IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v14y2022i21p14149-d957710.html
   My bibliography  Save this article

Identifying Measures of Effective Risk Management for Public–Private Partnership Infrastructure Projects in Developing Countries

Author

Listed:
  • Khwaja Mateen Mazher

    (Department of Construction Engineering and Management, King Fahd University of Petroleum and Minerals, Dhahran 31261, Saudi Arabia)

  • Albert P. C. Chan

    (Department of Building and Real Estate, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong, China)

  • Rafiq M. Choudhry

    (Construction Engineering and Management, Civil Engineering Department, College of Engineering, Imam Mohammad Ibn Saud Islamic University (IMSIU), Riyadh 11432, Saudi Arabia)

  • Hafiz Zahoor

    (College of Civil Engineering, National University of Sciences and Technology, Risalpur Campus, Nowshera 24080, Pakistan)

  • David J. Edwards

    (School of Engineering and the Built Environment, Birmingham City University, Birmingham B4 7BD, UK
    Faculty of Engineering and the Built Environment, University of Johannesburg, Doornfontein 2028, South Africa)

  • Ahmed M. Ghaithan

    (Department of Construction Engineering and Management, King Fahd University of Petroleum and Minerals, Dhahran 31261, Saudi Arabia)

  • Awsan Mohammed

    (Department of Construction Engineering and Management, King Fahd University of Petroleum and Minerals, Dhahran 31261, Saudi Arabia)

  • Mubashir Aziz

    (Department of Civil and Environmental Engineering, King Fahd University of Petroleum and Minerals, Dhahran 31261, Saudi Arabia
    Interdisciplinary Research Center for Construction and Building Materials, King Fahd University of Petroleum and Minerals, Dhahran 31261, Saudi Arabia)

Abstract

The inadequate risk management of public–private partnership (PPP) projects is a principal cause of project distress or failure. This research seeks to identify and empirically validate measures of effective risk management (ERM) in the context of PPPs in a developing country, a subject that has received scant attention in the extant literature. The research is based on a comprehensive literature review, expert interviews and a questionnaire survey. Mean score ranking and factor analysis were employed to rank and group the identified measures, respectively. Tests were performed to determine the respondents’ agreement and establish the reliability and validity of the survey instrument. Analysis results indicate that all identified measures are important, are distributed over the entire project’s life cycle and exhibit a multi-organizational focus. The most significant measures focus on PPP-specific artifacts and procurement activities that are vital for ERM. Factor analysis established six critical underlying dimensions for the ERM of PPP projects. The extracted factors generally acknowledge the need for expert public- and private-sector project stakeholders with mature organizational structures, business processes and relevant experience to successfully handle and deliver PPP projects. Furthermore, a comprehensive PPP policy and sound legal and regulatory frameworks are essential for supporting the ERM of PPP projects. The findings will enable a better understanding of factors that influence the quality and outcomes of risk management efforts and promote sustainable infrastructure development via PPPs, where the success of a project strongly relies on positively managing a project’s risks in the economic and the social domains.

