Professional Documents
Culture Documents
BY
KAMALUDDIN BISWAS
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ASSIGNMENT
At the risk identification stage, sources of risks, events that will be affected by exposure to
risks and consequences of risks are defined. Based on expert opinions, intuition, market
research, collected data and past records, a "checklist" of project risks is prepared. Risk
identification is the most important stage of a risk management system, as an identified risk
turns out to be a management problem and a poorly defined risk structure will breed more
risks. Then, risks on the checklist are classified according to their impacts, origins or
consequences, to facilitate risk analysis.
Response management is the last step in a risk management framework at which risk
mitigation strategies are made clear upon discussion of analysis results. Depending on the
attitude of decision makers and nature of the risk structure, risks can be insured, reduced by
taking necessary precautions, transferred to other parties by contractual arrangements or
retained. The clue in a successful risk management system is that, every party being involved
in the project must be conscious about the amount of retained risks by specifying the proper
counteractions and risk should be shared among the parties that could manage them in the
best possible way.
Risk is nothing more than the variables or circumstances associated with the implementation
of a specific project that has the potential to adversely affect the development of a project or
the interests of a participant, as the case may be. Risks include circumstances or situations,
the existence or occurrence of which will in all reasonable foresight result in an adverse
impact on any aspect of the implementation of the project.
Sources of Risk
Government
Contracts
Developers
Risks in a typical
Construction PPP Project
O&M
Demand
Target Market
Although risk identification and management are specific to each project, it is possible to
identify certain variables and uncertainties that are common to most infrastructure projects.
i. Revenue Risk:
Revenue risk is the uncertainty in relation to the revenue that a project would actually
generate. The uncertainty of the ‘revenue’ of an infrastructure project is because of its
public nature, which carries with it, the uncertainty in the ability and willingness of
consumers to pay for the benefits arising from the project. This risk may be mitigated to
a great extent for construction industry by assuring quality at an adequate price of the
product. The manner of managing this risk is essentially to carefully undertake a
feasibility study of the project that evaluates not only the economic demand of the
project but also the willingness to pay and the ability or credit worthiness of the main
consumer.
iv. Usage of the facility or demand for the services or commodity produced by the
facility.
This risk relates to any defect in the design of the infrastructure facility or the design
requirements stipulated for the project. This is an inherent risk in the project as it is very
difficult to conclusively ascertain that damage to the facility is actually caused due to
the defect in the design parameters or the very design itself. Generally, it is the design
contractor who is responsible for the design aspects of the project. In the event of the
design parameters being stipulated by the grantor of the concession or license, this risk
would be within the control of the grantor.
The construction risks are essentially a bundle of various individual risk factors that
adversely affect the construction of a project within the time frame and costs projected
and at the standards specified for the facility.
ii. Suitability of the land for the construction of the project facility,
v. Availability of the basic infrastructure required for the construction of the facility
such as water, electricity etc.
viii. Failure of the facility to meet the performance criteria and the standards
stipulated.
The constructions risks are generally distributed and sought to mitigate by adequately
drafted construction risks are best handled by, and are generally within the control of
the construction contractor.
iv. Operating Risk:
These risks are similar to the construction risks. They are a bundle of risks associated
with the operation of the infrastructure facility.
iii. Risks associated with the compliance of specified performance criteria, quality
and quantity,
v. Risks associated with the inability to comply with the maintenance standards and
availability of funds required for the operation and maintenance of the facility.
v. Financial Risk:
This risk is the totality of all risks to financial developments external to the project that
are not in the control of the project developers. These risks include:
The general mechanism for mitigating some of the risks constituting the overall
financial risk of the project is to include, in the security package for the lenders,
hedging facilities against exchange rate risks such as currency rate swaps, caps and
floors.
Political risks are a bundle of distinct risk that can include not only political factors but
also administrative, social and economic factors. Political risks associated with project
are closely evaluated as they are generally outside the control of the parties to the
project, other than the government to a certain extent. But even the government granting
the concerned concession rights does not have control over all the categories of political
risks. It should be kept in mind that many of the political risk arise from the possibility
of arbitrary action by the government and altering the framework on which the very
foundation of the project rests. Political risk can be:
i. Relating to the manner of investing and doing business in a particular country or
(a) Risk of political instability such as riots, revolution, terrorism, guerrilla warfare,
These are risks presented by the legal framework governing the project and include the
possibility of alteration of the concerned legal framework to the prejudice of the
implementation of the project on commercial lines.
