Modelling Risk Allocation Decisions in Public-Private Partnership Contracts using the Fuzzy Set Approach

Ernest Effah Ameyaw, Albert P.C. Chan

Research output: Chapter in book / Conference proceedingChapter in an edited book (as author)Academic researchpeer-review

Abstract

Allocating risk in public-private partnership (PPP) projects based on public-private parties’ risk management (RM) capabilities is a condition for success of these projects. In practice, however, risks are allocated to these parties beyond their respective RM capabilities. Too much risk is often assigned to the private or public party, resulting in poor RM and costly contract renegotiations and terminations. This chapter proposes a methodology based on fuzzy set theory (FST) in which decision makers (DMs) use linguistic variables to assess and calculate RM capability values of public-private parties for risk events and to arrive at risk allocation (RA) decisions. The proposed methodology is based on integrating RA decision criteria, the Delphi method and the fuzzy synthetic evaluation (FSE) technique. The application of FSE allows for the introduction of linguistic variables that express DMs’ evaluations of RM capabilities. This provides a means to deal with the problems of qualitative, multi-criteria analysis, subjectivity and uncertainty that characterise decision-making in the construction domain. The methodology is outlined and demonstrated based on empirical data collected through a three-round Delphi survey. The public-private parties’ RM capability values for land acquisition risk are calculated using the proposed methodology. The methodology is helpful for performing fuzzy-based analysis in PPP projects, even in the event of limited or no data. This chapter makes the contribution of presenting a RA decision-making methodology that is easy to understand and use in PPP contracting and that enables DMs to track calculations of RM capability values.

Original languageEnglish
Title of host publicationFuzzy Hybrid Computing in Construction Engineering and Management
Subtitle of host publicationTheory and Applications
PublisherEmerald Group Publishing Ltd.
Pages337-355
Number of pages19
ISBN (Electronic)9781787438682
ISBN (Print)9781787438699
DOIs
Publication statusPublished - 1 Jan 2018

Keywords

  • Fuzzy set theory(FST)
  • Fuzzy synthetic evaluation (FSE)
  • Infrastructure projects
  • Private sector
  • Public sector
  • Public-private partnerships (PPPs)
  • Risk allocation(RA)

ASJC Scopus subject areas

  • Computer Science(all)
  • Engineering(all)

Fingerprint

Dive into the research topics of 'Modelling Risk Allocation Decisions in Public-Private Partnership Contracts using the Fuzzy Set Approach'. Together they form a unique fingerprint.

Cite this