Risk factors of public-private partnership projects in China : comparison between the water, power, and transportation sectors

Abstract

With the growing economic development experienced in China, there is an urge for more and better public infrastructure. Public-private partnership (PPP) is an innovative method for delivering these facilities and services. However, along with this method there are certain risk factors that exist or are more severe when compared to the traditional delivery method. This paper considers three types of common public projects in China that are often delivered by the PPP method, including water and wastewater, power and energy, and transportation. For each type of project, experienced practitioners in China were asked to rank the severity of 20 risk factors sought from a comprehensive literature review. The top five most severe risk factors for each type of project were considered. Government intervention and public credit were ranked severe for all three types of projects. The findings indicate that the most severe risks are government-related. It appears that the stakeholders have low confidence in the government. These findings have highlighted the severity of risk factors for common types of PPP projects in China. With this information, both public and private parties can be more aware of which risk factors would be the most severe for certain projects. As a result, appropriate precautions can be made to avoid or minimize the likelihood and consequences of these risks. By doing so, PPP projects can be carried out more successfully, and their further use can be encouraged in China. PPP stakeholders from other countries can also use the findings presented in this paper to prevent the occurrence of potential risks. Furthermore, the methodology adopted in this paper can easily be adopted for other countries.