These are risks relating to occurrence of environmental incidents during the course of
implementation of the project. These risks are generally within the control of the
construction, and the operation and maintenance consortium. This risk has increased
due to the presence of strict legal liability in relation to such environmental incidents,
which can result not only in adverse effects on the financials of a project but may also
cause a closure of any work or operations of and in relation to the facility.
These risks are regarding the events that are outside the control of any party and cannot
be reasonably prevented by the concerned party. These risks generally arise due to
causes extraneous to the project. The defining of force majeure events, these include:
Natural force majeure events comprise of all events that can be attributed to natural
conditions or under act of god such as earthquakes, floods cyclones, and typhoons.
These risks should be shared equally among the parties.
Direct political force majeure events, which are attributable to political events that are
specific to project itself such as expropriation, nationalization.
Indirect political force majeure events are events that have their origins in political
events but are not specific such as war, riots etc.
However, the mechanism of managing and mitigation for such risks cannot be
categorically stated as they vary with each project and the circumstances surrounding
each project.
Political
Regulatory Commercial
Operational/
Maintenance Financial
RISKS
Force
Majeure Market
Risk management is a planned and structured process aimed at helping the project team
makes the right decision at the right time to identify, classify and quantify the risk and then to
manage and control them. The aim is to ensure best value for the project in terms of cost,
time and quality by balancing the input to manage the risk with the benefits from doing so In
other words it is cost-benefit analysis of any project for a company.
The main techniques of risk management that have evolved and are generally applied to
infrastructure projects are:
i. Risk Avoidance:
Risk avoidance signifies the giving up of an opportunity to invest, as the probability of
loss is too high as compared to the potential profit. In adopting risk avoidance
technique, the concerned party may opt to either completely exit from the proposed
project or restrict its role, rights and exposure to a particular project.
v. Insurance:
Insurance is the mechanism that allows parties regulating a risk to bring down their
expected exposure to any loss from the occurrence of such risks. The costs of loss due
to specific risks are transferred to insurers for a specific consideration in the nature of
concerned insurance policy payments.
Allocation of Risks:
ii. Bear the adverse consequences if it is not able to redress the risk, thereby insulating the
other participants from the direct adverse consequences entailed with the risk.
Consequently it is not surprising to find that most of the negotiations involved between the
various participants centers around the allocation of risk with each participants eager to
allocate the risks to some other participant and unwilling to bear any risks directly. The main
principle for evaluating an adequate allocation of risks is that the party can best placed to
control or reduces the risk or the circumstances that may arise if the risk occurs should be
allocated the risk.
‘Risk response and mitigation’ is the action that is required to reduce or eliminate the
potential impact of risk. There are two types of response to risk:
i. Risk Avoidance: Risk avoidance includes review overall of project objective leading to
reappraisal of project as a whole. Risk avoidance is often perceived as ultimate
mitigation strategy in that it implies that project may be aborted.
In simple terms, this method of mitigation involves removal of cause of risk, by risks
itself. Ideally any approach involving avoidance is best implemented by consideration,
adoption of alternative course of action. Other examples of risk avoidance include use
of exemption clauses in contracts, either to avoid certain risks or to avoid certain
consequences following from risks. Risk avoidance is most likely to take place where
level of risk is at level where project is potentially unviable.
ii. Risk Reduction: This method adopts an approach where by potential exposure to risks
and their impact is alleviated. Often this is achieved by the managing or designing out
of potential risk. Risk reduction occurs where the level of risk is unacceptable and
alternative action is available. Typical action to reduce risk could be:
Detailed site investigation where adverse ground condition are known to exist but
full extent is not known; detailed ground investigation will improve the information
upon which estimate has been prepared.
Alternative procurement route by utilizing an alternative contract strategy risks will
be allocated between project participants in a different process.
Changes in design to accommodate the findings of the risk identification process.
Risk reduction invariably leads to greater confidence regarding the project outcome.
However risk reduction will result in an increase in the base cost but should offer a
significantly greater reduction in the level of contingency required. It goes without
saying that risk reduction should only be adopted where the resultant increase in costs is
less than the potential loss could be caused by the risk being mitigated.
iii. Risk Transfer: This method involves the transfer of risk to other project participants.
Commonly, risks are transferred through the placement of contracts, the appointment of
specialist sub contractors or suppliers or by taking out an insurance policy.
