24 May 2019

Now Closed - FOR CONSULTATION – PPP Risk Allocation Tool 2019 Edition

24 May 2019

The PPP Risk Allocation Tool 2019 Edition is now open for consultation. Feedback provided through this process will inform the final version which will be released later this year. 

Please send any suggestions, comments or questions to Jack Handford at jack.handford@gihub.org by 20 June 2019.

Background 

This new guidance tool has been developed by the Global Infrastructure Hub (GI Hub) in collaboration with Allen & Overy, to update and expand the original PPP Risk Allocation Tool released by the GI Hub in 2016. Some areas of the guidance are still in the process of being developed and will be subject to change. 

Purpose 

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 (i.e. whether investors will be willing to commit financial resources to the project).

The PPP Risk Allocation Tool 2019 Edition will contain matrices showing the allocation of risks as between the public and private partners in typical PPP transactions for 19 different types of projects, including both economic infrastructure (such as transport, energy, telecommunications and water projects) and social infrastructure (such as school and hospital projects). The guidance tool comprises four volumes: Volume 1 (Transport), Volume 2 (Social Infrastructure), Volume 3 (Energy, Communications and Industrial Parks) and 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 will also describe alternative arrangements for countries with differing levels of PPP market maturity. 

The PPP Risk Allocation Tool 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 also provide value for money.

The guidance tool is closely aligned with the World Bank’s Guidance on PPP Contractual Provisions 2019 Edition, which is also being developed with the assistance of Allen & Overy.

Consultation details 

Project lead: Jack Handford, Manager, Leading Practices, Global Infrastructure Hub

Contact email: jack.handford@gihub.org 

Consultation dates: 23 May to 20 June 2019 Now Closed

While all comments received will be reviewed and documented, they may not be incorporated into the final version. The Global Infrastructure Hub will release a table after the consultation process that anonymously details all submissions.