ABSTRACT
Research on risk management in Public Private Partnerships (PPPs) has largely overlooked that the Special Purpose Vehicle (SPV) is made up of several project partners with different interests and objectives to manage risk. This paper makes an important contribution to this literature as it articulates SPV partners’ perceptions of how they manage risk in toll road PPPs. Our case studies show that the different skillsets of both the international and domestic partners with their sub-contractors provide opportunities for mitigating and managing risk but also pose potential problems in terms of measuring and obtaining value for money for taxpayers.
Acknowledgments
The authors acknowledge constructive comments received from participants at the 2016 Irish Accounting and Finance Association Annual Conference, Waterford Institute of Technology, May 2016 and constructive comments received from Anthony Burke, Dr Sean Byrne and John Maher.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
1. See Burke and Demirag (Citation2017) for an example of a risk allocation matrix and a description of the key risks in PPP projects.
2. The distinction between risk and uncertainty in PPPs is discussed in more detail later on in this paper.
3. SPV partners refer to the private sector partners that make up an SPV consortium. These include contractors, operators, equity investors, and senior debt financiers (see ).
4. See Demirag and Burke (Citation2013) for an overview of the different stakeholder relationships that may occur in PPPs.
5. Toll roads can be used for both Greenfield PPPs and existing roads. Greenfield projects are new projects with no pre-established flow of traffic (Ortiz and Buxbaum Citation2008). Two of the case studies examined in this study were pure Greenfield projects while one of the projects involved the construction of a new section of road (Greenfield) and operation and maintenance of an existing road.
6. The Procuring Authority is a state body responsible for tendering the PPP and choosing a successful consortium.
7. Many of the operators and contractors hold equity stakes within the SPV consortiums.
Additional information
Notes on contributors
Richard Burke
Richard Burke is a lecturer in finance at Waterford Institute of Technology, Waterford, the Republic of Ireland. He teaches a range of modules including Applied Finance, Business Finance, Personal Finance, Statistics and Advanced Financial Management. His research interests include corporate governance and public private partnership with particular reference to risk and stakeholder issues. Richard has previously published in Accounting Forum and Critical Perspectives on Accounting. He completed his Doctoral thesis on public private partnerships at Queen’s University Belfast.
Istemi Demirag
Istemi Demirag is Professor of Accounting and subject lead at Keele Management School. Prior to joining Keele, he was a Professor in Accounting at Hull University Business School where he acted as Co-Director of the Centre for Accounting and Accountability. He also taught accounting 12 years at Queen’s University Belfast, Management School, as Professor of Accounting and has extensive international teaching experience at postgraduate level and on Executive courses in countries, such as Germany, USA, Denmark, Turkey, Malaysia, Singapore, and Hong Kong. Professor Demirag was an Associate Editor of two major international journals; The European Journal of Finance and Accounting Forum. He initiated, organized and contributed to the European Accounting Association’s (EAA) funded research methodology seminars entitled ‘Early Career Academics’ Research Development Program’ designed for developing research skills of accounting lecturers from the Eastern European countries. Professor Demirag has published over 100 refereed and professional journals and has edited, authored and/or co-authored six books. His areas of research interest focus on the use and abuse of Accounting information and its impact on behaviour in the Private and Public sectors.