Risk Management in Transport PPP Projects
In the Islamic Countries
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framework. Tailored to PPPs this would more appropriately address the specificities related to
this type of procurement method, also providing a standard set of provisions potentially
mitigating risks of contractual disputes and renegotiations. Attention should be also given to the
inclusion in the legislation of provisions concerning transparency in the procurement of PPP
initiatives, limiting as far as possible the use of the unsolicited proposal and direct negotiation
procurement methods. Initiatives should be preferably identified as part of national and
transport planning processes, where ideas and proposals by the private sector may be collected
as part of public consultation activities and events. Such measures would potentially mitigate
legal risks as well as political risks.
Increased transparency in the identification, planning, preparation and procurement of PPPs
supports competition and opening of the market to international investors and operators,
reducing the risk of potential dominance of private entities already present in the market.
In a globalized economy, due consideration should be given to the removal from the existing
legislation of barriers hampering the possibility for foreign companies to participate in the
procurement procedures.
Islamic finance solutions should be considered for the positive implications it might have on the
mitigation of macroeconomic and financial credit risks . For the adoption of Islamic finance
in countries where this is not already in use the study suggests several basic steps, i.e. amending
the legislation and regulatory framework of the banking and financing system, undertaking
sensibilization campaigns on Islamic finance at the institutional level, as well as training
programs dedicated to the improvement of the competences and skills of the human resources.
Procedural measures
Risk management guidelines and checklists should be considered for adoption, where not
already in place for the overall improvement of risk management practices with reference
to all types of risks. These should be country if not transport/mode specific in order to reflect
peculiarities in the policy, institutional and regulatory settings. Guidelines should be tailored to
PPP initiatives and not generally applicable to infrastructure investments as PPPs are more
complex than projects developed and implemented under the public procurement conventional
model. Further to the identification of the main risks applicable to the PPPs over the course of
the different stages of project life-cycle, the entities responsible for their assessment, monitoring
and treatment should indeed be indicated. As of supervision and monitoring activities the
scheduling/frequency of the reporting tasks should be also specified. Standard templates for
collection of project relevant information should be preferably adopted.
Guidelines for risk management practices should cover all dimensions of risk governance. A
“legal attitude” to PPP risk management focusing on risk identification, allocation and treatment
should be combined with an economic approach to reflect the appropriate management of risks
at all stages of the project life-cycle integrating risk identification, allocation and treatment
related analyses, with risk appraisal (ex-ante), monitoring and evaluation (ex-post) of PPPs
(including all different elements of analysis to be performed as part of economic and financial
evaluations, e.g. Value-for-Money, public sector comparator, Cost-Benefit Analysis, sensitivity
analysis, scenario analysis, risk analysis…).