Risk Management in Transport PPP Projects
In the Islamic Countries
44
consideration how the incentive system inherent to each procurement route may influence risk
allocation in the concrete case.
PPP contractual arrangements
Depending on the needs addressed by the project and the functions the public authority intends
to transfer to the private party (following the appraisal phase), different PPP contract types can
emerge.
In order to categorize PPPs, two main nomenclatures are used. While the first one underlines
which functions PPPs perform, the second one stresses the element of ownership of the project
asset. The following Table summarizes the two contract nomenclatures.
Table 11: The two main PPP contract nomenclatures
Contract nomenclature Rationale
 Design-Build-Finance-Operate-Maintain (DBFOM );
 Design-Build-Finance-Operate (DBFO);
 Design-Construct-Manage-Finance (DCMF).
The range of PPP contract types is defined
by the functions transferred to the private
sector.
 Build-Operate-Transfer (BOT );
 Build-Own-Operate-Transfer ( BOOT);
 Build-Transfer-Operate (BTO ).
The range of PPP contract types is defined
by the legal ownership of the asset.
Source: Authors’ elaboration on The World Bank et al., 2017.
Irrespective of such categorization, the preparation of the PPP contractual arrangement
revolves mainly around risk allocation, i.e. the definition of which party is expected to assume
each risk.
Global Infrastructure Hub (2016) provides comprehensive risk matrixes for 5 transport
subsectors (toll roads, airports, light rail, heavy rail, ports), identifying for each risk which party
it is generally allocated to, and which are the relevant mitigation measures. Building on this
work on punctual risks, the following Table provides a general overview on risk categories
instead (based on the categories outlined at the beginning of this Chapter). In fact, for the
purposes of this study, establishing a risk matrix with risk categories and not individual risks
achieves two goals. First, it offers a wide-ranging view on the issue of risk allocation and allows
to make visible the rationale behind risk allocation, i.e. themanagement of a risk should fall upon
the party best positioned to assess and address it. Second, it provides an indispensable degree
of flexibility in the adoption of the framework in the country case studies (Chapte .