Article

Developing a risk assessment model for PPP projects in China — A fuzzy synthetic evaluation approach

Department of Construction Management, Tsinghua University, Beijing, China
Automation in Construction (Impact Factor: 1.82). 11/2010; DOI: 10.1016/j.autcon.2010.06.006

ABSTRACT Earlier research works on PPP showed that an objective, reliable, and practical risk assessment model for PPP projects is essential to the successful implementation of PPP projects. However, actual empirical research studies in this research area are rather limited. This paper reports the second stage of a funded research study, which aims to develop a fuzzy synthetic evaluation model for assessing the risk level of a particular critical risk group (CRG) and the overall risk level associated with PPP projects in China. At the first research stage, thirty-four risk factors were identified through a comprehensive literature review and 3 new risk factors were proposed during a two-round Delphi questionnaire survey. The most critical 17 risk factors were selected through the calculation of normalized values. The correlation of these 17 critical risk factors (CRFs) was further analyzed via factor analysis and 6 CRGs were formulated, namely: (1) Macroeconomic Risk; (2) Construction and Operation Risk; (3) Government Maturity Risk; (4) Market Environment Risk; (5) Economic Viability Risk; and (6) Government Intervention. On the basis of the research works conducted at the first research stage, the weightings for each of the 17 critical risk factors (CRFs) and 6 CRGs were determined through the two-round Delphi questionnaire survey. A set of knowledge-based fuzzy inference rules was then established to set up the membership function for the 17 CRFs and 6 CRGs. The empirical research findings showed that the overall risk level of PPP highway projects is between “moderate risk” and “high risk”. Hence it could be construed that investment in PPP highway projects in China may be considered as risky. In fact, the Delphi survey respondents perceived that “Government Intervention” is the most CRG; with “Government Maturity Risk” being the second; “Economic Viability Risk” the third; “Market Environment Risk” the fourth; “Construction and Operation Risk” the fifth; and “Macroeconomic Risk” the last. These findings revealed that government intervention and corruption may be the major hurdles to the success of PPP highway projects in China. These may be caused by inadequate law and supervision system and poor public decision-making process. Although the fuzzy synthetic evaluation model was primarily developed for PPP projects in general, the research method could be replicated in a specific type of PPP project, such as water treatment projects and hospital projects, to produce similar models for inter-type comparisons. By doing so, it provides an opportunity for practitioners to assess the risk level of different types of PPP projects based on objective evidence rather than subjective judgment. The most CRG for different types of PPP projects could be identified and both precautionary and remedial actions could be taken as soon as possible. Such an extension would provide a deeper understanding of managing different types of PPP projects.

Full-text

Available from: Shou Qing Wang, Feb 08, 2014
9 Followers
 · 
751 Views
  • Journal of Urban Planning and Development 12/2011; 137(4):409-415. DOI:10.1061/(ASCE)UP.1943-5444.0000086 · 0.93 Impact Factor
  • Source
    PPP INTERNATIONAL CONFERENCE 2013 - BODY OF KNOWLEDGE, Preston, University of Central Lancashire; 03/2013
  • Source
    [Show abstract] [Hide abstract]
    ABSTRACT: Purpose The specific purposes are to (1) identify the critical drivers for and hindrances to enterprise risk management (ERM) implementation; and (2) compare the influence of these factors on ERM implementation between large and small-medium (SM) Chinese construction firms (CCFs) in Singapore. Design/methodology/approach A questionnaire survey was conducted and responses were received from 35 experienced managers in CCFs operating in Singapore. Findings A total of 13 drivers and 22 hindrances were found critical to ERM implementation in Singapore-based CCFs. “Improved decision-making” were the top influential driver, while “insufficient resources (e.g. time, money, people, etc.)” were the most significant hindrances. Additionally, In addition, despite significant differences in the mean scores of seven drivers and four hindrances, the large and small-medium CCFs agreed on the rankings of drivers and hindrances, respectively. Research limitations/implications As the survey was performed with the Singapore-based CCFs, there may be geographical limitation on the identification of the critical drivers for and hindrances to ERM implementation. The sample size was still small, despite a relatively high response rate. Practical implications The findings of this study allow the management to strengthen the positive influence from the drivers and overcome the challenges posed by the significant hindrances. Originality/value Despite studies on ERM in various industries, few studies have attempted to disclose the factors driving and hindering ERM implementation in construction firms. Thus, this study expands the existing literature relating to ERM. An understanding of the drivers for ERM implementation enables the management to obtain sufficient support for the ERM program and strengthen the positive influence from the drivers. The identification of the hindrances allows the management to be clear about the challenges faced by the ERM program and take measures to diminish their negative influence and overcome them. Additionally, other construction firms can use the drivers and hindrances identified in this study to prepare their customized list of drivers and hindrances.
    Engineering Construction & Architectural Management 04/2015; 22(3). DOI:10.1108/ECAM-09-2014-0117