Risk Pricing Strategies for Public-Private Partnership Projects

The complexity of public-private partnership project procurementrequires an effective process for pricing, managing and appropriateallocation of risks. The level at which risk is priced and themagnitude of risks transferred to the private sector will have asignificant impact on the cost of the PPP deals as well as on thevalue for money analysis and on the section of the optimuminvestment options.

The construction industry tends to concentrate on theeffectiveness of risk management strategies and to some extentignores the price of risk and its impact on whole life cost ofbuilding assets. There is a pressing need for a universal frameworkfor the determination of fair value of risks throughout the PPPprocurement processes.

Risk Pricing Strategies for Public-Private PartnershipProjects addresses the issues of risk pricing and demonstratesthe use of a coherent strategy to arrive at a fair risk price. Thefocus of the book is on providing risk pricing strategies tomaximise return on risk retention and allocation in the procurementof PPP projects. With its up-to-date coverage of the latestdevelopments in risk pricing and comprehensive treatment of themethodologies involved in designing and building risk pricingstrategies, 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; Riskpricing measurement and modelling; Risk pricing at each of theproject life cycle stages - and deals with all the importantrisk pricing issues, using relevant real-world situations throughcase study examples. It explains how the theory and strategies ofrisk pricing can be successfully applied to real PPP projects andreflects the broad understanding required by today's projectrisk analysts, in their new and important role in PPP contractmanagement.