Risk Allocation Scheme In PPP Projects In China And UK: An Essay.

Question:

Discuss about the Implementation of PPP Projects in China and UK.

The research topic basically comes from the implementation of PPP projects in China and UK. It also comes from the risks experienced in the development and implementation of construction projects in UK and China.

The field of research around it is basically the development of the PPP projects which is held responsible for enhancing competitiveness and flexibility in the construction of infrastructural projects in UK as well in China which is indicated in this study (Ke et al. 2010).

My research is placed in identifying and understanding of the concept of risk allocation scheme and how the risk allocation is useful in the comprehensive construction of the PPP projects for the development of infrastructure in China as well in UK. The scope of the research is that it should be providing the opportunities to the new and existing researchers to review the existing and new concepts of PPP projects and its construction in one of the most planned economic countries which include China. The scope of this research is to identify how the public and private sector has been involved in the development of the PPP projects and how risks are allocated and aligned with the total project life as well.

The articles will be addressing that how the risks are equally divided or segmented around the public and the private sector that are responsible for the implementation of the PPP projects in China as well in UK. The topic will also address the flexibility in the contracts made between the public and the private sector for PPP projects.

The topic is about the success of the implementation of the PPP projects in the Western countries as the PPP projects are at high risks and the risks need to be managed effectively in the successful implementation of the PPP projects. The management of the risks in the implementation of the PPP projects has certainly become a serious issue in the construction sector. There were past studies ad literature on the risk allocation. According to Mladenovic et al. (2013) the risks in managing the PPP projects in the Western countries like UK as well in the Asian giants like China is very tough as the risk allocation scheme is not proper and defined it in a comprehensive manner. The PPP projects in China have become successful only due to the risk allocation has been good but it is only for some of the PPP projects.  They do not have the risk sharing method to be implemented positively for the development of the PPP projects. The topic is also about the understanding of the concept of risk allocation scheme which is applicable for both the private and the public sectors. This topic is also about managing the degree or measurement of the risks identified and experienced by the private sectors as compared with the public sector for the construction of the PPP projects across the globe. There is no much of the history of this research activity to be seen as there were no relative evidence to be found out in the success and failure of the development of the PPP projects.

Research Topic

The current knowledge and the research activity indicate that the risk allocation mechanism is the ultimate solution for the analysis, assessing as well as managing the risks for the development of the PPP projects.

The scope of your interest set within this file of research is that how the risk shar8ing or risk allocation is segmented between the private and the public sector. The interest of how the risks could be managed at lowest of prices for the overall performance of the PPP projects to be improved in China as well in the Western countries. The proper risk management plan and the PPP/PFI procurement process deals with the management and control of the risks for constructing PPP projects. The scope of interest for me to know in detail about the negotiation process to be implemented between the private and the public sector and how the risks are shared for enabling the best and ethical construction practices to be involved for the PPP projects to be determined and established successfully (Doloi 2012).

This area of research is important in resolving any kind of risks experienced by the public sector due to the development of the PPP projects in China as well in other Western countries. It is seen that with the development of technology and rapid competition within the construction sector there is huge scarcity of the resources to be taken place and this could be involved in high risks for the future generations to come by and this will ultimately have an impact on the public sector (Bing et al. 2005). The public sector always does things for the betterment of the common individuals who are living in this society. The infrastructure projects are very much important in providing social and cultural benefits to the people living in the society. So there is always an important ink to be developed between the public and the private sector for the benefit of the common people. This area of research is also important in analyzing and assessing the risks involved in the development of the PPP projects. This area of research is also important as the research is based on the principle of risk allocation mechanism. According to Osei-Kyei and Chan (2015) this research study will gain the understanding of how the risk allocation method could be one solution in reducing down the level of risks between the public and the private sectors with the transfer of highest of risks towards the private sector rather than the public sector as well. This area of study also provides an understanding of the inability of the public sector to manage and reduce the risks of developing the PPP projects (Zou et al. 2014). The research also provides importance to the solution of providing allocation of more risks to the private sector as they have the best of the capabilities and the compatible resources for the development of the PPP projects in China as well in the Western countries like UK.

