30 June 2019

PPP Risk Allocation Tool 2019 Edition

30 June 2019

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The refreshed PPP Risk Allocation Tool 2019 has been developed by the Global Infrastructure Hub (GI Hub) and Allen & Overy to update and expand the original PPP Risk Allocation Tool released by the GI Hub in 2016.

Background

Risk allocation is at the centre of every PPP transaction, and a deep understanding of the risk allocation arrangements is a precondition to the drafting of every successful PPP contract. The appropriate application of risk allocation principles is what determines whether a PPP project will satisfy the needs of the government, achieve value for money and be financially viable for the private sector.
The PPP Risk Allocation Tool 2019 is closely aligned with the World Bank’s Guidance on PPP Contractual Provisions 2019 Edition, which was also developed with the assistance of Allen & Overy.

Purpose

The 2019 Edition has been designed to assist both the public and private sector in appropriately allocating risks across a variety of infrastructure projects with an aim to improving the way PPP projects are delivered, leading to more sustainable and better quality infrastructure that provides value for money and addresses the needs of the public.

Content

The 2019 Edition contains matrices showing the allocation of risks as between the public and private partners in typical PPP transactions for 18 different types of projects, including both economic infrastructure (transport, energy, telecommunications, water and waste projects) and social infrastructure (eg: school and hospital projects).

It comprises of four volumes:

  1. Volume 1 Transport
  2. Volume 2 Social Infrastructure
  3. Volume 3 Energy, Communications and Industrial Parks
  4. Volume 4 Water and Waste.

For each project type, there is also an identification of key risk areas and a discussion of risk allocation trends. Each matrix is accompanied by annotations, explaining the rationale for the allocations, mitigative measures and possible government support arrangements. The annotations also describe alternative arrangements for countries with differing levels of PPP market maturity.

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