Risk Allocation For PPP Project: A Comparative Analysis Between Developed And Developing Countries

Recently, PPP is getting wide application in a global context, not only for itseffectively solving the governments’ difficulty in shortage of funds, but alsodepending on its core idea-risk allocation. Proper risk allocation plays a vital role inthe success of a PPP project. So, a series of related research is carried at home andabroad. However, the optimal risk allocation schemes given by researchers have somedifferences in different countries. Therefore, this paper takes PPP project riskallocation between developed countries and developing countries as research objectand focuses on their similarities and differences, helping private investors assesse theproper risk they should bear in different countries, improving the scientific andeffective of private investors’ bidding decisions,what’s more,giving guidance fordeveloping countries to optimize their institutional environment.Firstly, give a definition of PPP and the Stakeholders through the literaturereview. Then, engineering project risk and risk allocation of PPP project are definedand characterized. On which base, it’s introduced of the overall process of PPP project,to provide data for the next phase of the study.Secondly, pick the target literature in literature retrieval and identify45riskfactors, divide them into subject risk, object risk and environmental risk. Also, wefocus on the differences of the three groups of risks between developed countries anddeveloping countries. It’s concluded that the differences are low for subject risk andobject risk, while high for environmental risk. It’s also found the government tends totransfer more object risk to private sector than the other two.Thirdly, we recognize the low-allocation-differences risks and excavate theircommon characteristics. Then, we pay attention to the risk factors ofhigh-allocation-differences and investigate the reasons of differences generating. Onthis base, we analyze national environmental system ’effects on risk-sharing anddetermine12factors. Also, we explore the factor’ influence on the ratio that thegovernment transfer risk to private sector and find that the better environmentalsystem, the higher transfer-ratio.Finally, this paper presents relevant suggestions to developing country’governments, including strengthen PPP legal system, make government image honest, strengthen supervision, pay attention to personnel training and so on. All these aboveare to help developing country improve the ability of the government and optimize theinstitutional environment.