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2016 | OriginalPaper | Buchkapitel

6. Risks in PPP Projects in Nigeria

verfasst von : George Nwangwu

Erschienen in: Public Private Partnerships in Nigeria

Verlag: Palgrave Macmillan UK

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Abstract

This chapter first discusses the concept of risk generally and then specifically in relation to PPPs. The essence of a PPP is to achieve optimal risk allocation (note that risk is used here to include opportunities). Under traditional procurement, the risk assumed by the public sector when it owns and operates an infrastructure asset is often unvalued. What PPP ensures, through the involvement of the private sector, is that the risk is adequately and properly priced and then transferred to the party that is best able to manage it. The idea that risks should be properly mitigated will also be discussed. The chapter will examine the various risk mitigation measures open to the public and private sector partners in a PPP.

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Vorheriges Kapitel The Value for Money Question

Nächstes Kapitel Political Risk

Baruch Fischoff, Stephen Watson and Chris Hope (1984) “Defining Risk”, Policy of Sciences, 17: 123–139.

Ibid.

Akintola Akintoye and Malcolm Macleod (1987) “Risk Analysis and Management in Construction”, International Journal of Project Management, 15(1): 38–39; see also the following: Robert M. Widerman (1992) Project and Program Risk Management, PMI; Kiyoshi Niwa (1989) Knowledge Based Risk Management in Engineering, New York: John Wiley & Sons; John C. Chicken and Tamar Posner (1998) The Philosophy of Risk, London: Thomas Thelford Publishing.

Royal Society (1991) “Report of the Study Group on Risk; Analysis, Perception and Management” (Group coordinator Sir F. Warner), London: Royal Society, p. 2, cited in Peter J. Edwards and Paul A. Bowen (1998) “Risk Management in Construction: A Review of Future Directions and Research”. Engineering, Construction and Architectural Management, 5(4) pp. 339–349.

Julie Froud, “The Private Finance Initiative: Risk Uncertainty and the State”, (2003) Accounting Organizations & Society, 28(6): 567–589.

Jamal F. Al-Bahar, (1989) “Risk Management in Construction Projects: A Systematic Analytical Approach for Contractors”, PhD. Thesis, University of California, Berkeley; see also the following: Jamal F. Al-Bahar and Keith C. Crandall, “Systematic Risk Management for Construction Projects” (1990) Journal of Construction Engineering and Management, 106 (3): 533–546; John Raftery (1994) Risk Analysis in Project Management, London: E & FN Spon; Christopher B. Chapman “A Risk Engineering Approach to Project Risk Management” (1990) International Journal of Project Management, 8(1): 5–16; Emmett J. Vaughan (1997) Risk Management, USA: John Wiley & Sons Inc.

Jamal F. Al-Bahar and Keith C. Crandall (1990).

Edmund H. Conrow and Patricia S. Shishido (1997) “Implementing Risk Management on Software Intensive Projects”, IEEE Software, 14(3): 83–89.

Akintola Akintoye, Craig Taylor and Eamon Fitzgerald (1998) “Risk in Private Finance Initiative Projects” in Luiz Montanheiro and Mirjam Spiering (eds.) Public and Private Sector Partnerships: The Enterprise Governance, Sheffield: Sheffield Hallam University Press.

Rui Cunha Marques and Sanford V. Berg (2010) “Risks, Contracts and Private Sector Participation in Infrastructure”, Journal of Construction Engineering and Management, available at http://warrington.ufl.edu/purc/purcdocs/papers/0925_marques_risks_contracts_and.pdf (last accessed 13 October 2015).

K.C. Iyer and Mohammed Sagheer (2011) “Risk and Uncertainty Assessment in PPP Infrastructure Projects: Need for a Systems Dynamic Framework”, available at: http://www.indianjournals.com/glogift2k6/glogift2k6-1-1/theme_5/Article%2011.htm (last accessed 13 October 2012); see also Al-Bahar (1989), n. 6.

J.E Martin and P. Heaulme (1998) “Risk Management: Techniques for Managing Project Risks” in D.I. Cleland (ed.) Field Guide to Project Management, New York: Van Nostrand Reinhold.

Charles Vleck and Pieter-Jan Stallen (1981) “Judging Risks and Benefits in the Small and in the Large”, Organizational Behavior and Human Performance, 28: 235–271.

