Impact of most correlated risk factors into actual construction price in PPP projects

Abstract

The basis of the formulation of most of the Public-Private Partnerships (PPP) is the reasoning that the public authority authorizes the design, construction, operation, maintenance, and funding of a public infrastructure project from a private group through a single contractual agreement. In general, PPP project risks consist of developing and building a new asset and ensuring that it remains functional for many decades. Exceeding the cost and time limits is possibly the most severe implication of risks throughout the construction period. Such events are the most extensively discussed situations in value for money risk analysis. There are changes in the sources of risk across the life cycle of a PPP project. In certain situations, the importance of construction and development risks in infrastructure projects is quite high. It is believed that projects pertaining to IT, rehabilitation/refurbishments, and complex agencies' interaction have considerably greater risks compared to other assets. PPP construction risks have been categorized by Standard and Poor in accordance with the kind of assets, indicating that the funding bodies acknowledge the presence of a relationship between construction risks and kinds of PPP assets. Usually, all price distress has to be covered by the public sector from these risks in conventional procurement. There is sufficient evidence to imply that in a few of the projects that are completed under the public procurement systems, public distress is normal. The effect of risk factors on the precise construction price in PPP projects will be determined in this paper. In addition, it will present the correlation between the risk factors and the precise construction price units in PPP projects.