Research On The Risk Of Urban Infrastructure On Public-private Partnership Model

Urban infrastructure is one of the essential factors in city construction, economicdevelopment and city development. Also, it is a prerequisite factor which determinesthe sustainable development of city. Various kinds of investing channels for urbaninfrastructure, which have been gradually formed and enhanced since reform andopen policy, guarantee rapid developments of urban infrastructure projects.PPP(Public-Private Partnership) model can improve the speed the developmentof urban infrastructure,speed up operating infrastructure, reduce financial pressure,reduce the cost of lifecycle, improve efficiency of management, share the risk moreeffectively. Because inequality exists and deadline of project is usually urgent,contradictions in taking responsibility of risks between government and companyoccur. In process of urban infrastructure, there can be great possibility that PPPproject suspends because one of them can not take responsibility of risks as what theyagreed on at first. The work of construction of urban infrastructure in China is toughand we are still at the beginning of management of risk in PPP model projects. Themanagement of risks in projects is not totally standard in urban infrastructure projects.Enhancing the research of management of risks can improve the level of managementof PPP model projects, improve profits of projects, which is meaningful forpopularizing PPP model in urban infrastructure in China.Risk management is the action using reasonable and scientific methods to reducerisks to the reasonable minimum according to the project nature, project environment,the quality of project manager,project targets and other conditions. The essence ofthis process for project manager is to measure the cost of reducing risks and theprofits of project and to take measures. The goal of it is not to achieve extra profit butto obtain the maximum security using the minimum cost. PPP model, whose conceptmeans a lot, is not only a certain model to raise funds for a project but also a totalname for raising funds for urban infrastructure by governmental department and private enterprise. It is very complex and all parts share different kinds and amount ofrisks. Based on abundant documents, this article analyzes the process of PPP model,investment structure, applicability, procedure and the relationship between all partners.By figuring out important risk factors of failures in PPP model of urbaninfrastructure in the past, this article find out that there are34main risks in PPPproject They can be distinguished into three levels:13risks of nation level,7risks ofmarket level,14risks of project level.Through two rounds survey of Delphi Technique, this article offers tendency of34risk factors. The result shows that, among34risk factors,11factors tend to betaken by government,13factors tend to be taken by project partners,10factors tendto be taken by private investors. Government should be responsible for risk factorswhich tend to be taken by government, or its power is much bigger than privateinvestors; Yet, there is no certain parts or even no parts should be responsible for the13risk factors which tend to be taken by project partners, including whethergovernment and public object, the condition of climate, the risk of force-major,environmental risk and so on;10risk factors, taken by private investors, mainly referto investment of project, the management of construction and business in which thepower of private investors is obviously bigger than that of government. Though thereis no certain parts should take responsibility for investment risk, the result show that ittends to be taken by private investors, which is main reason for PPP model.This article builds an evaluation system for risks in PPP model of urbaninfrastructure on basis of some instantiation. It provides us with appropriate methodsto avoid risks by the risk evaluation model built by Extension Evaluation Method andAnalytic Hierarchy Process. This offers all parts in PPP model of urban infrastructureoperable methods to analyze and evaluate risks efficiently and thereby imply the riskmanagement process effectively.