Risk Allocation Mechanism for Public-Private Partnership (PPP) Projects

Risk allocation in public-private partnership (PPP) projects is currently claimed as capability driven. While lacking theoretical support, the claim is often ´violated´ by current industrial practice. There is thus a need for formal mechanisms to interpret why a particular risk is retained by government in one project while transferred to private partners in another. Moreover, it could be utilized to steer the risk allocation strategy by controlling certain critical determinants identified in the study. Study limitations and future research directions have also been set out. In light of these, this paper proposes a research framework for developing a quantitative risk allocation mechanism to assist the public and private sectors to reach a reasonable and equitable trade-off in an effective manner.