Transference of risk should comprise passing of risks to those better placed or more
capable to maintain control, influence outcome of the risk. Transference should never
be viewed as negative risk response. Its intention is not to pass buck by making
someone else responsible. When transferring risk it is important to differentiate between
the transference of risk itself and the allocation of risk responsibility. Where a risk is
transferred the intention should be to transfer the whole of h risk including its potential
impact. Where a portion of the risk is transferred whilst some risk is retained this is
known as risk sharing. This approach may be adopted where the risk exposure is
beyond the control of one party. In such instances it is imperative that each party
appreciate the value of the portion of risk for which it is responsible.
iv. Residual or Retained Risk: Once all the avenues for response and mitigation have been
explored a number of risks will remain. This does not imply that these risks can be
ignored; indeed it is these risks, which will in most instances, undergo detailed
quantitative analysis in order to assess and calculate the overall contingency levels
required. The aim of the previous responses is to reduce project uncertainty and in so
doing increases the base estimate to reflect the more certain nature of the project.
However it does not imply that these retained risks can simply be ignored. Indeed they
should be subject to effective monitoring, control and management to ensure they are
contained within the contingency allowance set.
It should be noted that this contingency should be made up of residual risk, which are
assessed, to be of a low likelihood and low potential impact. High probability and high
impact risks should undergo further rigorous examination so that an alternative response
can be found.
Steps/
Identifying
Identifying In case the actions
and
the events event occur which can
allocating
or actions the effect be taking
Cost of
addressing
the risk
has
to be
determined
TYPICAL RISK ALLOCATION IN INDIA
Developers’ carries all type of risk in India unlike industrialized countries where government guarantees minimum revenue and share the
same also in case that exceeds threshold limit.
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DEVELOPMENT OF MUNDRA PORT IN GUJARAT
Salient features:
Mundra Port is located in the Gulf of Kutch, in the southern part of the Kutch peninsula.
Kutch (or Kutch) is the largest district in Gujarat (and in India) and has an area of 45,652
sq.km constituting 23% of the State. It is bound by the sea in the South and West and by the
Ranns (salt marshlands) in the East and North.
In the global context, Mundra port located on the Western coast of India is ideally located to
access the Asian, European, American, South American and African Markets. Moreover,
Mundra has an attractive and large hinterland spread over Western, Northern and North
Eastern India covering 70% of India’s GDP. Large Industries already exist in the vicinity.
Page | 15
One of the deepest ports on the coastline of India blessed with a natural draft of 17 M.
and capable of berthing Capsize vessels up to 1,50,000 DWT.
Proximity to Northern & Western hinterland of the country which generates over 42% of
the total international trade of India. Mundra port is over 180 KM. Closer to Delhi than
Mumbai Port & JNPT.
The Port has dedicated infrastructure to cater to various cargo like Grain, Liquid, POL
and coal amongst others.
Back-up Infrastructural facilities developed in an area of 300 acres for Dry, Liquid &
Container cargo.
Large tank farm area for storage of wide variety of Liquid cargo.
Linked to the national railway grid through a self-developed 57 KM. Long railway link
capable of handling 24 rakes per day.
An area of 5,000 acres available for further developing the Port back up related
Infrastructural facilities.
With a total quay length of 895 M, the Port has four berths ranging from 180 to 225 M in
length and 31 M in width, besides an 85 M barge berth for handling a wide variety of
cargo. These berths can easily handle 9 MMTA of cargo per annum on the existing
infrastructural facilities.
Traffic is at 9 MMTA.
One of the first ports to secure rail connectivity by putting up the investment for it
through PPP (Rs 136 Crore)
Allocation of Risks
Risk Mitigation
However, private party retains the primary liability for the risk under the contract.
ii. Insurance:
Specialized form of passing risk - Covers aspects of project risk like owner’s
liability, some Force Majeure Events, owner’s asset risks, business interruption,
some policy risks such as convertibility of local currency etc.
Mitigate risks arising from inflation, interest rates, foreign exchange rates etc.
Ensure legal ability to contract with the private party – sometimes enabling
legislation may be required.
Construct the ‘Public Sector Comparator’ to determine what constitutes value for
money – infrastructure and service delivery options, technologies available etc.
vii. Insurance:
To the extent possible cover through insurance where it represents good value for
money.
SITE RISK
Site Risk is a collection of risk that flows from the project land.
Risk that the project land will be unavailable or unable to be used at the required time, in
the manner or cost anticipated, or that the site will generate unanticipated liabilities, thus
adversely affecting service delivery and/or project revenues.
