Risk Pricing Strategies for Public-Private Partnership Projects

by Boussabaine, Abdelhalim

• ISBN13: 9781405177924
• ISBN10: 1405177926
• Edition: 1st
• Format: Hardcover
• Copyright: 2013-12-16
• Publisher: Wiley-Blackwell

Summary

Risk Pricing Strategies for Public-Private Partnership Projects

Innovation in the Built Environment

The complexity of public–private partnership (PPP) project procurement requires an effective process for pricing, managing and appropriate allocation of risks. The level at which risk is priced and the magnitude of risks transferred to the private sector will have a significant impact on the cost of the PPP deals as well as on the value for money analysis and on the selection of the optimum investment options.

The construction industry tends to concentrate on the effectiveness of risk management strategies and to some extent ignores the price of risk and its impact on whole life cost of building assets. There is a pressing need for a universal framework for the determination of fair value of risks throughout the PPP procurement processes.

Risk Pricing Strategies for Public–Private Partnership Projects addresses the issues of risk pricing and demonstrates the use of a coherent strategy to arrive at a fair risk price. The focus of the book is on providing risk pricing strategies to maximise return on risk retention and allocation in the procurement of PPP projects. With its up-to-date coverage of the latest developments in risk pricing, and comprehensive treatment of the methodologies involved in designing and building risk pricing strategies, the book offers a simple model for pricing risks.

The book follows a thematic structure: PPP processes map; risk, uncertainty and bias; risk pricing management strategies; risk pricing measurement and modelling; risk pricing at each of the project life-cycle stages – and deals with all the important risk pricing issues, using relevant real-world situations through case study examples. It explains how the theory and strategies of risk pricing can be successfully applied to real PPP projects and reflects the broad understanding required by today’s project risk analysts, in their new and important role in PPP contract management.

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Author Biography

Halim Boussabaine, School of Architecture, University of Liverpool

Table of Contents

Contents
Chapter 1: Mapping of the PPP process.

1.1 Introduction.

1.2 key stages in the PFI/PPP procurement process.

1.3 PPP as a driver for risk transfer for the private sector.

1.4 PPP as a driver for value for money.

1.5 Risk and value for money.

1.7 Summary.

1.8 References.

Chapter 2: Project risk management strategies.

2.1 Introduction.

2.1 Types of project risk.

2.3 Project life cycle risk management plan.

2.4 The project risk management process.

2.5 Strategies for project risk management.

2.6 Risk governance.

2.7 Summary.

2.8 References.

Chapter 3: Risk management in PPP projects.

3.1 Introduction.

3.2 An integrated framework for risk management of PPP projects.

3.3 Design risk management.

3.4 Construction Risk Management.

3.5 Operation risk management.

3.6 Project finance risk management.

3.7 Summary.

3.8 References.

Chapter 4: Project risk measurement and modelling.

4.1 Introduction.

4.2 quantifying risks.

4.3 Risk modelling methods.

4.4 Selecting a risk modelling technique.

4.5 Building risk models.

4.6 Assessing the accuracy of risk models.

6.7 Summary.

6.8 References.

Chapter 5: Strategies for risk pricing.

5.1 Introduction.

5.2 Principles of risk pricing strategies.

5.3 Risk pricing management strategies.

5.4 Value gain from risk retention.

5.5 Value loss from risk retention.

5.6 Optimum return on risk retention.

5.7 Cost of risk control.

5.8 Resources capability for risk control.

5.9 Summary.

5.10 References.

Chapter 6: Pricing design risks.

6.1 Introduction.

6.2 Overview of design risks.

6.3 Strategies for mitigating and managing design risks.

6.4 Pricing design risks.

6.5 Design risks pricing example.

6.6 Summary.

6.7 References.

Chapter 7: Pricing construction risks.

7.1 Introduction.

7.2 Overview of construction risks.

7.3 Strategies for mitigating and managing construction risks.

7.4 Pricing construction risks.

7.5 Construction risks pricing example.

7.6 Summary.

7.7 References.

Chapter 8: Pricing operational risks.

8.1 Introduction.

8.2 Overview of operational risks.

8.3 Strategies for mitigating and managing operational design risks.

8.4 Pricing operational risks.

8.5 Operational risks pricing example.

8.6 Summary.

8.7 References.

Chapter 9: Pricing project finance risks.

9.1 Introduction.

9.2 Overview of project finance.

9.3 Project finance risk map.

9.4 Strategies for pricing project finance risks.

9.5 Project finance risk price modelling.

9.6 Summary.

9.7 References