Risk Management in Transport PPP Projects
In the Islamic Countries
1
EXECUTIVE SUMMARY
Public-Private Partnerships (PPPs) represent an alternative to conventional public
procurement of infrastructure and services that can allow implementing projects reducing the
burden of the investment costs on state financial resources, benefiting from specialized
technical and technological know-how useful to implement and operate assets in a more
effective and efficient way and even acquire know-how and competences not available in the
public sector.
Nevertheless, PPPs also bring about some threats as compared to traditional public
procurement. They entail, for example, potentially higher cost of financing (because the private
operator faces more finance costs than public entities), or higher transaction costs, as PPP
models are generally more complex from a contractual and organizational point of view
compared to conventional public procurement. Thus, in addition to project-related risks, several
potential issues stem as well from PPP inherent characteristics as a procurement method.
Scope of study and methodology
The main purpose of the study is to establish a conceptual foundation regarding better risk
management practices for transport PPP projects in the OIC Member Countries . The study
aims at providing an overarching overview of risk management practices for transport PPP
projects of relevance to the OIC Member Countries. The analysis describes and comments on
crucial issues, barriers, and challenges, which OICMember Countries are currently facing or may
face in the implementation of PPPs. The study also brings policy recommendations outlining
how these issues can be addressed by the various players. The ultimate target of the research is
to draw attention to the risk management practices of transport PPP projects at the OIC Member
Countries as well as to trigger a serious debate around the issues identified and how to better
address them. The research focused on the following specific objectives:
 Identifying the basic concepts and steps of risk management of transport PPP projects;
 Investigating the major and successful practices regarding risk management of transport
PPP projects outside the OIC geography;
 Describing the general situation related to experiences in transport PPP projects in the
OIC Member Countries and analyzing risk management practices in six selected OIC
Member Countries as case studies;
 Proposing recommendations for better enhancing risk management practices for
transport PPP projects among the OIC Member Countries.
The theoretical definition of PPPs and type of risks associated with PPPs used in this study are
in line with those included in relevant international literature by the World Bank PPP
Infrastructure Resource Centre (PPPIRC), European PPP Centre of Expertise (EPEC), and
Organization for Economic Cooperation and Development (OECD), which are currently
representing the basis of the international debate on the analysis of the applicability of PPPs to
the transport sector.