Perceived Risk Allocation in Public-Private-Partnered (PPP) Water Supply Projects in Indonesia (original) (raw)
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Risk criticality and allocation in privatised water supply projects in Indonesia
International Journal of Project Management, 2010
Public–private-partnership (PPP) infrastructure projects typically involve a plethora of risks. Given that many risks which are traditionally borne by the government get transferred to the private sector, careful risk allocation is considered to be the key to successful PPP projects. This paper focuses on the current risk allocation practice within Indonesia’s water supply projects. The paper captures, presents and discusses the perceptions of both regulators and operators in the context of project risk criticality and allocation. Both parties consider non-availability of raw water is of paramount concern. However, survey findings highlight low-to-moderate levels of intra-group and inter-group agreement regarding the allocation of specific project risk factors. Thus, asserting that the issue of optimal risk allocation remains elusive.
IMPORTANT RISKS ON PUBLIC-PRIVATE PARTNERSHIP SCHEME IN WATER SUPPLY INVESTMENT IN INDONESIA
The success of public-private partnership (PPP) investment scheme in water supply provision can not be separated from the implementation of risk management concept within the project. Proper risk management processes ensure a profitable operation to the private party as well as considerable benefit to the public interest. In risk management, risk analysis is a key step to understand the risk involved in such scheme and subsequently in defining appropriate risk management action.
Risk ranking and analysis in PPP water supply infrastructure projects
Facilities, 2015
Purpose – This paper aims to identify and evaluate the most significant risk factors that strongly affect the implementation of public–private partnership (PPP) water supply projects. PPP for water supply infrastructure services has seen continued growth over the past two decades, following public sector’s budgetary constraints and inability to provide infrastructure-based water services efficiently and cost effectively. However, these projects are often subjected to major risks leading to failures. Design/methodology/approach – Following extensive literature review and case study analyses, an international questionnaire survey was conducted with practicing and experienced PPP experts to establish the significant risks in PPP water projects. Both the probability of occurrence and severity of 40 risks were evaluated by the expert panel to determine their significance and impact on water projects procured under the PPP arrangement. Findings – The paper presents a derived risk factor l...
Civil Engineering Dimension, 2012
The success of Public Private Partnership (PPP) for water supply investment is inseparable from the capability of risk management of the parties within the project. This study investigates the risk management capability of Indonesian local public sector organizations that are potentially involved in PPP schemes for water supply. A risk management maturity model based assessment tool probing the culture, process, experience, application and partnership aspects is used in the survey. The model describes risk management capability in four levels (adhoc, initial, competent, excellent). The survey shows that their risk management capability is still in-average at the initial stage (level 2), meaning that the adopted risk management postures are mostly supported only by unstructured, ad-hoc and non-formal processes. The result of this study can help decision makers in choosing appropriate risk management methods and tools to be used by the local public authorities for managing risks in PPP schemes.
Risk Management of West Semarang Water Supply PPP Project: Public Sector Perspective
IPTEK Journal of Proceedings Series, 2017
While the need for water supply infrastructure development keeps increasing, many local governments of Indonesia are facing problems related to limited funding. This condition opens up an opportunity for private sector to invest in water supply infrastructure projects through Public Private Partnership (PPP) scheme. As this scheme is relatively new for many local governments in Indonesia, its complexity and typically long duration of the concession period may raise concerns of potential risks throughout the project life cycle. It is, therefore, very important for public sector as owner of the project to understand and to be able to manage risks properly throughout the concession period. The aim of this research is to evaluate risk management of West Semarang Water Supply PPP Project as perceived by public sector. The objectives are to identify, to analyze, and to allocate risks to the right parties. Qualitative and quantitative approaches have been used for the research method. Data were collected through focus group discussion involving 16 relevant officials of local government of Semarang, including its Regional Water Supply Company (PDAM). This research has identified a total of 66 risks as perceived by the public sector, which are then classified into 11 categories, e.g. political, operation, revenue, etc. The proportions of the level of risks are relatively balanced, as follows; low (37.88%), moderate (28.79%) and high (33.33%). In terms of risk allocation, 46.97% of risks are allocated to the public sector, while 37.88% and 15.15% of the risks are allocated to the private sector and shared by both parties, respectively. The results of this research are valuable for the local government of Semarang and can be used as a guidance in managing risks of the PPP project throughout the concession period.
PUBLIC-PRIVATE PARTNERSHIPS AS MECHANISMS FOR RISK MANAGEMENT IN THE WATER SECTOR
have been long since used in the procurement and operation of water infrastructure, as shown in the first part of the paper. The main object of the paper is to highlight the mechanisms of PPP in the water sector and to suggest that in times of economic and financial distress, when both the public sector and the private sector face additional risks and challenges, various models of PPP may be used to manage and mitigate the risks and to improve performance in providing the public services of Water Supply and Sanitation (WSS). The economic and financial risks of the WSS sector are commonly classified in two broad categories but within these broad categories there are many more specific risks. Therefore, we shall analyse some of these main risks and their potential interrelations, by employing several methodologies: literature review, case studies, performance indicators, risk matrix, analysis and synthesis. The mechanisms, features and experiences of PPP in this branch of the water sector are summarized and comparatively analysed, from the viewpoint of risk sharing, leading to some conclusions and recommendations on the opportunity and effectiveness of implementing such arrangements especially in Romania.
Journal of Water and Wastewater, 2022
In the face of growing water demand and insufficient public budgets in developing countries, public-private partnerships play an important role in infrastructure development, such as water supply and transmission. However, carrying out such projects always carries with it many and varied risks that threaten the success of such projects. Due to the research gap on risk identification and assessment in the context of public-private partnership water transfer projects, the purpose of the present research is to identify and prioritize the risks in Safadasht publicprivate partnership water transfer project. The first phase of the present research identifies the risks of public-private partnership projects. At this stage of the research, through the brainstorming method, an attempt was made to identify the risks related to the project under study. In the second stage, three research criteria including "probability of occurrence", "cost effect" and "time effect" were weighed using the best-worst method. The third stage, which was the final stage of the research, was dedicated to prioritizing the risks identified in the first stage using the simple additive weighting technique. Based on the analyzes performed, respectively, changes in legal conditions and standards by the government, sudden changes in bank interest rates, severe climate change, damage to the investor's manpower and improper performance of the investor project factors were identified as the most important risks. Finally, while pointing out the limitations of the research, some suggestions for future studies were presented.
International Journal of Strategic Property Management, 2019
In a situation of growing water demand, inadequate public funding, poor asset condition and lack of maintenance in developing countries, public-private partnerships (PPPs) play an important role in the development of infrastructure, such as water supply and sewerage services. The purpose of this study is to develop a quantitative approach to appropriate risk allocation, with attention directed to the impact of positive and negative factors in water and sewerage projects. The paper presents a hybrid SWARA-COPRAS approach to examine risk allocation, particularly for PPP water supply and sewerage projects in the context of Malaysia. In addition to PPP infrastructure projects, the approach has the potential to be adapted to other applications. The proposed method enables decision makers to utilise qualitative linguistic terms in the allocation of risk between the public and private sector, and to select the best strategy for risk allocation in a contract. Finally, 24 significant risks w...