Risk management, public interest and value for money for PPP projects: literature review and case studies

Public Private Partnership (PPP) method has been increasingly used to procure large scale infrastructures and public assets such as freeways, tunnels, bridges, hospitals, libraries, schools and prisons. The underlying principle of a PPP project is to achieve value for money for all project stakeholders involved in the partnership, by engaging them in a risk sharing relationship. While there have been many successful PPP projects, the unsuccessful PPP ones abound and the study of them can teach us how to better manage the risks associated with PPP projects. To this end, two PPP projects -- the Sydney Cross City Tunnel and Sydney Airport Railway Link, are used as case studies to scrutinize reasons leading to their current dilemma and articulate the valuable lessons learnt. It is concluded that protecting the public interests and allowing the private partners to gain reasonable return on their investments, are essential in achieving value for money in PPP projects. This can only be viable through optimal risk allocation and balanced interests between the public and private sector partners.