Critical risk management strategies for the operation of public–private partnerships: a vulnerability perspective of infrastructure projects
Engineering, Construction and Architectural Management
ISSN: 0969-9988
Article publication date: 14 May 2024
Abstract
Purpose
The success of public–private partnership (PPP) projects is highly correlated to the successful management of risks encountered during the operation phase. PPP projects are especially exposed to risk due to the long operation period over which revenues need to be generated to recoup substantial initial investment and operational running costs. Despite the critical impact of risk exposure, limited research has been specifically undertaken on the matter of operational risk management. This study seeks to address this oversight by identifying and evaluating operational risk management strategies for PPPs.
Design/methodology/approach
Vulnerability theory is the theoretical lens used, with context drawn from Chinese PPP projects. Based on the data collected from expert interviews and questionnaires, 28 operational risk management strategies are identified. A fuzzy synthetic method is employed to analyze the effectiveness of the 28 strategies.
Findings
The findings reveal that providing an exit mechanism clause into the contract, establishing a comprehensive performance evaluation mechanism and developing a clear compensation mechanism are the top three effective strategies. This study also reveals that risk mitigation approaches that reduce vulnerability prove more effective than attempts to reduce external threats. Specifically, strategies aimed at managing contract, political, technical and financial risk are the most effective.
Originality/value
The findings of this study extend current knowledge regarding the risk management of PPP projects. They also offer a reference by which practitioners may select effective operational risk management pathways and thereby, galvanize the sustainable development of PPPs.
Keywords
Acknowledgements
The writers would like to thank the respondents from both industry and academia who have assisted this study by consenting to pilot the work and then, by completing the survey questionnaires used in this paper. The writers also thank the reviewers for their helpful comments and insights. This work was funded by the National Natural Science Foundation of China [No. 72201185, 2022].
Citation
Jiang, W., Jiang, J., Martek, I. and Jiang, W. (2024), "Critical risk management strategies for the operation of public–private partnerships: a vulnerability perspective of infrastructure projects", Engineering, Construction and Architectural Management, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/ECAM-12-2023-1292
Publisher
:Emerald Publishing Limited
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