DEVELOPMENT OF RISK ANALYSIS MODEL IN PUBLIC PRIVATE PARTNERSHIP PROJECTS

Abstract

To fulfil the increasing demands of the public, Public Private Partnership (PPP) has been increasingly used to procure infrastructure projects. However, the risks involved in PPP projects are unique and dynamic due to large amount of investment and long concession period. This causes many challenges like cost overruns, time overruns and lower quality. Risk management is a crucial part of PPP projects. It is important to accurately identify and evaluate the risks involved in PPP projects due to its immense application in the development of infrastructure. The present study deals with the prioritization and analysis of risks in PPP projects. 26 risk factors are categorized under 8 main risk heads identified from literature. Multiple-Criteria Decision Analysis (MCDMs) techniques like Analytical Hierarchy Process (AHP), Decision Making Trial and Evaluation Laboratory (DEMATEL) and Failure Mode and Effect Analysis (FMEA) are utilized for prioritizing, finding the stakeholder perception of the risk factors and determining the interrelationship between the main risk heads. The eight main risk heads identified are financial, legal, political, economic, operation and maintenance, construction, social and relationship risks. Social risk is identified as the most significant risk in all basis. Risk remedial measures are also identified to mitigate the risks in PPP projects. Relative Importance Index (RII) is used to prioritize them. Finally, risk factors are modelled in Partial Least Square Structural Equation Modelling (PLS-SEM) to find their impact on PPP project performance. The study concluded that social, legal, financial and construction risks have significant negative impact on project performance. Effect of social and legal risks on economic risk and political risk on financial risk are also found significant.