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Risk Management in Public–Private Partnerships

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  • Demi Chung
  • David Hensher

Abstract

type="main"> This study investigates the risk management in long-term concession contracts known as public–private partnerships (PPPs). The M4 is the first Australian PPP road concession to reach the end of its concession cycle. It provides a unique and timely opportunity to examine the risk management process over its contract term and the efficacy of PPP contractual structures in managing uncertainties. Our specific research interests focus on two questions. First, what risk management approach was implemented? Second, has the risk-allocation strategy defined in the contract facilitated or hindered the risk management process? The findings of the study suggest that under the incomplete contract approach, the risk management practices rooted in a strong contractual framework, allied with good relationship skills, has contributed to a positive outcome for the M4 PPP. The study provides generalisable insights into risk management in inter-organisational long-term contracts.

Suggested Citation

  • Demi Chung & David Hensher, 2015. "Risk Management in Public–Private Partnerships," Australian Accounting Review, CPA Australia, vol. 25(1), pages 13-27, March.
    • Handle: RePEc:bla:ausact:v:25:y:2015:i:1:p:13-27
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    File URL: http://hdl.handle.net/10.1111/auar.12062
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    References listed on IDEAS

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    1. Carlos Oliveira Cruz & Rui Cunha Marques, 2012. "Risk-Sharing in Seaport Terminal Concessions," Transport Reviews, Taylor & Francis Journals, vol. 32(4), pages 455-471, February.
    2. Robert Jones & Gary Noble, 2008. "Managing the Implementation of Public--Private Partnerships," Public Money & Management, Taylor & Francis Journals, vol. 28(2), pages 109-114, April.
    3. Froud, Julie, 2003. "The Private Finance Initiative: risk, uncertainty and the state," Accounting, Organizations and Society, Elsevier, vol. 28(6), pages 567-589, August.
    4. Chung, Demi & Hensher, David A. & Rose, John M., 2010. "Toward the betterment of risk allocation: Investigating risk perceptions of Australian stakeholder groups to public-private-partnership tollroad projects," Research in Transportation Economics, Elsevier, vol. 30(1), pages 43-58.
    5. Linda English & Jane Baxter, 2010. "The Changing Nature of Contracting and Trust in Public‐Private Partnerships: The Case of Victorian PPP Prisons," Abacus, Accounting Foundation, University of Sydney, vol. 46(3), pages 289-319, September.
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    1. Opara, Michael & Rouse, Paul, 2019. "The perceived efficacy of public-private partnerships: A study from Canada," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 58(C), pages 77-99.
    2. Hrelja, Robert & Rye, Tom & Mullen, Caroline, 2018. "Partnerships between operators and public transport authorities. Working practices in relational contracting and collaborative partnerships," Transportation Research Part A: Policy and Practice, Elsevier, vol. 116(C), pages 327-338.
    3. Chung, Demi & Hensher, David A., 2018. "Public private partnerships in the provision of tolled roads: Shared value creation, trust and control," Transportation Research Part A: Policy and Practice, Elsevier, vol. 118(C), pages 341-359.
    4. Michael Opara, 2018. "Value for Money and Risk Relationships in Public–Private Partnerships: Evaluating Program‐based Evidence," Australian Accounting Review, CPA Australia, vol. 28(3), pages 391-404, September.
    5. Yan Wang & Yujie Wang & Xiuyu Wu & Jiwang Li, 2020. "Exploring the Risk Factors of Infrastructure PPP Projects for Sustainable Delivery: A Social Network Perspective," Sustainability, MDPI, vol. 12(10), pages 1-26, May.

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