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Risk allocation in public-private partnership water supply projects in Ghana

Author

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  • Effah Ernest Ameyaw
  • Albert P.C. Chan

Abstract

Appropriate risk allocation (RA) between public and private sectors according to their risk management (RM) capabilities is crucial for the success of public-private partnership (PPP) projects. The RA process in PPP water projects is examined, and a methodology based on fuzzy set theory is outlined with RA principles that can be used by public-private participants to arrive at fair RA decisions. Empirical data based on an industry-wide three-round Delphi questionnaire survey is used in this study to outline the methodology. The fuzzy set theory is employed for the RA analysis because it deals well with the complex multi-criteria problem of, and precisely accounts for the fuzziness inherent in human cognitive process that characterize, RA decision-making. Five risk factors are evaluated on each RA principle, analysed and assigned between the public and private sectors. The results show that it is appropriate to allocate risks according to both sectors' RM capability to manage them, using established RA principles and fuzzy set theory. The methodology renders the decision-making process more systematic and practical because the fuzzy theory approach allows decision makers to express their evaluations of both sectors' RM capabilities in descriptive qualitative terms. The results should assist public clients to establish efficient RA strategies and develop balanced RA schemes for PPP contracts, with a view to achieving a mutually acceptable RA with the private sector.

Suggested Citation

  • Effah Ernest Ameyaw & Albert P.C. Chan, 2015. "Risk allocation in public-private partnership water supply projects in Ghana," Construction Management and Economics, Taylor & Francis Journals, vol. 33(3), pages 187-208, March.
    • Handle: RePEc:taf:conmgt:v:33:y:2015:i:3:p:187-208
    DOI: 10.1080/01446193.2015.1031148
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    References listed on IDEAS

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    1. World Bank, 2013. "Energizing Economic Growth in Ghana : Making the Power and Petroleum Sectors Rise to the Challenge," World Bank Publications - Reports 16264, The World Bank Group.
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    Cited by:

    1. Nur, Suardi & Burton, Bruce & Bergmann, Ariel, 2023. "Evidence on optimal risk allocation models for Indonesian geothermal projects under PPP contracts," Utilities Policy, Elsevier, vol. 81(C).
    2. Yang Wang & Qingying Li & Jian Zuo & Katharine Bartsch, 2022. "How Did Balance Loss Occur? A Cross-stakeholder Analysis of Risk Misallocation in a Sponge City PPP Project," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 36(13), pages 5225-5240, October.
    3. Ronny Kountur & Martdian Ratna Sari, 2023. "Risk identification approaches and the number of risks identified: the use of work breakdown structure and business process," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-7, December.
    4. Nizkorodov, Evgenia, 2021. "Evaluating risk allocation and project impacts of sustainability-oriented water public–private partnerships in Southern California: A comparative case analysis," World Development, Elsevier, vol. 140(C).
    5. Xiaoyan Jiang & Kun Lu & Bo Xia & Yong Liu & Caiyun Cui, 2019. "Identifying Significant Risks and Analyzing Risk Relationship for Construction PPP Projects in China Using Integrated FISM-MICMAC Approach," Sustainability, MDPI, vol. 11(19), pages 1-31, September.
    6. Lima, Sónia & Brochado, Ana & Marques, Rui Cunha, 2021. "Public-private partnerships in the water sector: A review," Utilities Policy, Elsevier, vol. 69(C).

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