Perceived Risk Allocation in Public-Private-Partnered (PPP) Water Supply Projects in Indonesia

Abstract

A Public-Private-Partnership (PPP) water supply project typically involves a plethora of risks. Because a PPP is nothing other than a transfer of project risks traditionally borne by the government to the private sector, proper risk identification and allocation is a key to successful PPP project implementation. This paper presents and discusses the industry's perception of the optimal risk allocation in the context of Indonesian PPP water supply projects. The paper has identified a total of 39 project risks, classified them into six categories. Qualitative assessments of individual risks were elicited from an industry survey of respondents' opinions via a mail-based questionnaire. The central tendency of risk allocation as measured by the mode value confirms the intuition and theory that risk must better rest with the party who has control or better manage it. However, the findings also suggest that balancing project risks remain elusive, which is indicated by a high disagreement level amongst respondents.