incapability in taking effective decision	The top executives of the PPP projects are inefficient in taking good quality decision so as to improve the flow of construction activities
Unavailability of land	The land acquisition is not completed on time
Taking permission	The legal operation in terms of taking permission from the local government is not completed
Irrelevant agreement with the contractor	The agreement signed with the contractor is ineffective in managing the demand and supply of the resources
Financial instability	The financial funding from the public sector to the private sector is not done on time and according to the requirement
Changes in the construction program	The operational plan of the construction program is changed which can affect the capabilities of the employees
Delay in the construction program	The project will not be completed on time due to the changes in construction program and limited supply of resources on the site
Failure of meeting supply and demand	The contractor is not able to manage the supply and demand of the resources
Operational risks	The skills and expertise of the employees are not relevant according to the requirement of the project
Change in market demand	The market demand of the construction program changes
Rising competition	The use of advanced technology by the market competitors
Organization risks	The risks associated with the hierarchy of the organization structure to gather relevant report
Tax regulation	The high payment of taxes paid by the private sector in deploying the construction program

 (Source: Firmanzyah, Veronika, and Trigunarsyah, (2016). Risk analysis in feasibility study of building construction project)

The guidelines and parameters should be developed for imposing the allocation of risks to the participating units. The interaction between the member participants and their contribution in the development of the construction project should be measured for imposing the risks allocation. It helps in reducing the occurrence of risks probability to a larger extent. The acceptance of risks at an early stage helps in managing the negotiation process which is laid down during the development of the agreement between the public and private sector. Some risks such as political risks, social risks, legal risks, and others are settled down during the process of negotiation and signing of the agreement contract. In the long term projects, both public and private sector parties are responsible of managing the uncertainty of risks which is associated the development of the infrastructure projects (Ngoma, Mundia, Kaliba, 2014). The division of role, responsibilities, authentication, and authorisation helps in managing the sustainability of the project by determining the administration boundaries to manage the operational, technical, and economic stability associated with the working project. The major benefit of the project profit share goes to the private sector while more input cost and financial aid is given by government and the common people (Otieno, 2014). The allocation of the optimal risks helps in managing the project success and brings stability of price paid by the public and private sector in the construction of the project. The focus should be given on four objectives in relation to the risks allocation and risks transfer between the public and private sectors in combination with stakeholders which are categorised as follows:

• Long term sustainability of risks management can be achieved by lowering the cost associated with the project plan activities
• Creating incentive cost for delivering the project within the scheduled time frame, meeting quality standard, and within cost estimation plan.
• Focus should be given on increasing the revenue cost for increasing the efficiency of the operational plan
• Consistency in the expenditure and management of resources
• Follow up of the laws and principles in managing supply and demand of the resources
• Increasing the quality of service and facilities provided to the common people 

Risks severity, risks likelihood, and risk ranking associated with the PPP projects

Risks Identified	Risks Severity	Risks Likelihood	Risks Ranking	Risks Impact
Technology risks	4	2	6	High
Construction program risks	2	2	4	Medium
Financial Risks	1	2	3	Low
Political risks	4	4	8	Very high
Legal risks	2	2	4	Medium
Operational risks	2	3	5	High
Environmental risks	2	1	3	Medium
Natural Disaster risks	3	3	6	High
Organization risks	1	1	2	Low
Process risks	4	3	7	Very high
Role played by the public and private sector	2	2	4	Medium
Skills and expertise of the employees	1	2	3	Medium
Measuring and monitoring risks	3	4	7	Very high
Design risks	2	4	6	High
Demand and supply risks	2	1	3	Medium
Asset risks	1	1	2	Low
Failure of technology	2	2	4	Medium
Occurrence of corruption	1	2	3	Medium
Interruption of the public sector	1	1	2	Low
Reliability on the government policies	3	3	6	High
Reliability from the third party	1	4	5	High
Development and implementation of the new laws	3	1	4	Medium
Opposition raised by the political parties	2	3	5	High
Rising rate of interest	4	4	8	Very high
Foreign exchange currency	2	1	3	Medium
Immature legislation system	1	0	1	Low
Incapability in taking effective decision	2	3	5	High
Unavailability of land	2	2	4	Medium
Taking permission	1	1	2	Low
Irrelevant agreement with the contractor	3	1	4	Medium
Financial instability	3	3	6	High
Changes in the construction program	2	2	4	Medium
Delay in the construction program	1	1	2	Low
Failure of meeting supply and demand	3	2	5	High
Operational risks	3	4	7	Very high
Change in market demand	2	2	4	Medium
Rising competition	3	4	7	Very high
Organization risks	1	1	2	Low
Tax regulation	4	2	6	High
Pre-investment	2	3	5	High
Re-settlement	4	4	8	Very High

