Environmental Engineering Reference
In-Depth Information
risks include the local population and/or government no longer supporting the
project.
119
PPPs often include an obligation to transfer the asset back to the state
at the end of the contract period,
120
which might cause problems with regard to the
'
of the asset. Finally, vandalism and hardship are further project
risks which a solar thermal power plant might face.
should-be state
'
1.3.4.3 Conclusion
There is a connection between risk and reward.
121
If the private operator is able to
manage the transferred risk, the reward will be equivalent to the amount of risk
assumed.
122
However, the bigger the project, the greater the risk is that it will
fail.
123
In the case of risk allocation, it is essential to properly assign each risk.
124
For example, the government will be more adept at handling political risks (prob-
lems created by government actions); while the private sector is better equipped to
deal with construction risks (design and schedule problems).
125
Best coverage
means that the appropriate party manages those risks cost-effectively and can
therefore influence the outcome to a certain extent.
126
The amount of risk trans-
ferred to the public sector depends on the PPP model chosen, so it can differ
tremendously.
127
The amount of risk which can be transferred increases for the
private sector from a simple PPP, such as Design-Build, to a concession.
128
A
Value-for-Money (VFM) will work best if the risk allocation process is thorough
and balanced.
129
Finally, the state must be aware that the amount of influence on the project
decreases by the amount of risk that it transfers to the private sector. It is still a
common misbelieve that the state can divest itself of all risk but retain all control of
the project. In return for the investment made by the private sector, the state must
119
Kumaraswamy and Zhang (
2001
), 195 (198); HyunChan et al. (
1997
), 93 (100).
120
Hofler (
2007
), 35 (44); Jonas and Paulsen (
2007
), 13 (22).
121
Corner (
2006
), 37 (44).
122
Corner (
2006
), 37 (49); The more the risk, the more owners
'
equity in a BOT, in: Wolfgang
Straßburg (
1996
), 29 (32); cf. Wiwen-Nilsson (
1996
), 91 (104).
123
Blanchard (
1998
), 417 (468).
124
Wiwen-Nilsson (
1996
), 91 (97-99); Becher (
2007
), 55 (58); Corner (
2006
), 37 (46); OECD
(
2008
), 48 and 235-237; Ahadzi and Bowles (
2004
), 967 (968); Davies and Eustice (
2011
), 20;
Corbacho and Schwartz (
2008
), 85 (89); Christiansen (
2008
), 143 (149); cf. Hemming (
2008
),
235 (237); Hathorn (
2008
), 245 (248); Bremer (
2005
), 87-88; Palmer (
2009
), 15; Nicklisch
(
2007
), 3 (7); Hofler (
2007
), 35 (47); Metje (
2008
), 48.
125
Corbacho and Schwartz (
2008
), 85 (88-89); cf. Christiansen (
2008
), 143 (149); cf. Yescombe
(
2007
), 19; Risks concerning building or contaminated sites are usually located by the government,
in: Bremer (
2005
), 88.
126
Corner (
2006
), 37 (46-47).
127
Christiansen (
2008
), 143 (149).
128
OECD (
2008
), 51.
