Updated Risk Allocation Tool to drive success of PPP projects
Governments around the globe continue to rely on private participation in infrastructure and public-private partnerships (PPPs) to address their infrastructure needs. The allocation and ongoing management of project risk is critical to the success of any PPP transaction and determines whether a PPP project will satisfy the needs of the government, achieve value for money for the public and be financially viable for the private sector.
In light of the potential for PPPs to contribute to a reduction of the $15 trillion infrastructure investment gap[i], the Global Infrastructure Hub (GI Hub) revamped its PPP Risk Allocation Tool with its updated PPP Risk Allocation Tool 2019 Edition.
The updates are aimed at providing more in-depth guidance, particularly around emerging challenges, such as increasing climate change risks and social scrutiny. The 2019 edition was informed by GI Hub workshops in Istanbul in November 2018, Singapore in April 2019 and additional key contributions were received from the World Bank Group, European PPP Expertise Centre and the Asian Development Bank.
The updated tool contains a set of annotated risk allocation matrices for PPP transactions across 18 types of projects including both economic infrastructure (e.g. transport, energy, telecommunications and water projects) and social infrastructure (e.g. social housing, school and hospital projects). It also details risk mitigation measures available and identifies potential sources of government support.
The PPP Risk Allocation Tool provides guidance to government infrastructure specialists to better assess potential infrastructure investment risk by identifying how risk allocation varies across different markets, depending on factors such as the level of market maturity and the domestic legal system.
Users can search the interactive tool by project and risk types, find guidance that suits their specific needs and easily compare risks of different project types.
The GI Hub engaged global law firm Allen & Overy to prepare the 2019 edition which builds on the initial 2016 edition developed by Norton Rose Fulbright. The updates were developed in close collaboration with the World Bank Group to ensure it complemented the World Bank’s Guidance on PPP Contractual Provisions 2019 Edition.