 (Source: Created by the author) 

The identification of risks associated with the PPP projects helps in identifying the risk mitigation plan for the successful completion of the project without any chaos and conflicts from the public and private sector. The systematic analysis of the risks results in the successful deployment of the PPP projects and its construction work to be completed with the approved time and budget (Ngoma,  Mundia, Kaliba, 2014). The government plays a vital role in providing the financial funding to the private projects. The intervention by the government laws and principles can affect the working of the private projects. The imposition of obligations from the opposition parties will affect the carrying over of the construction program which will results in the project delay and overrunning of the cost. The private sector should sign agreement with the contractor for managing the resources at the construction site. The effective management of supply and demand by the contractor helps in completing the project within the given specified time. The decision making capabilities of the top executives of public and private sector plays a vital role in improving the condition of infrastructure construction program. The experience of the stakeholders in the field of public private project plays a key role in balancing the risks associated with the deployment of the projects. The agreement should be signed with the government to pay financial funding according to the requirement raised by the private sector so as to manage the construction plan. It results in minimizing the financial risks associated with the project. The probability of the market change can be resolved by indulging the capital investment. The risks associated with the demand change can be managed by analysing the capital investment required for completing the project. The step-by step procedure should be followed for identifying the risks associated with the project to develop the mitigation strategy by rating the risks and setting priority to it to resolve them effectively. The increasing time for completing the construction activities will increase the percentage of interest associated with the financial funding of the project which will directly affect the variation in the cost estimation plan. The rising cost and time of the project will results into the failure of project (Effah, and Chan,2014). The policies and construction program laid down by the private sector is get affected by the interruption caused by the public sector and development of new government policies and legislation laws so the proper care should be taken to arrange periodic meetings between the public and private partners so as to complete the project effectively with the efficient contribution.

Literature Review

The study of literature review and interview session organized with the top executives helps in revealing the information about the risks associated with the Private Public partnership project. The analysis and evaluation of the risks helps in setting priority and giving ranking and rating to the associated risks of the PPP projects. The rating and ranking was drawn to manage and develops a risks mitigation plan accordingly. The top ten significant risks which are highly rated are discussed below:

Interruption from the government authorities:

The government authorities actively participate in checking and evaluating the procedures and process followed by the private sector in completing the construction program. The periodic intervention and obligations imposed by the government stakeholder s will results in improper management of construction program (Kavishe, 2018). The duration of time for completing the given task will be affected which in turn results into project delay and overrunning of the cost. The emphasis should be given on managing the government intervention after a period of time which helps in filling the positive motivation in the employees of private sectors (Effah, and Chan, 2014). The government should focus on resolving the political issues which are associated with the project land, condition, and construction plan so that the project can be completed effectively.

Poor quality of decision making ability

The success of project depends upon the efficiency of the top executives in taking decision for smoothen the operation of construction plan (Shastri, 2012). The inefficiency and inexperience of the executives will affect the decision making in proposing the construction plan.

Financial instability

The financial instability of the government in providing funding according to the requirement raised by the private sector in completing the given construction program of developing the required infrastructure.

Reliability on government plans and policies

The changes in the government plan will affect the working of the construction program which will directly affect the completion of the project within the given time frame (Velasquez, 2014).

Change in the market demand

The change in the market demand raises the utilization of the technological advancement in the construction program laid for the development of requirement infrastructure.

Technical Risks

The advanced trends and technology should be imposed for balancing the smooth operation of the construction program according to the requirement of the government for increasing the GDP of the nation.

Interest Risks

The delay in the project will affect the completion of the project activities within the given time frame. The project delay will increase the overrunning of the cost by increment in the interest rate.

