RISK MANAGEMENT IN PUBLIC PRIVATE PARTNERSHIP (PPP) PROJECTS IN SINGAPORE � FROM A PRIVATE SECTOR �S PERSPECTIVE

Abstract

The Singapore government (Ministry of Finance) started its first Public-Private Partnership (PPP) project in Singapore in 2003. Under the PPP scheme, selected public sector projects worth more than S$50 million will be outsourced to the private sectors. To date, there are only ten successfully procured PPP projects in Singapore.

The purpose of this study is to identify risk factors that perceived as obstacles to the private sector in emerging PPP projects in Singapore. A questionnaire survey was conducted to explore the criticality of the risk categories and the preferred risk allocation (Risk allocated to public sector, private sector and shared between parties) from the private sectors’ perspective. The respondents were requested to rank the importance of the identified risk categories according to the five point Likert scale in PPP projects. In addition, they were also requested to indicate their preferred risk allocation.

The results show that seven out of the twelve risk categories were found to be critical. The seven critical risk factor categories are: (1) Macroeconomic Risk; (2) Political and Government Policy Risk; (3) Relationship Risk; (4) Construction risk; (5) Legal Risk; (6) Project Finance Risk and (7) Design Risk. Majority of risks are mainly in the macro-level risks (risks external to the project itself). On top of that, it was found that most of the macro-level risks were preferred to be allocated to the public sector, whereas most of the meso-level risks were preferred to be allocated to the private sector. Micro-level risks were mainly preferred to be shared between the public and private sector.

By identifying the risk factors and preferred risk allocation, the private sector can better manage and cope with the risks found in PPP projects. Also, the findings from this study should enable the private sector to establish a quick identification of major/critical risks and the most efficient risk allocation framework in the early stages of project development.

Keywords: PPP projects, Criticality of Risk, Preferred Risk Allocation