Abstract
PPP projects usually involve more risks than other traditional procurement models because of their complexity. This paper presents the third stage of a funded study, which aims to develop a practical and computerized risk evaluation model for PPP projects. In the first and second stages, a risk hierarchal structure composed of 17 weighted risk factors is developed to describe risk profiles of PPP projects. The weightings and membership functions for risk factors are established using the Delphi survey technique and Fuzzy Set Theory. The risk evaluation model is then developed using a fuzzy synthetic evaluation approach. In the third stage, an automated decision support tool based on the risk evaluation model is designed for PPP practitioners by using Visual Basic for Application (VBA). The computerized tool can not only assist PPP participants to assess a PPP project's overall risk level for auxiliary investment decision, but can also help practitioners to identify the most risky areas of a PPP project for effective risk response. To demonstrate the applicability of the computerized model, an illustrative case is finally provided.
Highlights
Since the reform and opening of the national economy in 1978, China has entered into a rapid urbanization period
This paper reports the third stage of a funded research study, which aims at developing a risk evaluation model for Private Partnership (PPP) projects in China
This paper presents a fuzzy risk evaluation model for assessing a PPP project’s overall risk level, with reference to the Chinese PPP industry
Summary
Since the reform and opening of the national economy in 1978, China has entered into a rapid urbanization period. Nations forecasted that the percentage of the urban population in the PRC would increase from 44.94% in 2007 to 57% in 2025 (China Statistical Yearbook, 2008; Chan et al, 2010). “Public-Private Partnership (PPP) financing modalities, with the capability of providing funding and efficient management, have been identified as innovative tools for financing major infrastructure projects in China” (Asian Development Bank, 2005; Chan et al, 2010). There is a plethora of useful information regarding the Risk Evaluation Model under “instruction” menu. They include: (1) procedures for developing the risk evaluation model; (2) the definition of each risk factor; and (3) calculation procedures of the risk evaluation model
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