The government should plays a vital role in setting down the legal risks associated with the project. The development of the new laws in the benefit of the PPP project helps in resolving the complexity of the project.

The division of role and responsibility should be according to the capabilities of the employees and their expertise.

The process and procedure undertaken for the development of the infrastructural plan should be approved by both private and public parties.

The development of the conceptual model helps in resolving the complexities associated with the plan of completing the project within time and cost. The analysis of the critical success factors focuses on developing and managing the smooth flow of operation in project activities plan of PPP projects. The emphasis should be given on managing the external environmental risks associated with the projects such as demand of the infrastructure, financial stability program, political issues, and revision of the legislations. The characteristics of the project is defined by focusing on the availability of the resources, financial forecasting, defining the complexities of the project, managing design and requirement of the project, development of contract agreement  with the contractors, and development of project management functions. The factors which affect the partnership between the public and private authorities are categorised capacity of the government to initialize the public private partnership projects, selection procedures laid down for passing the tender of the private partners, division of role and responsibilities between the public and private participants, and initialization procedures for risks identification, setting of priority, risks analysis, and risk allocation for mitigation procedures (Merrit, and Ricketts, 2012). The balance should be made on the operational flow by giving emphasis on the feedback retrieved from thee participating members of the public and private sectors. The following diagram shows the conceptual model which is followed for developing the effective relationship between public and private partners. 

The PPP projects can be successfully laid down by following the procedures of project life cycle plan (Li and Zhou, 2014). The steps which are incorporated in the life cycle plan of the PPP projects are analysis of the project objectives, establishing need and requirement of the services, optimising the procedure for performance appraisal, analysis of the business case, approval of the project funding from the government, development of the project schedule, preparation of the bid procedures, evaluation of the bidding procedures, development of the final review report, initialization of the negotiation process, development of the contract management plan, systematic initialization of required changes, and handover of the agreement report. 

The process and methodologies should be adopted for the effective management of the risks severity. The risks impact and tolerance capabilities should be measured for the management of risks. The assessment of the risks depends upon the probability of occurrence. The following flowcharts shows the procedures which should be followed for managing the risks associated with the deployment of PPP projects. 

The focus should be given on analysing the responsible parties for setting down the risks associated with the project. The risks should be allocated to the public and private sectors authorities so that they can participate in the management process of risks identified for the successful completion of the project within the approved and cost (Lee, Han, Quising, and Villaruel, 2012). The table below shows the systematic division of risks with the public and private team members so that the complexities associated with the project can be resolved.

Table 3: Division of risks with the public and private team members

Risks	Rating	Parties Responsible
Technology risks	6	Private
Construction program risks	4	Private
Financial Risks	3	Public
Political risks	8	Public
Legal risks	4	Public
Operational risks	5	Private
Environmental risks	3	Public
Natural Disaster risks	6	Private and public
Organization risks	2	Private
Process risks	7	Private
Role played by the public and private sector	4	Public
Skills and expertise of the employees	3	Private
Measuring and monitoring risks	7	Private
Design risks	6	Private
Demand and supply risks	3	Public
Asset risks	2	Private
Failure of technology	4	Private
Occurrence of corruption	3	Public and Private
Interruption of the public sector	2	Public
Reliability on the government policies	6	Public
Reliability from the third party	5	Public
Development and implementation of the new laws	4	Public
Opposition raised by the political parties	5	Public
Rising rate of interest	8	Private
Foreign exchange currency	3	Public
Immature legislation system	1	Public
Incapability in taking effective decision	5	Private
Unavailability of land	4	Public
Taking permission	2	Private
Irrelevant agreement with the contractor	4	Public
Financial instability	6	Public
Changes in the construction program	4	Public
Delay in the construction program	2	Private
Failure of meeting supply and demand	5	Private
Operational risks	7	Private
Change in market demand	4	Public
Rising competition	7	Public
Organization risks	2	Private
Tax regulation	6	Public
Pre-investment procedures	5	Public
Countermeasures taken for resettlement of the people	8	Public

 (Source: Created by the author)

