Risk Management in Transport PPP Projects
In the Islamic Countries
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Phase 2: Pre-tender decision process
Risk identification and assessment in the pre-tender decision-making should logically follow
and build on the strengths and priorities identified through the strategic framework phase.
However, the focus in this phase is on specific projects or project types potentially suitable for
PPP funding. Independent of the procurement route selected, sound technical-economic
studies in this phase are essential to identify and evaluate key project risks ex-ante. However,
under a PPP procurement route the assessment of certain risks may become more critical and
the emphasis of the studies may reflect this, given the need to share risks with private parties
under a contract structure which may cover implementation from design to operation and asset
return. For example, where user charges are expected to support the remuneration of the
private party, traffic studies and travel behavior modelling should pay particular attention to
the willingness to pay of final users.
An important step is the identification of the “PPP project” boundaries. This relates to the
fact that the components of a project suitable for a PPP procurement route are not necessarily
identical to those of a similar project implemented through conventional procurement. To think
about the definition of the “PPP project” is thus part of good practice and a way to achieve a
viable alignment of incentives for the various parties. For instance, a project structured as PPP
may involve the inclusion of an existing asset as part of the concession agreement or other value
capture mechanisms, such as the ability to share land value uplifts generated by the project.
Box 6 Defining the “PPP project” – the Vasco da Gama bridge case26
In the early 90’s the existing 25th April bridge connecting the Northern and Southern banks of the
Tagus river in the Lisbon metropolitan area in Portugal was operating beyond design capacity. The
bridge had been built in 1965 and the need for additional river crossing capacity had been
considered a national priority for quite a few years. In the early 90’s the Portuguese authorities
were aware of recent trends in the private financing of road infrastructure on estuarial crossings
such as the Dartford crossing and the Second Severn bridge. In addition, they viewed the new
crossing as technically challenging and private sector involvement, attracting international
expertise, as desirable. Thus, the Ministry of Public Works established GATTEL (Gabinete da
Travessia do Tejo em Lisboa) as a special-purpose agency charged with coordinating activities
related to the design and implementation of a new fixed crossing. It was then decided that the
project for a new crossing should be launched as a PPP based on a DBOT concession model. One of
the key concepts of the concession – also inspired by the experience in the United Kingdom –
was that the concessionaire would be given the operation of the existing bridge. This had the
function of giving the concessionaire an additional source of revenue, avoiding at the same
time competition from the existing infrastructure. Thus, given the PPP delivery concept
adopted by the authorities, the PPP project boundaries did not simply include the new asset ,
as it would have been the case under a conventional procurement model, but also the existing
bridge. The preliminary performance calculations, as often happens in the case of PPPs, were made
for multiple stakeholders.
26 This Box draws on Carbonaro et Al (2017).