Risk Management in Transport PPP Projects
In the Islamic Countries
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where taking back the concession may turn out to be the most appropriate option in the public
interest.
The case of Carillion, one of the largest private PPP contractors, illustrate that although as a
general rule the government should be aware of potential events of private partner default, in
practice problems may arise because of lack of preparedness even in highly sophisticated
environments like the United Kingdom. This case shows that the bankruptcy of a large
contractor can have disruptive effects on the whole PPP sector, with costly and potentially
disruptive impacts for the delivery of public services, including in the transportation sector.
In sum, takeaways, barriers and parallel strategy options related to the closure phase can be
summarized as presented in the following Table.
Table 22: Takeaways, barriers and options related to the closure phase
Key Takeaways
 Despite key differences in the nature of risks between early termination and closure at maturity,
in both cases the critical issue which may lead to excessive risk-taking is lack of preparedness by
the public party, with the need to ensure continuity of services essential in both cases
 In the case of closure at maturity public sector preparedness essentially implies that relevant
decisions are made with reasonable anticipation and against the backdrop of a long-term strategic
use of PPP assets
Barriers/trade-offs
 Adequate preparation to closure events requires resources and skills and possibly institutional
continuity and institutional memory in the public sector entities responsible for contract
management
 Trade-off between cost of close risk monitoring during operation and leaving private parties
flexibility to follow most appropriate service delivery during operations
Scope for parallel strategies
 It is important to have a vision of the ongoing portfolio of transportation projects as they mature
and prepare for closure/re-tendering in view of broader policy objectives
 As part of a sound contract management strategy, project contractor risks should be monitored in
conjunction with project portfolio risks
Source: Authors.
4.3. Conclusions
A robust system for PPP riskmitigation and resilience in the OIC geography should be structured
on the basis of the lessons learned from the vast worldwide experience in implementing
transport PPPs. This system should consist of a package of support measures tailored to the
local institutional framework and investment opportunities. The package should be aimed at
building, reinforcing and where necessary complementing the experience and institutional
capacity in specific countries, with a view to supporting the effective delivery of PPP transport
operations in the national interest.