Risk Management in Transport PPP Projects
In the Islamic Countries
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impact6 . The qualitative assessment involves a discussion of the parties’ ability to manage each
risk, and can produce a descriptive ranking of risks (e.g. high, medium, low) based on the risks’
likelihood and the severity of the impact on project outcomes, e.g. in terms of potential financial
relevance (APMG, 2016).
During the PPP appraisal phase, the public authority also carries out activities of early risk
mitigation, e.g. geo-technical tests when geo-technical risk represents a serious uncertainty for
the project.
3.2.3. Procurement and contracting
The third phase, Procurement and contracting, is divided into four elements. For each of them,
the following Table sets out the relevant questions that guided the analysis throughout the
study.
Table 10: Overview of elements of Phase 3) Procurement and contracting
Phase Elements included
Procurement
and contracting
 Procurement strategies: What are the main the procurement strategies adopted
to develop and implement projects? What are the main drivers behind the
identification and choice of the procurement different routes?
 PPP contractual arrangements: According to the risk sharing matrices for the
PPP transport projects, which project risks are allocated to public and private
party? Which types of project risks are shared? What are the pros and cons from
the risk management point of view? What type of financing schemes are adopted
for PPP transport projects? What are the main features of each type of financing
scheme? What are the pros and cons of the selected PPP methods, from a risk
allocation and management point of view? What is the typical concession/contract
period of transport PPP projects? What is the rationale behind? What are the types
of risks (including the ones that may be external to the project, i.e. environmental
risks) identified and allocated to the parties involved in PPPs for the different
options of PPP arrangements? What is the rationale underpinning risk allocation
(or risk transfer) strategies?
 Performance metrics: How do the foreseen values of the main performance
parameters (traffic, revenue, tariff ...) compare with the actual ones? What is the
rationale, the structure and content of output and performance measurement of
PPPs?
 Remuneration: How is performance metrics linked with payment to the private
party or compensation to the public?
Source: Authors.
Procurement strategies
Once the pre-tendering decision-making process is completed and the set of necessary
assessments carried out has led to the decision to develop the project as a PPP, the public
6 A more complex approach to risk-adjusted costs is represented by the use of Montecarlo simulations, i.e.
computational algorithms relying on repeated random sampling to obtain numerical results, based on
previously inputted probabilities.