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(RISK-1870) Owner's Risk in a Public-Private Partnership Project

Primary Author: Mr. Phillip P Collin PE
Co-Author(s): Mr. David A Norfleet CCP CFCC DRMP

Audience Focus: Advanced
Application Type: Application
Venue: 2015 AACE International Annual Meeting, Las Vegas, NV, USA

Abstract: Public-Private Partnerships (P3s) are becoming more popular for major infrastructure projects, especially transportation and transit projects. Owners have developed some risk management guidance documents during the brief P3 history, but more is needed to provide a consistent and reliable approach for effective assessment, treatment, and control of risks. A major advantage of a P3 is the Owner’s ability to transfer more project risks to the private entity than would be possible with other delivery methods. Once risks are allocated properly during the project development phase, the Owner must then assess and control its retained and shared risks. Most of the claims for compensation against the Owner’s project contingency will arise from the private entity without warning. This causes even more uncertainty with respect to cost and/or time impacts of a risk event. Little guidance is written regarding this particular aspect of the overall risk management process. This paper will explore specific ways to assess and control the Owner’s risk after financial close and during the design, construction, and operations/maintenance phases of a P3 project.