Prioritization of Demand Risk Factors in PPP Infrastructure Projects

Abstract

Risk Management is one of the key success factors of Public Private Partnerships (PPP) projects. Demand risk, being one of the major risks affecting PPP concessions, needs particular attention and effective management to avoid project failure. Thus, the objective of this study is to identify, rate and prioritize these factors. The literature provides a list of core factors influencing demand in PPP projects. The full range of factors has been categorized into three groups of user characteristics, facility characteristics and area characteristics. A questionnaire survey, based on receiving feedbacks from PPP stakeholders, is then used to rate and measure the relative importance of each influencing factor. Since the factors affecting demand risk interact with each other in a complex manner, demand risk identification should involve prioritizing the influencing factors considering their complex interactions. Hence, an Analytic Network Process (ANP) based technique for prioritizing demand risk factors in the PPP infrastructure concession has been developed. This prioritization process will help identify the most critical factors under each cluster to allow them to be given more attention and be subject to further analysis. The analysis shows that historical experience of paying and willingness to pay are the most important factors under user characteristics cluster, whereas fees of using the facility is most important under facility characteristics cluster while employment level is most important under area characteristics.