TY - JOUR
T1 - A holistic review of research studies on financial risk management in public-private partnership projects
AU - Akomea-Frimpong, Isaac
AU - Jin, Xiaohua
AU - Osei-Kyei, Robert
PY - 2021
Y1 - 2021
N2 - Purpose – Globally, the management of financial risks has gained much attention in the public–private partnerships (PPP) market in recent years. Existing studies rank financial risks among the topmost risk factors that determine the success or failure of a PPP project. As essential for managing financial risks, a systematic review of previous studies on financial risk management of PPP from 1995 to 2019 (inclusive of both years) has been presented in this paper. Design/methodology/approach – The paper undertakes a systematic analysis of 49 relevant and available studies on financial risk management of PPP projects. Findings – From the results, high-interest charges, increased construction costs and increased market risks are some of the key financial risks hampering the success of PPP projects. Techniques used to assess financial risks include Monte Carlo Simulation (MCS) and Net Present Value (NPV). Financial risks control adopted by project managers include minimum revenue guarantee and real option pricing. Extremely limited studies on financial risk management in PPP projects in developing economies was revealed. Practical implications – Project managers in developing financial risk management models may use the outcome of this paper to improve the financial success of PPP projects. Holistically, researchers will be guided to investigate and heighten the pertinent issues on financial risk management of PPP projects in academia. Originality/value – The results provide a rare guide to project managers in controlling financial risks of PPP projects which is an unexplored topic. It is also the first paper to highlight the issues of financial risk management in PPP projects research.
AB - Purpose – Globally, the management of financial risks has gained much attention in the public–private partnerships (PPP) market in recent years. Existing studies rank financial risks among the topmost risk factors that determine the success or failure of a PPP project. As essential for managing financial risks, a systematic review of previous studies on financial risk management of PPP from 1995 to 2019 (inclusive of both years) has been presented in this paper. Design/methodology/approach – The paper undertakes a systematic analysis of 49 relevant and available studies on financial risk management of PPP projects. Findings – From the results, high-interest charges, increased construction costs and increased market risks are some of the key financial risks hampering the success of PPP projects. Techniques used to assess financial risks include Monte Carlo Simulation (MCS) and Net Present Value (NPV). Financial risks control adopted by project managers include minimum revenue guarantee and real option pricing. Extremely limited studies on financial risk management in PPP projects in developing economies was revealed. Practical implications – Project managers in developing financial risk management models may use the outcome of this paper to improve the financial success of PPP projects. Holistically, researchers will be guided to investigate and heighten the pertinent issues on financial risk management of PPP projects in academia. Originality/value – The results provide a rare guide to project managers in controlling financial risks of PPP projects which is an unexplored topic. It is also the first paper to highlight the issues of financial risk management in PPP projects research.
KW - public-private sector cooperation
KW - risk management
UR - http://hdl.handle.net/1959.7/uws:58305
U2 - 10.1108/ECAM-02-2020-0103
DO - 10.1108/ECAM-02-2020-0103
M3 - Article
SN - 0969-9988
VL - 28
SP - 2549
EP - 2569
JO - Engineering, Construction and Architectural Management
JF - Engineering, Construction and Architectural Management
IS - 9
ER -