Suggested Citation

  • Khwaja Mateen Mazher & Albert P. C. Chan & Rafiq M. Choudhry & Hafiz Zahoor & David J. Edwards & Ahmed M. Ghaithan & Awsan Mohammed & Mubashir Aziz, 2022. "Identifying Measures of Effective Risk Management for Public–Private Partnership Infrastructure Projects in Developing Countries," Sustainability, MDPI, vol. 14(21), pages 1-19, October.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:21:p:14149-:d:957710
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/14/21/14149/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/14/21/14149/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Asheem Shrestha & Jolanta Tamošaitienė & Igor Martek & M Reza Hosseini & David J Edwards, 2019. "A Principal-Agent Theory Perspective on PPP Risk Allocation," Sustainability, MDPI, vol. 11(22), pages 1-18, November.
    2. Martin Schieg, 2006. "Risk management in construction project management," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 7(2), pages 77-83.
    3. Liang Shan & Michael Garvin & Raman Kumar, 2010. "Collar options to manage revenue risks in real toll public-private partnership transportation projects," Construction Management and Economics, Taylor & Francis Journals, vol. 28(10), pages 1057-1069.
    4. Beenish Bakhtawar & Muhammad Jamaluddin Thaheem & Husnain Arshad & Salman Tariq & Khwaja Mateen Mazher & Tarek Zayed & Naheed Akhtar, 2021. "A Sustainability-Based Risk Assessment for P3 Projects Using a Simulation Approach," Sustainability, MDPI, vol. 14(1), pages 1-22, December.
    5. Bruzelius, Nils & Flyvbjerg, Bent & Rothengatter, Werner, 2002. "Big decisions, big risks. Improving accountability in mega projects," Transport Policy, Elsevier, vol. 9(2), pages 143-154, April.
    6. Patricia Carrillo & Herbert Robinson & Chimay Anumba & Nasreddine Bouchlaghem, 2006. "A Knowledge Transfer Framework: the PFI context," Construction Management and Economics, Taylor & Francis Journals, vol. 24(10), pages 1045-1056.
    7. M. Motiar Rahman & Mohan Kumaraswamy, 2005. "Assembling integrated project teams for joint risk management," Construction Management and Economics, Taylor & Francis Journals, vol. 23(4), pages 365-375.
    8. Zhansheng Liu & Yueyue Jiao & Anxiu Li & Ximei Liu, 2021. "Risk Assessment of Urban Rail Transit PPP Project Construction Based on Bayesian Network," Sustainability, MDPI, vol. 13(20), pages 1-23, October.
    9. Marcus Ahadzi & Graeme Bowles, 2004. "Public-private partnerships and contract negotiations: an empirical study," Construction Management and Economics, Taylor & Francis Journals, vol. 22(9), pages 967-978.
    10. Nakhon Kokkaew & Nicola Chiara, 2010. "Modelling completion risk using stochastic critical path-envelope method: a BOT highway project application," Construction Management and Economics, Taylor & Francis Journals, vol. 28(12), pages 1239-1254.
    11. Bent Flyvbjerg, 2013. "Quality Control and Due Diligence in Project Management: Getting Decisions Right by Taking the Outside View," Papers 1302.2544, arXiv.org.
    12. A. V. Thomas & Satyanarayana Kalidindi & L. S. Ganesh, 2006. "Modelling and assessment of critical risks in BOT road projects," Construction Management and Economics, Taylor & Francis Journals, vol. 24(4), pages 407-424.
    13. Hemanta Doloi, 2009. "Relational partnerships: the importance of communication, trust and confidence and joint risk management in achieving project success," Construction Management and Economics, Taylor & Francis Journals, vol. 27(11), pages 1099-1109.
    14. Nunzia Carbonara & Nicola Costantino & Roberta Pellegrino, 2014. "Revenue guarantee in public-private partnerships: a fair risk allocation model," Construction Management and Economics, Taylor & Francis Journals, vol. 32(4), pages 403-415, April.
    15. Laura Martiniello & Donato Morea & Francesco Paolone & Riccardo Tiscini, 2020. "Energy Performance Contracting and Public-Private Partnership: How to Share Risks and Balance Benefits," Energies, MDPI, vol. 13(14), pages 1-19, July.
    16. Roberta Pellegrino & Luigi Ranieri & Nicola Costantino & Giovanni Mummolo, 2011. "A real options-based model to supporting risk allocation in price cap regulation approach for public utilities," Construction Management and Economics, Taylor & Francis Journals, vol. 29(12), pages 1197-1207.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Abraham Park & Chen Yu Chang, 2013. "Impacts of Construction Events on the Project Equity Value of the Channel Tunnel Project," ERES eres2013_97, European Real Estate Society (ERES).
