Structured risk management process to achieve value for money in Public Private Partnerships

Public-Private Partnership (PPP) is an alternative arrangement for public sector for capacity expansion or upgrade of infrastructure and public services. From the perspective of the public sector, success of PPP arrangements in delivering infrastructure service depends on their ability to optimise value for money of the service delivered. Therefore, a proper risk allocation is needed to achieve value for money for sustainable infrastructure development. This research concentrates on the risk management process that could optimise value for money in the delivery of infrastructure and public services through PPPs. A structured process is presented for identifying, assessing, analysing, allocating and controlling risks over the contract period including design, construction, finance operation and maintenance of infrastructure or public services. A scoring-risk matrix is used within the process to transfer different risks into a risks priority list for risk allocation and control. Relationship between the risk management and organisational arrangement to achieve value for money in PPPs are assessed. The findings shows that a proper risk management practice could facilitate allocating a range of risks and incentives to private sector to improve value for money and thereby to achieve effective infrastructure and public services on a sustainable basis.