Abstract
Efficient risk allocation has been proven to be at the heart of effective and efficient infrastructure project operation. While most risks may be reasonably assigned in transport infrastructure projects, demand risk remains ambiguous due to the multiple factors influencing its appropriate allocation. The present research is a first attempt to introduce indicators as tools to guide contracting parties in assigning demand risk. The level of control, based on infrastructure characteristics and attributes, describes the potential control over demand an operator may have. The optimal demand risk allocation is seen as an assessment of the appropriateness of demand risk allocation effected. The indicators are constructed following accomplished rules set by supranational organizations. Furthermore, 51 project cases ranging different transport infrastructure modes from 19 European countries including projects delivered traditionally and as Public Private Partnerships were used to validate the indicators and assess their performance. Results show the potential of both indicators to guide governments, operators and also financiers in appropriately allocating demand risk in transport infrastructure projects. This optimality was shown to be related to more accurate traffic forecasts resulting in sustainable transport infrastructure as the project then delivers on its economic, environmental, and social/welfare targets.
Highlights
Thriving for sustainable infrastructure projects, especially in the transport sector, concerns balancing public and private investments so as to maximize output in terms of providing infrastructure that will meet future demand as per capacity, technology and innovation, social needs, and, recently, resilience to climate change
The present research focuses on assessing the match between “control” and ‘’demand risk allocation” in the form of a composite indicator and compares it to transport infrastructure performance leading to valuable conclusions and lessons learned
The cases that comprise this sample provide a useful benchmark for the current analysis, since they include both Private Partnerships (PPPs) and public funded projects, covering a wide range of transport infrastructure modes in 19 European countries
Summary
Thriving for sustainable infrastructure projects, especially in the transport sector, concerns balancing public and private investments so as to maximize output in terms of providing infrastructure that will meet future demand as per capacity, technology and innovation, social needs, and, recently, resilience to climate change. Social welfare is assumed to be achieved through the trade-off between the cost of risk bearing and incentives of technical efficiency [5]. This applies to both infrastructures delivered through traditional public funding and various other forms including private financing such as Public Private Partnerships (PPPs). The latter are expected to be more efficient due to the anticipated private sector management skills and the fact that private finance is at risk [6] The latter are expected to be more efficient due to the anticipated private sector management skills and the fact that private finance is at risk [6] (p. 163)
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