Risk Pricing Strategies for Public–Private Partnership Projects

This book sets out the key principle strategies involved in risk pricing of PPP projects in a clear and accessible way and provides the reader with fundamental principles of risk pricing theories and enveloping processes. Each chapter treats specific aspects of risk in PPP projects, including: PPP process map Project risk management strategies Project risk measurement and modelling Strategies for risk pricing Risk pricing at each of the project life cycle stages Pricing project finance risks The first two aspects provide the required background knowledge with which to conceptualise the main elements of risk management in the context of PPP procurement systems. Project risk measurement in then introduced with modelling methods that might be applicable in the process of risk pricing PPP projects. This is followed by a comprehensive introduction to an innovative framework for risk pricing of PPP projects. Finally, the book addressed risk pricing at each stage of PPP projects development and operation. A thematic structure is used, dealing with all the important risk pricing issues, and relevant real–world situations are analysed through case study examples.

Preface Chapter 1: Mapping of the PPP Processes and Concepts 1.1 Introduction 1.2 Rationale for PPPs 1.3 key stages in the PFI/PPP procurement process 1.4 Financing PPP projects 1.5 Rationale for value for money and risk transfer in PPPs 1.6 PPPs project structure 1.7 Payment mechanisms in PPPs 1.8 PPP emerging issues 1.9 Summary References Chapter 2: Uncertainty in Pricing Risk 2.1 Introduction 2.2 Concepts of risk and uncertainty 2.3 Relationship between risk and uncertainty 2.4 Attitudes to risk and uncertainty 2.5 Variability and uncertainty 2.6 Quantifying uncertainties in risk pricing 2.7 Taxonomies of uncertainty 2.8 Pricing risk under uncertainty 2.9 Summary References  Chapter 3: Bias in Risk Pricing  3.1 Introduction 3.2 Risk bias theories 3.3 Sources of bias 3.4 Managing bias 3.5 Summary References  Chapter 4: Management Strategies for Risk Pricing 4.1 Introduction 4.2 Principles of risk pricing strategies 4.3 Risk pricing management strategies 4.4 Value gain and loss from risk retention 4.5 Risk retention analysis 4.6 Resources capability for risk control 4.7 Summary References  Chapter 5: Framework for Pricing PPP Risks 5.1 Introduction 5.2 Framework for pricing construction risks 5.3 Strategies for risks costing 5.4 Risk pricing in PPP transaction 5.5 The choice of the discount rate in risk costing   5.6 Summary References  Chapter 6: Risk Price Measurement and Modelling 6.1  Introduction 6.2  quantifying risks 6.3  Probability distributions for risk costing quantification 6.4  Risk analysis methods    6.5  Selecting a risk modelling technique 6.6 How to build a risk pricing BN model 6.7  Building risk price models using Monte Carlo simulation 6.8  Summary References  Chapter 7: Risk Networks in PPP Contracts 7.1 Introduction 7.2 Risk systems in PPP contracts 7.3 Modelling the parameter of the risk allocation network 7.4 The structure of risk allocation networks in PPP contracts  7.5 Modelling the structure of the risk allocation network 7.6 The characteristics  of a typical PPP risk allocation network 7.7 Key observations 7.8 Summary 7.9 References  Chapter 8: Pricing Development and Constructions Risks 8.1 Introduction 8.2 Overview of development and constructions risks 8.3 Strategies for mitigating and managing construction risks 8.4 Pricing development and construction risks 8.5 Summary References  Chapter 9: Pricing operational risks 9.1 Introduction 9.2 Overview of operational risks 9.3 Strategies for mitigating and managing operational risks 9.4 Pricing operational risks  9.5 Operational risks pricing example 9.6 Summary References  Chapter 10: Financial Risk Assessment in PPP Projects 10.1 Introduction 10.2 Emergence of  risks in project finance 10.3 Project finance risk network concepts 10.4 Project Finance cash flow risk network 10.5 Project finance risk assessment 10.6 Summary References  Index

Halim Boussabaine, School of Architecture, University of Liverpool