Risk Management in Transport PPP Projects
In the Islamic Countries
28
Building on the relevant literature and on international best practices, the conceptual
framework developed for the purposes of this study will guide the analysis of risk management
principles in transport PPPs, while providing at the same time a comprehensive checklist to
assess current practices in different contexts (international trends and practices in Chapter 4
and in-depth case studies on OIC Member Countries in Chapter 5).
3.2. Conceptual framework
The conceptual framework guiding the entire study results from the combination of risk
governance dimensions and investment phases.
Five risk governance dimensions have been identified.
1. Risk Identification. Risk governance requires a preliminary identification of the risks
that can potentially prevent the transport PPP project from achieving its objectives or
affect its performance;
2. Risk Assessment . The estimation of the likelihood, impact and implications of the
identified risks is instrumental to the choice of how to share them between public and
private parties, and it relies upon assessment criteria and tools;
3. Risk Allocation. As a core feature of PPPs, risks must be distributed between the public
and private parties involved. Under this dimension, the challenge is to find the optimal
risk allocation, identifying which party is best positioned to bear each risk;
4. Risk Monitoring . Risks, risk perceptions, and risk mitigation measures may change
over the project’s lifetime. As such, risks are the target of specific monitoring activities.
Quality and availability of monitoring tools, as well as dedicated agencies or offices for
the monitoring of the delivery and performance of PPPs play a crucial role in this regard;
5. Risk Treatment. In order to deal with risks, each of the parties faces choices related to
avoiding, optimizing, transferring or retaining risk. Following this choice, specific
measures can be taken to address every different risk.
These risk governance dimensions represent the analytical lenses through which this study will
describe the different investment phases, following a life-cycle approach. The investment life-
cycle has been structured in 6 investment phases, further detailed into their main elements.
The resulting conceptual framework is graphically illustrated in the following matrix. For each
investment phase, the relevant risk dimensions are colored green and the sign “+” indicates their
degree of relevance.