Risk Mitigation and Sharing in Motorway PPPs: A Comparative Policy Analysis of Alternative Approaches

Abstract

The detailed contracts between private parties and public sector project sponsors that provide for the construction and operation of transportation infrastructure are often referred to as public-private partnerships (PPPs). Risk-mitigation and risk-sharing arrangements are critical to the long-term success or failure of transportation PPPs. This article examines the distribution of the key risks inherent in a PPP across public sector and private sector partners in road infrastructure PPPs. It draws lessons from the use of alternative risk-mitigation mechanisms across several countries, focusing on how aspects of PPP concession contracts allocate risks on both demand and cost sides of an infrastructure facility.