Risk Management in Transport PPP Projects
In the Islamic Countries
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proportion of gross revenues for the duration of the agreement (54.47% in the first six years and
54.64% in the following nineteen years).
A system of fixed (land rent) and variable fees (TEU fee or ton fee) has been uniformly applied
for smaller ASEZA PPP projects.
5.5.5. Construction
Management of risks during design and construction
The PPP guidelines recognize the need for whole-life performance monitoring, as opposed to
the mere confirmation of the completed construction of the required infrastructure. They
suggest the establishment of a Project Management Unit (as it has been the case for the QAIA
project), in charge of managing and monitoring the PPP from the contracting authority’s
perspective.
Key Performance Indicators (KPIs) to be checked during construction include among others:
whether the necessary land for construction is available; whether all permits and licenses have
been obtained; whether the project design has been reviewed by an independent party; whether
interconnection facilities (such as approach roads, or electricity, water and sewerage
connections) are completed on time; whether the testing of the new facility has been carried out
(PPP unit, Ministry of Finance, 2019).
Moreover, as regards risk management in particular, the PPP Program underlines that in order
to effectively manage changes to risks, the contracting parties in coordination with the PPP unit
should follow up and monitor the allocation of risk throughout the term of contract.
Box 35 Risk management during design and construction in the QAIA case
The construction works foreseen as part of the QAIA PPP project were characterized by a 2-year
delay (the new terminal opened in 2013 instead of 2011), due to the need to change design
following operational and logistical issues. The construction sequence had to be changed, and the
schedule and the contract had to be renegotiated and amended.
Crucially, despite these challenges the initial PPP model worked and managed to accommodate
unexpected changes, including adjustments to design impacting on construction.
Additionally, the construction phase took place at the time of the Arab Spring, which posed a risk
in terms of changing the economics of the project. Yet, traffic proved resilient and was supported
through aggressive airline marketing by the new operator (Leigh, 2017). As a matter of fact, the
expected annual growth ratio (indicated in the contract) was about 5% but the actual one is about
8%.