Study On Risk Management Of Lihe-Ceke Joint-Venture Railway

Since the reformation and open-door to outside four decades ago, China's economy has been developing rapidly. The rapid economic development called for a good railway system. Although the railway system has made great achievements, the railway system cannot meet the needs of economic development and is the "bottleneck" that constraints the economic development. How to accelerate the pace of railway construction is a key issue that both the central and local governments should address urgently. Traditionally, China's railway projects are invested by fiscal budgets through the Ministry of Railways, and are operated by Railway Bureaus after their completion. With the growing demand resulting from the national economy, fiscal budgets alone cannot meet all the capital investment required. In this case, it is very important to study how to tap non-state capital investment in railway construction so as to complement the shortage of fiscal budgets.The construction of railway projects is exposed to various risks due to its huge amount of capital investment, long payback periods, sunken capital if failed, and so on. Moreover, as a developing country, China's legal systems and market systems are imperfect, and there are changes in policies, regulations and laws. As a result, it will take great risk to invest railway projects in China.Project risk management is a key part of Project Management Body of Knowledge. It attracts the attention of all the project participants. Unlike ordinary projects, railway projects built by a public-private joint venture are exposed to more risks: there are many stakeholders, and risk factors are complex. It is considered that project risk management is the key to the success of the project.Therefore, this thesis first learned lessons from other joint venture railway projects through literature reviews, case studies, interviews and surveys in order to construct a basis for the study of risk management of Linhe-Ceke Joint-Venture Railway project. And then the thesis analyzed risks of the railway project, evaluated the impact of risks identified, and proposed risk management strategies and measures for key risks. Finally, risk exposure of non-state capital investment was analyzed in-depth in order to allocate risk between project participants optimistically. Measures for controlling risks are proposed to maintain cash flows so that both investors and project owners are mutually benefited from the project. Findings provide a win-win model for tapping non-state capital investment in railway projects to solve the shortage of funds.