The distribution of the risks among the public and private authorities helps in measuring the contribution given by the private and public participants in the development of the PPP construction projects (Hovy, 2015). The goals and vision should be set for managing the risks associated with the project. The focus should be given on managing the habitat for the people who face difficulty with the development of the PPP projects (Kolodiziev, Tyschenko, Azizova, A2017). The re-settlement of the people is the key responsibility of the government because it will plays a major obstacle in the completion of the PPP projects. The government should support in managing risks associated with the project like legal, social, economic, and political so that the construction activities can be effectively laid down. The settlement of the political and social risks helps the private partners to settle their allocated risks evenly by managing the grievances and conflicts of the member participants from the public and private sector (Ngoma, Mundia, Kaliba, C2014). The designing of the project depends on the response given by the public and private parties in managing their risks allocated. The evaluation of the return on investment, return on equity, and return on assets helps in analysing the successful manangement of the risks with the public and private sector in the development of the infrastructure. It helps in evaluating the growth and increment in the GDP of the developing nation. The active participation of the government parties in the selection of the private partners plays a crucial role (Carbonara, Costantino, and Gunnigan, 2012). The bidding procedures should be used for passing the tender and allocation of the project to the private partners. The focus should be given on the feedback report of the contractor in managing the demand and supply of the resources at the construction site. The year wise feedback report of the participating units should be collected to analyse the success and failure of the project. The training and development should be organized for the private employees so that they can improve their skills and expertise according to the requirement of the project which in turn helps in minimizing the operational risks associated with the project. 

Conclusion

It can be concluded that the risks associated with the PPP project can be resolved by developing partnership between the public and private sectors for completing the projects in the public benefits. The major risks which are associated with the PPP projects are categorised as technical risks, operational risks, supply chain management risks, legal risks, process, risks, financial risks, and many others. The PPP projects sets criteria for risks identification and procedures for managing the risks allocated. The contribution from public and private sectors is required for bringing sustainability in completing the long term and short term project plan. The results of the consequences of PPP projects should be measured and evaluated for analysing the success and failure of the construction program. It helps in reducing the tax on the infrastructure costs of the projects and which results in completing the project within the approved cost. The traditional framework of the risks identification was majorly depends on analysing the financial stability of the company. The efficiency of the project increased by getting approval of time and cost allocated to complete activity schedule of the projects. The PPP projects do not focus on analysing the impact of uncertainty on the development process of the project. The success criteria should be developed in the management of different types of risks associated with the project.

It is recommended that the risks should be allocated to the public and private sectors authorities so that they can participate in the management process of risks identified for the successful completion of the project within the approved and cost. The analysis and evaluation of the risks helps in setting priority and giving ranking and rating to the associated risks of the PPP projects. The rating and ranking was drawn to manage and develops a risks mitigation plan accordingly.

The future scope of the project is to study about the risks management and allocation procedures which are laid out to resolve the complexities and risks associated with the project.

The limitation of the research is that the research was conducted by analysing the literary sources and other sources. The selection of the literature is the major factor for the success and failure of the research completion. 

References:

Carbonara, N., Costantino, N., and Gunnigan, L. (2012). Risks management in PPP projects: An empirical study on motorway sector. Ebook [Online]. Available at: https://www.pomsmeetings.org/confpapers/051/051-1250.pdf [Accessed on 09 Sep, 2018]

Chan, A., Yeung, J., Calvin, P., Wang, S., and Ke, Y. (2014). Empirical study on risks assessment and allocation of public private partnership projects in China. Ebook [Online]. Available at: https://pdfs.semanticscholar.org/9a71/637b5a83287de096a6f1d433af26af59f42b.pdf [Accessed on 09 Sep, 2018]

Effah, E., and Chan, A. (2014). Risk allocation in public-private partnership water supply projects in Ghana. Ebook [Online]. Available at: https://www.researchgate.net/publication/276431880_Risk_allocation_in_public-private_partnership_water_supply_projects_in_Ghana [Accessed on 09 Sep, 2018]

Firmanzyah, B., Veronika, A., and Trigunarsyah, B. (2016). Risk analysis in feasibility study of building construction project. International journal of structural engineering and construction, 3(5). Available at: https://eprints.qut.edu.au/6551/1/Trigunarsyah_EASEC_10_5.pdf [Accessed on 09 Sep, 2018]

GiHub. (2014). Allocating risks in public private partnership contracts. Ebook [Online]. Available at: https://ppp-risk.gihub.org/ [Accessed on 09 Sep, 2018]