    2. Marzouk, Mohamed & Ali, Mohamed, 2018. "Mitigating risks in wastewater treatment plant PPPs using minimum revenue guarantee and real options," Utilities Policy, Elsevier, vol. 53(C), pages 121-133.
    3. Ales S. Berk & Dejan Podhraski, 2018. "Superiority of Monte Carlo simulation in valuing real options within public–private partnerships," Risk Management, Palgrave Macmillan, vol. 20(1), pages 1-28, February.
    4. 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.
    5. Babatunde, Solomon Olusola & Perera, Srinath, 2017. "Analysis of traffic revenue risk factors in BOT road projects in developing countries," Transport Policy, Elsevier, vol. 56(C), pages 41-49.
    6. Geneviève Zembri-Mary & Virginie Engrand-Linder, 2023. "Urban planning law in the face of the Olympic challenge: Between innovation and criticism of exceptional urban regeneration," Local Economy, London South Bank University, vol. 38(4), pages 369-388, June.
    7. Schreiner, Lena & Madlener, Reinhard, 2022. "Investing in power grid infrastructure as a flexibility option: A DSGE assessment for Germany," Energy Economics, Elsevier, vol. 107(C).
    8. Hemanta Doloi, 2009. "Relational partnerships: the importance of communication, trust and confidence and joint risk management in achieving project success," Construction Management and Economics, Taylor & Francis Journals, vol. 27(11), pages 1099-1109.
    9. Alexander Budzier & Bent Flyvbjerg & Andi Garavaglia & Andreas Leed, 2019. "Quantitative Cost and Schedule Risk Analysis of Nuclear Waste Storage," Papers 1901.11123, arXiv.org.
    10. Armstrong, J. Scott & Green, Kesten C. & Graefe, Andreas, 2015. "Golden rule of forecasting: Be conservative," Journal of Business Research, Elsevier, vol. 68(8), pages 1717-1731.
    11. Sanghyo Lee & Kyunghwan Kim, 2015. "Collar Option Model for Managing the Cost Overrun Caused by Change Orders," Sustainability, MDPI, vol. 7(8), pages 1-15, August.
    12. Oliveira, A. & Couto, G. & Pimentel, P., 2021. "Uncertainty and flexibility in infrastructure investments: Application of real options analysis to the Ponta Delgada airport expansion," Research in Transportation Economics, Elsevier, vol. 90(C).
    13. Taeil Park & Byungil Kim & Hyoungkwan Kim, 2012. "Impact of Deterioration and Negotiation on Sewer System O&M Contracts from the Real Option Perspective," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 26(10), pages 2973-2989, August.
    14. Ginés de Rus, 2014. "The economic evaluation of infrastructure investment. Some inescapable tradeoffs," Working Papers 2014-16, FEDEA.
    15. A. Q. Adeleke & A. Y. Bahaudin & A. M. Kamaruddeen, 2018. "Organizational Internal Factors and Construction Risk Management among Nigerian Construction Companies," Global Business Review, International Management Institute, vol. 19(4), pages 921-938, August.
    16. Antonella Lomoro & Giorgio Mossa & Roberta Pellegrino & Luigi Ranieri, 2020. "Optimizing Risk Allocation in Public-Private Partnership Projects by Project Finance Contracts. The Case of Put-or-Pay Contract for Stranded Posidonia Disposal in the Municipality of Bari," Sustainability, MDPI, vol. 12(3), pages 1-18, January.
    17. Shabir Hussain Malik & Weizhong Fu & Samma Faiz Rasool & Gowhar Ahmad Wani & Shah Zaman & Najaf Ali Wani, 2023. "Investigating the Impact of Communication Factors and Stakeholders Engagement on Renewable Energy Projects in Pakistan," Sustainability, MDPI, vol. 15(14), pages 1-14, July.
    18. Chiara Pancotti & Matteo Pedralli & Geert Smit & Silvia Vignetti, 2020. "Understanding transport project appraisal in its institutional dimension," Working Papers 201902, CSIL Centre for Industrial Studies.
    19. Akbari Ahmadabadi, Ali & Heravi, Gholamreza, 2019. "Risk assessment framework of PPP-megaprojects focusing on risk interaction and project success," Transportation Research Part A: Policy and Practice, Elsevier, vol. 124(C), pages 169-188.
    20. Buso, Marco & Moretto, Michele & Zormpas, Dimitrios, 2021. "Excess returns in Public-Private Partnerships: Do governments pay too much?," Economic Modelling, Elsevier, vol. 102(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:14:y:2022:i:21:p:14149-:d:957710. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.