Risk Evaluation and Transfer
Risk in a PPP relates to uncertain outcomes which have a direct effect either on the provision of the services (e.g. because the Facility is not built on time), or the financial viability of the project (e.g. loss of revenue or increased costs). In either case the result is a loss or cost which has to be borne by someone, and one of the main elements of PPP structuring is to determine where this loss or cost will lie.
This chapter therefore summarises the basic principles which lie behind risk transfer in PPP projects (§14.2), and then reviews the application of these principles in detail, using the ‘Risk Matrix’ approach (§14.3) used by all parties to identify and evaluate risks at each ...