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(RISK-1544) Risks Associated with Concession-Based Contracts in Lagos State, Nigeria

Primary Author: Mr. Godwin Jagboro, Ms. Grace Kehinde Ojo, Mr. Akintayo Opawole and Mr. Gabriel Akindoyin Sani

Audience Focus: Intermediate
Application Type: Application
Venue: 2014 AACE International Annual Meeting, New Orleans, LA, USA

Abstract: Concession contracts gained prominence in Nigeria following the return to democratic governance in 1999. However peculiarities of risks associated with concession project have not been adequately studied. This paper investigated the occurrence, impact on cost, mitigation and allocation of risks in concession-based projects. One Federal Government Airport and a State Government Highway were the reference projects for this study. Data were collected from stakeholders using structured questionnaire covering both the frequency of occurrence and impact of cost, mitigation and allocation of risks. Analysis was based on factor analysis (FA) and percentile. Findings indicated that financial risk had the highest frequency of occurrence while inadequate experience had the highest impact on cost. Mitigating tools included contingency sum, insurance, guarantees contract transfer and escrow account. Political-related risks were allocated to the public sector; while design and construction risks were allocated to the private sector. Revenue shortage and inflation risks were proffered to be shared by the public and private sectors.