Managing Critical Risks Affecting the Financial Viability of Public-Private Partnership Projects: Case Study of Toll Road Projects in Vietnam

Anh Nguyen, Abu Mollik, Ying Yi Chih

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1 Citation (Scopus)

Abstract

Public-private partnerships (PPP) have been widely applied in infrastructure projects in developing countries. However, many projects have been abandoned or canceled owing to an insufficient understanding of risk factors, lack of awareness of the financial consequences of risk, and a limited understanding of risk bearers' capacity to handle risks. Using a mixed research method, this study identified critical risks in PPP toll road projects in Vietnam that affect the projects' financial viability, determined the PPP partners capable of managing these risks, and explored the causes to these risks and their management strategies. Empirical data collected from quantitative and qualitative studies revealed 22 risks critically affecting toll road projects' financial viability in Vietnam, either by inflating projects' cash outflows or reducing projects' cash inflows in a commonly used net present value (NPV) analysis model. This confirms the important role of government support and guarantees in the mitigation of the risks in developing countries and indicates that governments need to actively get involved in managing these risks and planning for the associated government support. This study provides a comprehensive understanding of risk management in PPP toll road projects in Vietnam, which will not only benefit public management, policy consultants, and investors, but also academics interested in studying PPP projects in developing countries.

Original languageEnglish
Article number05018014
Pages (from-to)1-13
Number of pages13
JournalJournal of Construction Engineering and Management
Volume144
Issue number12
DOIs
Publication statusPublished - 2018

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Toll highways
Developing countries
Viability
Public-private partnerships
Roads
Value engineering
Risk management

Cite this

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title = "Managing Critical Risks Affecting the Financial Viability of Public-Private Partnership Projects: Case Study of Toll Road Projects in Vietnam",
abstract = "Public-private partnerships (PPP) have been widely applied in infrastructure projects in developing countries. However, many projects have been abandoned or canceled owing to an insufficient understanding of risk factors, lack of awareness of the financial consequences of risk, and a limited understanding of risk bearers' capacity to handle risks. Using a mixed research method, this study identified critical risks in PPP toll road projects in Vietnam that affect the projects' financial viability, determined the PPP partners capable of managing these risks, and explored the causes to these risks and their management strategies. Empirical data collected from quantitative and qualitative studies revealed 22 risks critically affecting toll road projects' financial viability in Vietnam, either by inflating projects' cash outflows or reducing projects' cash inflows in a commonly used net present value (NPV) analysis model. This confirms the important role of government support and guarantees in the mitigation of the risks in developing countries and indicates that governments need to actively get involved in managing these risks and planning for the associated government support. This study provides a comprehensive understanding of risk management in PPP toll road projects in Vietnam, which will not only benefit public management, policy consultants, and investors, but also academics interested in studying PPP projects in developing countries.",
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author = "Anh Nguyen and Abu Mollik and Chih, {Ying Yi}",
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AU - Mollik, Abu

AU - Chih, Ying Yi

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KW - Infrastructure projects

KW - Toll road projects

KW - Developing countries

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