Ex Post Risk Management in Public-Private Partnership Infrastructure Projects

Abstract

Public-private partnerships (PPPs) have been widely used in infrastructure development in the past 30 years. However, a number of PPP projects have suffered serious risk scenarios and ended up with project failures. The change from a short-term contract period of traditional projects (fewer than five years) to a long-term contract period of PPP projects (20–30 years) has raised challenges to the traditional risk management. The high occurrence of renegotiations and early terminations of PPP projects suggest that ex ante risk management is no longer enough and ex post risk management is needed. This study aims to propose an ex post risk management model, under which renegotiations and early terminations are introduced. The application of this model begins with risk impact evaluation, then ex post risk response measures assessment, selection, and enforcement. An illustrative case is provided in the Appendix at the end of the article. The outputs of this study would facilitate governments’ decision making in PPP projects under serious risk scenarios.