L. Shen., A. Platten and X.P. Deng (2006) “Role of Public Private Partnerships to Manage Risks in Public Sector Projects in Hong Kong”, International Journal of Project Management, 24(7): 587–594.

Ibid.

Stephen Grey (2005) Practical Risk Assessment for Project Management, Chichester: John Wiley & Sons, p. ix.

Darrin Grimsey and Mervyn K. Lewis (2007) Public Private Partnerships: The Worldwide Revolution in Infrastructure Provision and Project Finance, Cheltenham, UK: Edward Elgar Publishing, p. 136.

Ibid.

Department of Economic Affairs (2006) National Public Private Partnership Handbook, Department of Economic Affairs, Ministry of Finance, Government of India, pp. 1–246.

Ibid.

United Nations Economic Commission for Europe (2008) “Guidebook on Promoting Good Governance in Public-Private Partnerships”, United Nations Publication, Sales No. 08.II.E.1, p. 36.

It has been argued in some quarters that this effectively makes the public the guarantors of the private sector. See Ellen Dannin (2011) “Crumbling Infrastructure, Crumbling Democracy: Infrastructure Privatization Contracts and their Effects on State and Local Governance”, Northwestern Journal of Law and Social Policy, 6.

United Nations Economic Commission for Europe (2008).

UNIDO (1996) “Guidelines for Infrastructure Development Through Build-Operate and Transfer Projects”, Vienna: United Nations Industrial Development Organisation; see also K.C. Iyer and Mohammed Sagheer (2011).

Darrin Grimsey and Mervyn K. Lewis (2002) “Evaluating the Risk of Public Private Partnerships for Infrastructure Projects”, International Journal of Project Management, 20: 107–118; M.A. Merna and N.J. Smith (1996) Privately Financed Concession Contract, Vols. 1 and 2. 2nd edn, Hong Kong: Asia Law and Practice.

A. Dias and P. Ioannou (1995) “Debt Capacity and Optimal Capital Structure for Privately Financed Infrastructure Projects”, ASCE Journal of Construction Engineering and Management, 121(4): 404–414.

A. Ng and Martin Loosemore (2007) “Risk allocation in the Private Provision of Public Infrastructure”, International Journal of Project Management, 25: 66–76.

Rui Cunha Marques and Sanford Berg (2010).

Ibid.

Donald R. Lassard and Roger Miller (2001) “Understanding and Managing Risk in Large Engineering Projects”, MIT Sloan Working Paper No. 4214-01.

Li Bing, A. Akintoye, P.J. Edwards and C. Hardcastle (2005) “The Allocation of Risk in PPP/PFI Construction Projects in the UK”, International Journal of Project Management, 23: 25–35.

Ibid.

Angela Walker and Sherif Mohammed (1999) “Risk Identification Frameworks for International BOOT Projects” in Stephen Ogunlana (ed.), Profitable Partnering in Construction Procurement, CIB W92 Proceedings Publication 224, pp. 475–485, ISBN 0-419-24760-2.

Yiannis Xenidis and Demos Angelide (2006) “The Financial Risk in Build Operate and Transfer Projects”, Construction Management and Economics, 23: 431–441.

R. W. Bakar (1986) “Handling Uncertainties”, International Journal of Project Management, 4(3): 205–210.

Department of Defence UK (2001) Private Financing Manual, Organisational Effectiveness Branch, Interim version, 25 February.

A.D. Ibrahim, A.D.F. Price and A.R.J. Dainty (2006) “The Analysis and Allocation of Risk in Public Private Partnerships in Infrastructure Projects in Nigeria”, Journal of Financial Management of Property and Construction, 11(3): 149–164.

International Monetary Fund (2005) “Public Private Partnerships, Government Guarantees, and Fiscal Risk”, prepared by staff team of the IMF led by R. Hemming, Washington, DC: IMF Multimedia Services Division.

Darrin Grimsey and Mervyn K. Lewis (2007) Public Private Partnerships: The Worldwide Revolution in Infrastructure Provision and Project Finance, Cheltenham, UK: Edward Elgar Publishing, p. 172.

H.-W. Alfen S.N. Kalidindi, S. Ogunlana, ShouQing Wang, M.P. Abednego, A. Frank-Jungbecker, Yu-Chien Amber Jan, Yongjian Ke, YuWen Liu, L. Boeing Singh and GuoFu Zhao, “An Introduction to PPP Concept” in Public-Private Partnership in Infrastructure Development: Case Studies from Asia and Europe, Bauhaus Universitat Weimar, (online), available at http://e-pub.uni-weimar.de/volltexte/2009/ (last accessed on 13 October 2015).

