Date of Award
Alternative Financing and Procurement (AFP), Design-Build-Finance-Operate-Maintain (DBFOM), Private Financing Initiative (PFI), Project Risk Management (PRM), Public-Private Partnership (P3), Risk Mitigation Alternative (RMA)
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Public-private partnership (P3) procurement has grown into an internationally acclaimed means of achieving value for money while procuring public infrastructure projects. Unlike conventional infrastructure procurement models, P3s transfer a considerable amount of project risk away from the public sector to the private sector. During a long, methodical procurement phase, public and private partners reach a final risk allocation agreement over forecasted risks regarding a project’s potential design, build, finance, operation, and maintenance. This thesis begins with exploring the P3 procurement phase, highlighting relevant project actors and stages leading up to the signing of a final contract. The concepts of risk and project risk management are studied under the assumption that P3 project partners operate under a principal-agent relationship, where public authorities are tasked with aligning private partner motivations with their own motivations through contractual incentives. A core literature database provides 54 identified P3 project risks along with their suggested sectorial allocations. Exactly half – 27 – of these risks are deemed contentious because they are not unanimously allocated to a given sector within the database. These 27 contentious P3 project risks were subjected to an expert questionnaire asking Canadian practitioners to allocate them to a preferred sector based on a five-point semantic differential scale. The respondent pool was equally comprised of public and private sector practitioners from an array of specialized occupations relevant to P3 project risk management. Expert input was subjected to various quantitative methods that measured: (i) levels of agreement within sectors over risk allocation preferences, (ii) levels of agreement between sectors over risk allocation preferences, and (iii) overall risk allocation preferences based on the five-point semantic differential scale. It is found that: (i) both sectors enjoy strong levels of agreement over risk allocation preferences, (ii) 6 of 27 risks show statistically significant levels of disagreement between sectors over their allocation preferences, and (iii) there are risks that should generally be borne by either the public or private sector pending individual P3 project circumstances. The research findings should enable scholars and practitioners alike to establish more concrete conceptions of where P3 project risks should generally be allocated pending circumstantial conditions unique to different P3 projects. Where risks cannot be broadly allocated due to circumstantial conditions, a review of the study’s final risk allocation model provides contextual considerations that influence their allocation. Concluding sections acknowledge this study’s methodological and theoretical limitations. Recommendations for future studies to consider, both methodological and theoretical, are provided.
Dunn, James, "Project Risk Management in Public-Private Partnerships: An Equitable Risk Allocation Decision Model based on Psychometrics" (2017). Electronic Theses and Dissertations. 6603.