Abstract
Negotiations among project participants in Public-Private Partnership (PPP), especially those between government and the private consortium, are time-consuming and costly. Disputes often arise during the operation period, due to the characteristics of the PPP financing mode that typically involves huge investment, long concession period, high risks and complicated contractual structure. The Channel Tunnel, which has long been regarded as one of the top construction achievements in the 20th century, is a classical example to demonstrate the complexity of risk allocation. This paper assesses the risk allocation of the Channel Tunnel and compares it with what is generally perceived as an equitable situation. The results show that the major reason for Project Company's bankruptcy is that the consortium had taken up too many risks beyond its control capability. Based on the principle that risks should be allocated to a party who is best able to manage in a cost effective manner, the government should take up political risks, social risks, etc., while the private investors should be responsible for financing, construction, and operation risks, which will be later transferred to appropriate parties, such as contractor, lender, supplier, etc..
Original language | English |
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Pages (from-to) | 97-102 |
Number of pages | 6 |
Journal | Tumu Gongcheng Xuebao/China Civil Engineering Journal |
Volume | 41 |
Issue number | 12 |
Publication status | Published - 1 Dec 2008 |
Keywords
- Channel Tunnel
- Infrastructure
- Public-Private Partnership
- Risk allocation
ASJC Scopus subject areas
- Civil and Structural Engineering
- Architecture
- Building and Construction
- Arts and Humanities (miscellaneous)