It is important to manage the multifaceted risks associated with international construction projects, in particular in developing countries, not only to secure work but also to make profit. This research seeks to identify and evaluate these risks and their effective mitigation measures and to develop a risk management framework which the international investors/developers/contractors can adopt when contracting construction work in developing countries. A survey was conducted and twenty‐eight critical risks were identified, categorized into three (country, market and project) hierarchical levels and their criticality evaluated and ranked. For each of the identified risks, practical mitigation measures have also been proposed and evaluated. Almost all mitigation measures have been perceived by the survey respondents as effective. A risk model, named Alien Eyes' Risk Model, which shows the hierarchical levels of the risks and the influence relationship among the risks, is also proposed. Based on the findings, a qualitative risk mitigation framework was finally proposed which will benefit the risk management of construction project in developing countries.

An impressive series of content analyses of Public-Private Partnership (PPP) publications between 1998 and 2003 from four internationally renowned construction journals (including the International Journal of Project Management, the Journal of Construction Engineering and Management, the Construction Management and Economics, and the Engineering Construction and Architectural Management) was reported. Their work inspired the writers of this paper to continue from where they left it. Based on a two-stage literature review, PPP articles from 1998 to 2008 were analyzed in terms of the annual number of PPP articles published, the writers’ contribution, and the research focus in their studies. From the analysis it was found that the number of PPP publications in these journals has been increasing. This finding might imply that PPPs are becoming more important to the construction industry at large. In addition, this study also found that the U.K. researchers have published the largest number of PPP articles, fo...

It is important for the public and private sectors to establish effective risk allocation strategies for public-private partnership (PPP) projects in order to achieve a more efficient process of contract negotiation and reduce the occurrence of dispute during the concession period. This paper aims first to identify the preferred risk allocation in PPP projects of mainland China and the Hong Kong Special Administrative Region (referred to as China and Hong Kong from here onward) and then to compare these preferences to those in the U.K. and Greece by a questionnaire survey based on the same risk register. The results in China and Hong Kong show that the public sector preferred to retain most political, legal, and social risks, and share most microlevel risks and force majeure risk; while the majority of mesolevel risks were preferred to be allocated to the private sector. The comparative analyses of risk allocation preference among these four countries/jurisdictions indicate that the public sector in the U...

This article attempts to compare the preferred and actual risk allocation and then to evaluate the impact of risk misallocation (if any) on project performance. The results show a significantly negative relationship between project performance and risk misallocation. The smaller the degree of risk misallocation was, the more successful the project would be. One group of three risks (including “Corruption,” “Government's intervention,” and “Government's reliability”) and the other group of three risks (including “Approval and permit,” “Immature juristic system,” and “Land acquisition”) were found to contribute considerably to the prediction of project performance. This article provides information on the impact of risk misallocation on project performance in China's public–private partnership (PPP) projects. To enter and perform well in China's PPP market, private firms should pay particular attention to the identified risks.

Public–private partnerships (PPPs) have been utilized worldwide as an effective tool to fill the gap between a surging demand for infrastructure and a shrinking public fiscal budget. However, the successful implementations of large PPP projects are hindered by huge capital investments and high uncertainties. To solve this challenge, hosting governments may choose to offer public funds, including public equity and government subsidy, to the financing of special purpose vehicle (SPV) on the purpose of strengthening projects’ financial viability and increasing transparency of SPV’s operation. The involvement of public funds reforms the traditional equity capital structure and needs to be carefully studied. To facilitate relevant decision-making for both private and public sector, this research developed a genetic algorithm based model to simultaneously optimize private equity, public equity and government subsidy for PPP projects. The effects of risk factors are incorporated by utilizing Monte Carlo simulation. The Beijing No. 4 Metro Line project is presented to demonstrate the applicability of the model. Optimization results show that the proposed model achieves balance between satisfying project’s financial viability and saving public funds. And it will significantly facilitate both private and public sector in determining an optimal equity capital structure which are involved with public funds.

The allocation and management of revenue risk is a critical issue in the development of public-private partnership (PPP) concessions for new roadways. In order to attract financing, governments often provide fiscal support ranging from availability payments (APs) to minimum revenue guarantees (MRGs) to flexible-term contracts when demand and thus the financial viability of a project are uncertain. However, a government’s inability to evaluate these alternatives can lead to either surplus fiscal support ex ante or unexpected liabilities ex post. The authors propose a quantitative methodology to guide governments’ decisions when choosing among the fiscal support mechanisms. Based on a comprehensive literature review, we establish a two-dimensional framework to evaluate fiscal support alternatives by comparing their effects on the financing costs of a project and the risk retained by a procuring government. We use a stochastic revenue projection model to quantify the revenue risk and the framework’s measurable indicators. We apply our framework using a hypothetical case study. The case results demonstrate that flexible-term contracts do little to increase project leverage, MRGs are most applicable to projects with significant revenue volatility, and APs are more appropriate in projects with lower revenue volatility. The framework allows governments to make more informed decisions about revenue risk sharing mechanisms to improve public budgeting and deficit control.