Risk Management in Transport PPP Projects
In the Islamic Countries
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In what follows, three boxes illustrate the role of a strategic and policy framework in
identifying and exploiting opportunities offered by PPP procurement in three different
countries. The first concerns the decision process on adopting a PPP model followed in the
United Kingdom, a sophisticated market and possibly the widest and most mature PPP market
in Europe.
Box 1 Dedicated PPP units
According to the World Bank (2018a), 81% out of 135 analyzed economies have established a
dedicated PPP unit. This support is particularly valuable at the early stage of PPP introduction in
a country, as sector agencies might have limited understanding of how PPPs work. A PPP unit is
designed to support PPPs during the preparation phase by ensuring that they meet quality
criteria such as the delivery of Value-for-Money and appropriate risk identification, assessment
and allocation, as well as by trying to attract investment on PPPs. In addition, the unit is usually
conferred a lasting mandate to manage PPP transactions in multiple sectors (Sanghi et al., 2007;
Hawkesworth, 2009). The functions PPP unit performs can be manifold (from broad policy
guidance to technical support for managing contracts, from capacity-building to PPP promotion)
and they tend to impact on the whole risk management cycle. From a public sector perspective, a
centralized PPP unit which could be established at national, regional or even urban level for large
cities (based on the ownership of capital expenditure decisions) can deliver several benefits,
among which:
 Promoting a proper regulatory framework for PPPs;
 Ensuring that projects fit into the overall PPP policy framework;
 Addressing gaps in terms of specific skills, lack of coordination or high transaction costs;
 Enabling public authorities to create, manage and evaluate PPPs efficiently and
effectively;
 Supporting authorities in their endeavor to secure Value-for-Money both in the
procurement and in the implementation phases;
 Controlling and overseeing of the whole PPP process;
 Providing clear communication channels to investors.
While the structure and funding of PPP units may vary (some are funded through a stand-alone
budget, others operate on a fee basis, with line agencies paying for advisory services provided by
the PPP unit), it is crucial that PPP units are attributed decision-making power, not a mere
advisory role (Sanghi et al., 2007).