Arises from land interests and acquisition, statutory approvals, environmental issues,
indigenous issues, suitability of the site/existing infrastructure.
Mitigation measures:
Addressing all environmental issues before the bid process, including impact
assessment.
Interfacing with concerned departments to ensure land approvals in place or face least
obstacles.
Ensure Concession Agreement deal with the approval issues – for example, making
certain critical approvals ‘conditions precedent’ to the Agreement/commencement of
construction.
Construction Risk is a collection of risk that faces the project during its initial stages of
design, implementation and commissioning.
Risk that the design, construction and commissioning are carried out or not carried out in
a manner that will adversely impact cost and/or service delivery consequences.
Arises from possible design flaws, time and cost over-runs, default in meeting
construction and commissioning deadlines, construction defects, keeping pace with
technological changes.
Mitigation measures:
Appointing a high quality project manager to monitor and also consult with the private
party on risk management.
SPONSOR RISK
Sponsor Risk stems from the complex nature of the consortium that form the Special
Purpose Vehicle (SPV) that becomes the project or concession company
Risk that members of the consortium/SPV or the sub-contractors are unable to fulfill their
contractual obligations and government is unable to enforce the obligations or recover
compensation or remedy for the loss sustained from the SPV breach.
Mitigation measures:
Provide flexibility for the SPV regarding change in ownership provisions, while
having some control over any changes to the ownership pattern to ensure qualification
and suitability of the new entrant.
Ensure ongoing tests for probity, capability, and on-going financial requirement.
Mitigation measures:
Promoter guaranteed short term loans converted into long term limited recourse project
financing facilities on project completion.
Market Risk is risk that demand or price for a service will vary from forecast levels,
generating less revenue.
Risk of negative impact on project revenues due to reduction in demand or price for the
concessioned services adversely impacting project revenues over the project term.
Mitigation measures:
Price/tariff indexation.
FINANCIAL RISK
Financial Risk is a collection of risks that would affect the financial strength, performance
and robustness of the project.
Mitigation measures:
Ensure project structure, contractual provisions and risk sharing make the project
bankable, addressing lender related issues.
Ensure credit worthiness of bidders and prima facie firm credit approval from
lenders.
Ensure the robustness of the financial case or model upon which the private party has
based its participation in the project.
Avoid only looking for lowest cost bid – rather choose a bid with financially robust
structure and sound business plan.
Provide for assignment of SPV rights under the contract to the lenders, as well as other
rights such as step-in/substitution rights.
Government right to take over some or all of the sub-contracts of the private party in
case of its failure to perform.
ENVIRONMENTAL RISK
Mitigation measures:
Ensure the project is always operated within the conditions of the resource consent.
Addressing of potential environment and social issues associated with the project.
Operating Risk is a collection of risk that faces the project after commissioning and
during its operational stage.
Risk that the process for delivering the concessioned service will be affected in a manner
that will adversely impact the delivery of services as per specified standards and/or
increase cost.
Mitigation measures:
Specifying Concessionaire responsibility for operation and maintenance as per terms
specified in the Agreement.
Draft service standards with clear outputs, objectively identified and measured.
Escrow mechanisms that will ensure project cash flows are protected and may be
enforced in case of service/operational default.
REGULATORY RISK
For Developer:-
- Notification of revised tariffs is required and there is no time limit for Government to
ensure such notification
– Tariff setting based on Rate of return (cost plus) regulation means that risks
associated with higher construction & operation costs are passed on to users
– Incentive based regulation on the other hand forces concessionaire to reduce costs,
thereby leading to higher risks
For Government:-
If high tariff indexations are provided - Government is locked in and cannot effectively
ensure efficiency benefits for users.
– Under Rate of return regulation concessionaire has an incentive to show higher capital
and operating costs – “Gold Plating”.
– Under Incentive based regulation, regulatory capacity required is high and cost of
regulation is likely to be higher
Mitigation measures:
Select from a menu of regulatory options to create hybrid model that suits the country.
POLITICAL RISK
Political Risk is risk that government will exercise its powers and immunities including
its power to legislate and determine policy and the way in which negatively impacts on or
disadvantages the project.
Arises from possible perceived immunity of government from legal action, government’s
refusal to grant approvals, alternate legislations/policy or regulatory changes, excessive
use of government powers, demand for changes in service scope and specifications,
government take-over of project facility.