Halil, F., Nasir, N., Hassan, A., Shukur, A. (2016). Feasibility study and economic assessment in green building projects, 222(2016). International journal of social and behavioural science. Available at: https://core.ac.uk/download/pdf/82616822.pdf [Accessed on 09 Sep, 2018]

Hall, D. (2012). Public private partnership: A summary paper. Ebook [Online]. Available at: https://gala.gre.ac.uk/2429/1/2008-11-PPPs-summ.pdf [Accessed on 09 Sep, 2018]

Hovy, P. (2015). Risk allocation in public-private partnership: Maximising value for money. Ebook [Online]. Available at: https://www.iisd.org/sites/default/files/publications/risk-allocation-ppp-maximizing-value-for-money-discussion-paper.pdf [Accessed on 09 Sep, 2018]

Hyari, K, and Kandil, A. (2009). Validity of feasibilities studies for infrastructure construction projects. International journal of civil engineering, 3(1). Available at: https://pdfs.semanticscholar.org/90e4/d6cf49e287b6b6bb3d0c091f7e85a4aecf5c.pdf [Accessed on 09 Sep, 2018]

Ibrahim, A. (2014). The analysis and allocation of risks in public private partnerships in infrastructure projects in Nigeria. Ebook [Online]. Available at: https://www.emeraldinsight.com/doi/abs/10.1108/13664380680001086 [Accessed on 09 Sep, 2018]

Jethwa, B., Bhavsar, A., and Malek, S. (2017). Critical review on risks management in PPP based Infrastructure projects. Ebook [Online]. Available at: https://www.ijedr.org/papers/IJEDR1701055.pdf [Accessed on 09 Sep, 2018]

Kang, B. (2010). Research support building and infrastructure modernization. Ebook [Online]. Available at: https://www-ssrl.slac.stanford.edu/lcls/reviews/rsb_project/2009_rsb_may18-19/supporting_docs/rsb_risk_management_plan.pdf[Accessed on 09 Sep, 2018]

Kavishe, N. (2018). Risks associated with public private partnership housin project delivery in Tanzania. International journal of construction engineering and management, 7(2). Available at: https://www.researchgate.net/publication/326146159_Risks_Associated_with_Public_Private_Partnership_PPP_Housing_Projects_Delivery_in_Tanzania [Accessed on 09 Sep, 2018]

Ke, Y., Wang, S., albert, P, and Chan, C. (2014). Risks allocation in public private partnership infrastructure projects: A Comparative study. Ebook [Online]. Available at: https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.728.6012&rep=rep1&type=pdf [Accessed on 09 Sep, 2018]

Kharaiweish, M. (2013). Project Monitoring and control measures. International Journal of computer science and information technology, 5(5). Available at: https://airccse.org/journal/jcsit/5513ijcsit03.pdf[Accessed on 09 Sep, 2018]

Kolodiziev, O., Tyschenko, V., Azizova, A. (2017). Project finance risks management for public private parnership. Ebook [Online]. Available at: https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/9861/imfi_2017_04_Kolodiziev.pdf [Accessed on 09 Sep, 2018]

Lee, M., Han, X., Quising, P., and Villaruel, M. (2012). Hazard analysis on public private partnership project in developing Asia. Ebook [Online]. Available at: https://www.adb.org/sites/default/files/publication/435871/ewp-548-hazard-analysis-ppp-projects.pdf [Accessed on 09 Sep, 2018]

Li, J., and Zou, P., . (2014). Risks Identification and assessment in PPP infrastructure using fuzzy analytical process and life cycle methodology. Ebook [Online]. Available at: https://www.ppp.gov.kg/upload/file/riskidentification.pdf [Accessed on 09 Sep, 2018]

LLveskoski, O. (2014). Building construction. Ebook [Online]. Available at: https://www.theseus.fi/bitstream/handle/10024/82098/HAMK_Building_construction_2014_ekirja.pdf?sequence=1[Accessed on 09 Sep, 2018]

Mansfield Community. (2013). Introduction to project management. Ebook [Online]. Available at: https://www.mansfield.vic.gov.au/Libraries/Community_Development/Intro_to_Project_Management_Manual.sflb.ashx [Accessed on 09 Sep, 2018]

