Risk Management in Transport PPP Projects
In the Islamic Countries
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Learning by doing
There is some encouraging evidence on the benefits of “learning by doing” in PPPs: recent
analysis13 by the World Bank indicates that likelihood of cancellation decreases rapidly with
the cumulative number of transactions within a jurisdiction in the main PPP sectors ,
including transport.
Figure 3: Probability of cancellation and PPP country experience
Source: World Bank (2017).
The study indicates learning to implement successfully infrastructure investment with private
participation and by implication mitigate and control risks associated with implementation can
reduce significantly cancellation risk, which decreases to 5-7% after 15-20 transactions (see
Figure 4.1 below). Thus the cancellation rate (proxy for PPP risk in early stages) decreases
(relatively) quickly with country experience.14 Given that learning by doing is likely to be
effective in containing such risks, an emphasis on launching PPP transactions and building in
parallel management capacity may help capturing the opportunities offered by the PPP
approach in emerging markets in the early stage of the development of a PPP market.
13 Marcelo D., Schuyler House S., Mandri-Perrott C., Schwartz J. (2017). Do Countries Learn from Experience in
Infrastructure PPP? PPP Practice and Contract Cancellation. World Bank, Policy Research Working Paper
8054.
14 “The PPP country experience associated with each project is defined as the number of PPPs that reached
financial closure within the past decade in the same country” (Marcelo et al, 2017). It should also be noted that
the PPP operations are drawn from the WB PPI (Private Participation in Infrastructure) database, which
mainly covers emerging economies (EU countries are not included).