The complexity of public-private partnership project procurement requires an effective process for pricing, managing and appropriate allocation of risks. The level at which risk is priced and the magnitude of risks transferred to the private sector will have a significant impact on the cost of the PPP deals as well as on the value for money analysis and on the section of the optimum investment options.
The construction industry tends to concentrate on the effectiveness of risk management strategies and to some extent ignores the price of risk and its impact on whole life cost of building assets. There is a pressing need for a universal framework for the determination of fair value of risks throughout the PPP procurement processes.
Risk Pricing Strategies for Public-Private Partnership Projects addresses the issues of risk pricing and demonstrates the use of a coherent strategy to arrive at a fair risk price. The focus of the book is on providing risk pricing strategies to maximise return on risk retention and allocation in the procurement of PPP projects. With its up-to-date coverage of the latest developments in risk pricing and comprehensive treatment of the methodologies involved in designing and building risk pricing strategies, the book offers a simple model for pricing risks.
The book follows a thematic structure: PPP processes map; Risk, uncertainty and bias; Risk pricing management strategies; Risk pricing measurement and modelling; Risk pricing at each of the project life cycle stages – and deals with all the important risk pricing issues, using relevant real-world situations through case study examples. It explains how the theory and strategies of risk pricing can be successfully applied to real PPP projects and reflects the broad understanding required by today’s project risk analysts, in their new and important role in PPP contract management.
Contents
Chapter 1 Mapping of the PPP’s Processes and Concepts
- 1.1 Introduction
- 1.2 Rationale for PPPs
- 1.3 key stages in the PPP procurement process
- 1.4 Financing PPP projects
- 1.5 Rationale for value for money and risk transfer in PPPs
- 1.6 PPP project structure
- 1.7 Payment mechanisms in PPPs
- 1.8 PPP emerging issues
- 1.9 Summary
- References
Chapter 2 Uncertainty in Pricing Risk
- 2.1 Introduction
- 2.2 Concepts of Risk and uncertainty
- 2.3 Relationship between risk and uncertainty
- 2.4 Attitudes to risk and uncertainty
- 2.5 Variability and uncertainty
- 2.6 Quantifying uncertainties in risk pricing
- 2.7 Taxonomies of uncertainty
- 2.8 Pricing risk under uncertainty
Chapter 3 Bias in Risk Pricing
- 3.1 Introduction
- 3.2 Risk bias theories
- 3.3 Sources of bias
- 3.4 Managing bias
Chapter 4 Management Strategies for Risk Pricing
- 4.1 Introduction
- 4.2 Principles of risk pricing strategies
- 4.3 Risk pricing management strategies
- 4.4 Value gain and loss from risk retention
- 4.5 Risk retention analysis
- 4.6 Resources capability for risk control
Chapter 5 Framework for Pricing PPP Risks
- 5.1 Introduction
- 5.2 Framework for pricing construction risks
- 5.3 Strategies for risk costing
- 5.4 Risk pricing in PPP transaction
- 5.5 The choice of the discount rate in risk costing
Chapter 6 Risk Measurement and Modelling
- 6.1 Introduction
- 6.2 Quantifying risks
- 6.3 Probability distributions for risk costing quantification
- 6.4 Risk analysis Methods
- 6.5 Selecting a risk analysis technique
- 6.6 How to build a risk pricing BN model
- 6.7 Building risk price models using Monte Carlo simulation
Chapter 7 Risk Allocation Networks in PPP Contracts
- 7.1 Introduction
- 7.2 Risk systems in PPP contracts
- 7.3 Modelling the parameters of the risk allocation network
- 7.4 The structure of risk allocation networks in PPP contracts
- 7.5 Modelling the structure of the risk allocation network
- 7.6 The characteristics of a typical PPP risk allocation network
- 7.7 Key observations
Chapter 8 Pricing Development and Construction Risks
- 8.1 Introduction
- 8.2 Overview of development and construction risks
- 8.3 Strategies for mitigating and managing development and construction risks
- 8.4 Pricing development and construction risks
Chapter 9 Pricing Operational Risks
- 9.1 Introduction
- 9.2 Overview of operational risks
- 9.3 Strategies for mitigating and managing operational risks
- 9.4 Pricing operational risks
- 9.5 Operational risks pricing example
Chapter 10 Financial Risk Assessment in PPP Projects
- 10.1 Introduction
- 10.2 Emergence of risks in project finance
- 10.3 Risk network concepts
- 10.4 Project finance cash Flow risk network
- 10.5 Assessment results
- 10.6 Summary
- Index
About the Authors
- Halim Boussabaine, School of Architecture, University of Liverpool.
Book Details
- Hardcover: 278 pages
- Publisher: Wiley-Blackwell; 1 edition (December 16, 2013)
- Language: English
- ISBN-10: 1405177926
- ISBN-13: 978-1405177924
- Product Dimensions: 9.7 x 6.8 x 0.9 inches
- List Price: $105.00