Merrit, F., and Ricketts, J. (2012). Building design and construction handbook. Ebook [Online]. Available at: https://www.uop.edu.jo/download/research/members/[Architecture_Ebook]_Building_Design_and_Construction_Handbook.pdf[Accessed on 09 Sep, 2018]

Monnappa. (2017). Project scope management: What it is and why it is important. Ebook [Online]. Available at: https://www.simplilearn.com/project-scope-management-importance-rar89-article [Accessed on 09 Sep, 2018]

Mouraveiv, N. (2012). Risks Allocation in public private partnership: A case study of construction and operations. Ebook [Online]. Available at: https://www.tandfonline.com/doi/abs/10.1080/13669877.2013.815650 [Accessed on 09 Sep, 2018]

Muller, C., Oppe, M. (2012). Conceptual design and design examples for multi-storey buildings. Ebook [Online]. Available at: https://eurocodes.jrc.ec.europa.eu/doc/WS2008/EN1993_6_Mueller.pdf[Accessed on 09 Sep, 2018]

Ngoma, S., Mundia, M., Kaliba, C. (2014). Benefits, constraints, and risks in infrastructure development via public private partnership in Zambia. International journal of construction in developing countries, 19(1). Available at: https://web.usm.my/jcdc/vol19_1_2014/JCDC%2019(1)%202014-Art.%202%20(15-33).pdf [Accessed on 09 Sep, 2018]

Otieno, F. (2014). The role of monitoring and evaluation in projects. Ebook [Online]. Available at: https://www.irbnet.de/daten/iconda/CIB8942.pdf [Accessed on 09 Sep, 2018]

Patanakul, P. (2010). An Empirical study on the use of project management tools and techniques across project life cycle and their impact on project success. Ebook [Online]. Available at: https://www.researchgate.net/publication/260059419_An_Empirical_Study_on_the_use_of_Project_Management_Tools_and_Techniques_across_Project_Life-Cycle_and_their_Impact_on_Project_Success[Accessed on 09 Sep, 2018]

Prasad, H., Reddy, P., Kumar, S., Reddy, S. (2012). A project report on analysis and design of multi-storey residential building. Ebook [Online]. Available at: https://www.retawprojects.com/uploads/fyp-Multi_Storey_Residential_Building.pdf[Accessed on 09 Sep, 2018]

Pribadi, K., and Pageran, M. (2013). Important risks on public private partnership scheme in water supply investment in Indonesia. Ebook [Online]. Available at: https://www.researchgate.net/publication/255621913_IMPORTANT_RISKS_ON_PUBLIC-PRIVATE_PARTNERSHIP_SCHEME_IN_WATER_SUPPLY_INVESTMENT_IN_INDONESIA [Accessed on 09 Sep, 2018]

Raz, T., Shenhar, A., and Dvir, D. (2011). Risk Management, project success, and technological uncertainty. 1^st ebook. Available at: https://www.researchgate.net/publication/227644860_Risk_Management_Project_Success_and_Technological_Uncertainty. [Accessed on 09 Sep, 2018]

Sastoque, L., Arboleda, C., and Ponz, J. (2016). A proposal for risk allocation in social infrastructure projects applying PPP in Columbia. International conference on sustainable design, engineering, and construction, 145(2016), pp. 1354-1361. Available at: https://core.ac.uk/download/pdf/82702773.pdf [Accessed on 09 Sep, 2018]

Shastry, T. (2012). A study on public private partnership with reference to indian infrastructural project. International journal of business and management invention, 3(10). Available at: https://www.ijbmi.org/papers/Vol(3)10/Version-1/H03101056062.pdf [Accessed on 09 Sep, 2018]

Singh, S. (2017). Evolution and need for PPP in India. Imperial journal of interdisciplinary research, 3(4). Available at: https://www.onlinejournal.in/IJIRV3I4/361.pdf [Accessed on 09 Sep, 2018]

Velasquez, G. (2014). Public private partnership in global health: Putting business before health. Ebook [Online]. Available at: https://www.southcentre.int/wp-content/uploads/2014/02/RP49_PPPs-and-PDPs-in-Health-rev_EN.pdf [Accessed on 09 Sep, 2018]