Ibid.

John Quiggin (2004) “Risk, PPPs and the Public Sector Comparator” Australian Accounting Review, 14(2): 51–61.

M. Abrahamson (1973) “Contractual Risks in Tunneling: How They Should Be Shared”, Tunnels & Tunneling, November: 587–598.

Stephen Ward, Chris Chapman and Bernard Curtis (1991) On the Allocation of Risk in Construction Projects, Discussion Papers in Accounting and Management Science: 91–98, Southampton, UK: University of Southampton.

Ibid.

Stephen Ward, Chris Chapman and Bernard Curtis (1991).

Ibid.

A. Ng and Martin Loosemore (2007).

Ibid.

Darrin Grimsey and Mervyn K. Lewis (2004), p. 179.

Tahir M. Nisar (2007) “Risk Management in Public-Private Partnership Contracts”, Public Organization Review, 7(1): 1–19.

Stephen Ward, Chris Chapman and Bernard Curtis (1991).

See, for example, Li Bing, Akintola Akintoye and Cliff Hardcastle, “VFM and Risk Allocation Models in Construction PPP Projects” in Akintola Akintoye, Champika Liyange and Suresh Renukappa (eds), “Public Private Partnership”, CIB TG 72ARCOM Doctoral Workshop 12 October 2011, University of Central Lancashire, UK, p. 16.

See, for example, Hiroaki Yamaguchi, Thomas E. Uher and Goran Runeson (2001) “Risk Allocation in PFI Projects”, 17th Annual Conference Salford Vol. 2. pp. 885–894.

Li Bing, Akintola Akintoye, and Cliff Hardcastle, ibid.

Ibid.

Stephen Ward, Chris Chapman and Bernard Curtis (1991).

Akintola Akintoye (2001) Framework for Risk Assessment and Management of Private Finance Initiative Projects, Glasgow, Scotland, UK; Glasgow Caledonia University, cited also in A. Ng and M. Loosemore (2007).

A. Ng and M. Loosemore (2007); see also William B. Moore and Thomas Muller (1989) “Impacts of Development and Infrastructure Financing”, ASCE Journal of Urban Planning and Development: 95–108.

Ibid.

See also Darrin Grimsey and Mervyn K. Lewis (2004).

Dorothy Morallos, Adjo Amekudzi, Catherine Ross and Michael Meyer (2009) “Value for Money Analysis in US Transportation Public-Private Partnerships”, Journal of Transportation Research Board 2115, Washington, DC, National Academy Press.

See Allyson Pollock and David Price (2004) Public Risk Transfer for Private Gain? The Public Audit Implications of Risk Transfer and Private Finance, London: UNISON. In a study carried out on behalf of UNISON, the authors show that the structure of PPP deals obscures the relationship between risk and the risk premiums for two reasons: first, the SPV is merely a shell company and transfers risk to other companies through a variety of complex financial mechanisms, which makes it difficult to assess its value.

Ibid.

It is common practice to determine whether the value for money requirement has been met by comparing the benefits of financing a project through the use of PPPs or doing so through direct public procurement. This is usually achieved by using a PSC; that is, whether more value for money could have been better achieved if the project were done solely through public sector finance.

Ibid, p. 179.

Darrin Grimsey and Mervyn K. Lewis (2004); A. Ng and Martin Loosemore (2007).

Rui Cunha Marques and Sanford Berg (2010).

United Nations Economic Commission for Europe (2008).

Gujarat Infrastructure Development Board “Public Private Partnership” found at <http://www.gidb.org/cms.aspx?content_id=96> (last accessed on 30 March 2012).

United Nations Economic Commission for Europe (2008).

Ana B. Alonso-Conde, Christine Brown and Javier Rojo-Suarez (2007) “Public Private Partnerships: Incentives, Risk Transfer and Real Options”, Review of Financial Economics, 16(4): 335–349.

Ibid.

Titel: Risks in PPP Projects in Nigeria
verfasst von: George Nwangwu
Verlag: Palgrave Macmillan UK
Buch: Public Private Partnerships in Nigeria
Print ISBN: 978-1-137-54241-0

Electronic ISBN: 978-1-137-54242-7

Copyright-Jahr: 2016
DOI: https://doi.org/10.1057/978-1-137-54242-7_6

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