According to Song et al. (2013) the gap in the research knowledge which is identified is that how the private and the public sector coincides in the segmentation of the risks and how they are managing the risks after he risks are segmented. There is always a conflict to be taken place between the private and public sector about which of the risks they should be managing and how they will be able to identify the risks coming under their way. There is the missing information about the handing of the risks identified and assessed and the level of risk to be identified and operated both by the private and the public sector (Chou et al. 2012). The improvements which are required for this research area is particularly the identification and the proper implementation of the risk allocation mechanism for the development of the PPP projects by which there is a measurement of difference between the public and the private sector could be involved. According to Zhang et al. (2015) there is the scope of new research to be developed as the research does not have detailed explanation of the PPF procurement process. There is the scope of new research on the level of risk transfer from the public to the private sector as well. In accordance with Xu Chan and Yeung (2010) the public and the private sector have not categorized and explained the types of risks to be managed and the impact of these risks on the development of the PPP projects as well. According to Ke et al. (2010) the distribution of the risks into the private and the public sector helps in the proper allocation of the resources and they will be conducting their operations based on the resources available.

The research questions for this study are highlighted below

• What are the types of risks identified and assessed in the development of the PPP projects?
• What should be the effective strategies to be developed in the successful implementation of PPP projects?
• How the implementation of the PPP projects has an impact on the society and on the environment?

The research will seek to achieve that how the implementation of PPP projects will become successful in China as well in the Western countries. This is necessary for the field of research as the literature states that there are high risks involved in the implementation of the PPP projects and this becomes a serious issue for the sustainability of the PPP projects in the future. The impact the proposed research have is on the external environment as well on the society due to the extreme risks involved in its development.

• To investigate the effect of implementation of PPP projects in China as well in the Western countries like UK.
• To explore and evaluate the type of risks involved in the implementation of the PPP projects.
• To analyze linkage between the pubic and the private sector for the development of the PPP projects.
• To develop strategies in minimizing the risks involved in the construction of PPP projects.

• The researcher will be able to obtain the findings with the help of the questionnaire surveys and the face to face interviews to be taken. The questionnaire is prepared for the private sector investors investing in construction of PPP projects. The interview is also taken of the government officials for getting ideas on public sector.

References

Bing, L., Akintoye, A., Edwards, P.J. and Hardcastle, C., 2005. The allocation of risk in PPP/PFI construction projects in the UK. International Journal of project management, 23(1), pp.25-35.

Chan, A.P., Lam, P.T., Wen, Y., Ameyaw, E.E., Wang, S. and Ke, Y., 2014. Cross-sectional analysis of critical risk factors for PPP water projects in China. Journal of Infrastructure Systems, 21(1), p.04014031.

Chou, J.S., Tserng, H.P., Lin, C. and Yeh, C.P., 2012. Critical factors and risk allocation for PPP policy: Comparison between HSR and general infrastructure projects. Transport Policy, 22, pp.36-48.

Doloi, H., 2012. Understanding impacts of time and cost related construction risks on operational performance of PPP projects. International Journal of Strategic Property Management, 16(3), pp.316-337.

Ke, Y., Wang, S., Chan, A.P. and Lam, P.T., 2010. Preferred risk allocation in China’s public–private partnership (PPP) projects. International Journal of Project Management, 28(5), pp.482-492.

Mladenovic, G., Vajdic, N., Wündsch, B. and Temeljotov-Salaj, A., 2013. Use of key performance indicators for PPP transport projects to meet stakeholders’ performance objectives. Built Environment Project and Asset Management, 3(2), pp.228-249.

Osei-Kyei, R. and Chan, A.P., 2015. Review of studies on the Critical Success Factors for Public–Private Partnership (PPP) projects from 1990 to 2013. International Journal of Project Management, 33(6), pp.1335-1346.

Song, J., Song, D., Zhang, X. and Sun, Y., 2013. Risk identification for PPP waste-to-energy incineration projects in China. Energy Policy, 61, pp.953-962.

Xu, Y., Chan, A.P. and Yeung, J.F., 2010. Developing a fuzzy risk allocation model for PPP projects in China. Journal of construction engineering and management, 136(8), pp.894-903.

Xu, Y., Chan, A.P., Xia, B., Qian, Q.K., Liu, Y. and Peng, Y., 2015. Critical risk factors affecting the implementation of PPP waste-to-energy projects in China. Applied energy, 158, pp.403-411.

Zhang, S., Gao, Y., Feng, Z. and Sun, W., 2015. PPP application in infrastructure development in China: Institutional analysis and implications. International Journal of Project Management, 33(3), pp.497-509.

Zou, W., Kumaraswamy, M., Chung, J. and Wong, J., 2014. Identifying the critical success factors for relationship management in PPP projects. International Journal of Project Management, 32(2), pp.265-274