Mitigation measures:
o ‘change-in-law’ does not include change in the way law is interpreted or applied,
change in taxes, fees or levies, or where the concessionaire has alternate price/fee
adjustment or compensation under other provisions.
Have clear contractual provisions under ‘Political Force Majeure Events’ (where this
is not covered under change-in-law) during different stages of the project, covering
conditions and compensation for termination.
Force Majeure (FM) is a risk that a specified event entirely out of the control of either
party will occur resulting in a delay or default by the private party in the performance of
its contractual obligations.
Arises from natural events, political events, non-political events which are beyond
control, preventing discharge of obligations and unable to overcome despite diligence and
having a Material Adverse Effect.
Mitigation measures:
Minimize the consequence of the materialized event through appropriate insurance,
which transfers the risk to the insurer.
Draw up and appropriate action plan for dealing with consequences of FM events such
as temporary service arrangements which may be included in service specifications.
Ensure that FM events do not include events that may be prevented, overcome or
remedied so as to ensure vigilance eon the part of the private party to prevent a risk event
before it occurs.
New project risks:
The scale and nature of new projects can significantly influence the risk profile of any issue.
Unrelated diversification into new products is invariably assessed in greater detail. The main
risks from new projects are: Time and cost overruns, even non-completion in an extreme
case, during construction phase; financing tie-up; operational risks; and market risk. Besides
clearly establishing the rationale of new projects, the protective factors that are assessed
include: track record of the management in project implementation, experience and quality of
the project implementation team, experience and track record of technology supplier,
implementation schedule, status of the project, project cost comparisons, financing
arrangements, tie up of raw material sources, composition of operations team and market
outlook and plans. The impact of project risk on the rating depends on the scale of projects in
relation to the size of assets and cash flows of the existing operations.
Management quality:
The importance of this factor cannot be overemphasized. When the business conditions are
adverse, it is the strength of management that provides resilience. A detailed discussion is
held with the management to understand its objectives, plans & strategies, competitive
position and views about the past performance and future outlook of the business. Other
important factors are : labour relations, track record of meeting promises specifically relating
to returns and project implementation, performance of “group” companies transactions with
the “group” companies etc.,
Funding policies:
This determines the level of financial risk. Management’s views on its funding policies are
discussed in detail. These discussions are generally focused on the following issues:
Level of leveraging
Financial flexibility:
While the primary source for servicing obligations is the cash generated from operations, an
assessment is also made of the ability of the issuer to draw on other sources, both internal
(secondary cash flows) and external, during periods of stress. These sources include:
availability of liquid investments, unutilized lines of credit, financial strength of group
companies, market reputation, relationship with financial institutions and banks, investor’s
perceptions and experience of tapping funds from different sources.
Generally financial flexibility factor facilities determination of the relative strength within a
rating category (i.e., + or - prefix with the rating) and has a greater bearing on the short term
ratings.
i. Profitability:
This is an important determinant of the financial risk. Some important indicators are -
It needs to be emphasized that business risk is a prime driver, which gearing has a
secondary role in determining the overall rating (especially long terms). To illustrate, an
issuer whose gearing level is favorable out relative business fundamentals are weak is
unlikely to get a favorable long term rating. This is so because gearing is considered to
be a “controllable” factor while business factors are relatively difficult to alter
significantly.
This is considered to be of primary importance to the debt holders. The important ratios
are -
Inventory
Receivables
Payables
Based on the feedback & concurrence obtained from the task force, appropriate matrices both
for the macro & micro systems would be developed and suitable weightages would be
allotted to various attributes. Few cases would be tested for calibration and readjustment of
the weightages allotted and a process of iteration shall be adopted to arrive at the proper
calibrated matrices. Cases belonging to Maximum & Minimum categories would be used
based on the recent post performances. It is proposed to develop 14 levels, alpha numeric
grading scale to assess the displayed delivery potential of the constituent. As an example the
grades proposed to be awarded to the construction companies shall have following
nomenclature and explanation the grading would be given the nomenclature, which shall be
awarded to the constituent for the level of assessed potential of delivery.
Awarded grades shall remain valid for a period of 3 years, with provision of surveillance at
annual interval.
Indemnities from the Insurance Companies at economical rates, thereby lowering the
overall procurement costs.
i. Lack of Experience and Professional Pride: Lack of experience can be a lack of risk
management knowledge, but in this situation it also has another meaning: The talent
and education of the respondents varied significantly. This has direct effect on the
quality and productivity of the work. A lack of common education and the personal
qualities which contribute greatly to the performance level, make it very difficult to
evaluate the time spent on a certain task. It also makes it difficult to prepare beforehand
for possible problems or for the amount of work needed for the guidance of crews.
