Risk allocation for infrastructure projects by PPPs - under environmental management and risk assessment mechanisms

Abstract

Infrastructure is one of the pillars for achieving urban sustainable development socially, economically and environmentally, since it reflects the progress of countries. The importance, high cost, and insufficiency of available balanced governmental funding, particularly in developing countries, for these projects prompted many governments to implement such projects through public-private partnership (PPP). This will ensure high-quality service and low-cost advanced technology by activating the principle of value of money and through competition between local and international private sector companies in a framework of transparency. This paper discusses the contractual relations between parties of partnerships in these projects and mechanisms of distributing risks to parties during different phases of the project. It applies the analytical hierarchy process (AHP) through assigning risk indicators at relative weight resulting from the probability of occurrence of such risks, taking into consideration environmental management mechanisms to ensure projects' success in achieving the concept of sustainable development and its economic, social and environmental aspects.