Risk Management in Transport PPP Projects
In the Islamic Countries
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 PPP Affordability49 & Sustainability Analysis, for PPP projects where end users are
expected to pay their own tariffs directly, it is required gathering any existing data on the
current prices being charged in the sector or/and carry out studies of consumer ability
or willingness-to-pay;
 Project Demand Analysis50, including scenario analysis51 and recommendations on how
demand risk should be allocated within a PPP structure;
 Project Technical Feasibility Analysis, including recommendations on how technical
risks (e.g. technology, design, performance, planning, resources and inputs, etc.) should be
allocated within a PPP structure;
 PPP Project Financial Feasibility Analysis;
 Legal & Institutional Feasibility Analysis;
 Project Environmental & Social Impact Assessment;
 PPP Project Risk Identification, Analysis and Mitigation;
 Development of the recommended PPP Risk Allocation Structure;
 Value-for-Money (VfM) Analysis, including both the qualitative likelihood of realizing
better VfM and the estimated quantitative value of VfM savings/benefits from a PPP;
 Assessment of Private Sector Market Interest in & Appetite for the PPP Opportunity.
As a result of this stage, all (technical, legal, environmental, financial and institutional) feasibility
analyses are presented to the PPP unit in the form of a PPP business case . It may be noted that
in the PPP law the feasibility study is not the only supporting document to prepare: the Law also
requires a Cost-Benefit Analysis and a sustainability report (focusing on the project’s cash flow).
However, these two studies are not mentioned in the PPP guidelines.
For the purposes of this case study, investigating the risk-related analyses in the feasibility study
is of particular interest. As regards risk identification, the PPP guidelines provide a list of 22
risks that the contracting authority should use in order to identify and describe the relevant
risks. Such risks are presented in the following Table.
49 Affordability analysis is the procedure for determining the maximum amount that the clients of a PPP, whether
a public Contracting Body (ie a “single off-taker”), multiple end-users, or a combination of the two, can afford
to pay for the new PPP project’s services over the entire life of the contract.
50 According to the PPP guidelines, infrastructure demand forecasting is usually based on two different
strategies: (1) for the entire country, region, or municipal area, it generally adopts regression analysis; (2) for
part of an administrative jurisdiction, it frequently adopts the case method.
51 According to the PPP guidelines, the projected level of demand must be tested using to at least three general
scenarios: Base Case; Optimistic Case (higher than planned demand);Pessimistic Case (lower than planned
demand). For each scenario, the assumptions used and the reasons for selecting those assumptions should be
explained.