The skills of the craftsmen, as well as the skills, abilities and personal character of the
project manager had great influence on project success. According to the interviewees,
risks, project team integration and a common atmosphere on site was related to the
project manager, and that in extreme cases extra amounts were added to project tenders.
The overall environment in the current labour markets does not place enough value on
trades. Other professions are more attractive to young people and not enough of them
seek vocational education in the field of construction.
ii. Adverse Relationships: The reason for adverse relationships is caused by severe price
competition. Traditionally adverse relationships make coordination and co-operation
difficult. Competition has caused margins to diminish and additional rewards are
sought. Interviewees admitted that, for example, due to the high degree of competition
even the smallest changes in the work is fought for, contracts are read very carefully
and there are cases where interpretations may differ considerably. This is not very
fruitful ground to build co-operation, not to mention that it means extra investments on
behalf of the actors. Adverse relationships also restrict the sharing of experiences and
information. Lessons learned in one project are not applied in other projects since
thought that the relevance of a solution in one situation can not be repeated in another,
since there was little chance that a comparable situation would present itself in the
future.
iv. Information Flow Breaks: Information that does not flow through the whole project
organization causes misunderstandings, delays and logistical problems. This was named
many times as the most severe threat to the smooth completion of a project. It was
recognized that since information does not move in the project network, it also does not
go through a single actor’s organization. Though, in light of previous findings of
adverse relationships and a business practice that do not support co-operation,
information delivery problems are not unexpected. Problems included people not
always attending the right meetings, or those who did attend, failed to deliver the
message to their respective organizations.
vi. Competition Based on the Lowest Bid: As a client, this is especially difficult, since
they are forced to take the lowest bid. There is no possibility of thinking about total
costs, related, for example, to possible complexities in relationships or quality failures.
That results in low motivation for extra work and small chances for development
programs. Project networks become short-lived and long-term relationships are difficult
to build. Severe competition over price does not provide any concrete resources or
motivation for long-term skills development or motivation to consider the interests of
any other parties (or the network as a whole) than own.
vii. Force Majeure: This is an aspect that never can be excluded from the construction
projects. As one interviewee put it; it is impossible to build a whole house before the
actual project has begun. Thus not all risks can be anticipated. An interesting point is
that whether these seemingly “force majeure” risks really are “force majeure”. Is it
possible that they could be avoided, or at least renamed if some more systematic risk
management means were used?
ix. Contractors’ Subcontractors: Another risk involved in subcontracting is that one can
never be completely sure who will actually perform the work; subcontractors may have
subsequently contracted the job to someone else. In such cases, many of the
aforementioned problems are magnified. For example an increased risk that information
is not transmitted to all parties involved.
Grading symbols for the Contractor/Construction Company and their implications shall be as
follows: -
a) Very strong contract execution capacity: The prospects of timely completion of projects
with minimal cost overruns are best and the ability to pay liquidated damages for non-
conformities highest.
CONCLUSION
Infrastructure projects in public-private participation mode are long gestation projects will lot
of dynamics and flexibilities embedded into it. However, such projects are structured and the
parties are bound by the provisions of a rigid ‘concession agreement’ prior to the
commitment of large amounts of capital. Incorrect decisions made at the early stages can
have a large impact on the future outcome of the project. Though previous studies have
proposed structured risk management processes, integrated with the overall project
management framework, unresolved difficulties still exist.
Project risk dynamics are difficult to understand and control and not all types of tools and
techniques are appropriate to address their systemic nature. Past research has shown that
project management activities can be improved through system dynamics modeling. It is
suggested that emphasis should be placed on understanding how dynamics can alter the
project performance, so that appropriate responses can be designed and undertaken to
maximize the effect of positive dynamics and minimize the effect of negative ones. Systems
Dynamics, as a proven tool in project management can be extended to manage the risks and
uncertainties in PPP infrastructure.
PPP Projects are complex projects that require effective attention to risk and their
mitigation.
Risks are inherently related to returns and the service/expertise which yields those
returns.
This gives a good perspective on who is best placed to bear the risk.
Objectives of the government in taking up a PPP project are essential to decide who
bears a particular risk.
Very active as compared to other parts of the country and ever increasing activity.
Thoroughness of documentation.