Second International Conference on Advances in Social Science, Economics and Management Study - SEM 2014
Author(s) : ABDEL-HALIM BOUSSABAINE , SALEH ALZAHRANI
The vast majority of Public Private Partnership (PPP) are developed based on the rationale that the public authority commissions the design, construction, operation, maintenance, and financing of a public infrastructure project from a private consortium within a single contractual framework. PPP project risks typically include the development and construction of a new asset as well as its operation for several decades. Probably the most serious consequences of risks during the construction period are cost and time overruns. These events are among the most widely used scenarios in value for money analysis risks. The sources of risk change over the life cycle of a PPP project. Construction and development risks in infrastructure projects are, in some cases, very significant. Projects that are related to IT, rehabilitation/refurbishments and complex agencies’ interaction are thought to carry more substantial risks than other assets. Work by Standard and Poor’s has classified PPP construction risks according to asset types, which suggests at least that funding bodies recognise the existence of an association between construction risks and PPP asset types. In traditional procurement, the public sector normally has to cover all cost distress from these risks. At least there is ample evidence to suggest that cost distress is a norm in some of the projects that are delivered under the public procurement systems. This paper examines the main reasons behind development and construction period risk manifestation and distress. The paper will demonstrate how to map out risks into PPP projects construction cost units.