Interpreting risk allocation mechanism in public-private partnership projects : an empirical study in a transaction cost economics perspective

Jin, Xiao-Hua and Doloi, Hemanta 2008, Interpreting risk allocation mechanism in public-private partnership projects : an empirical study in a transaction cost economics perspective, Construction management and economics, vol. 26, no. 7, pp. 707-721.

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Title Interpreting risk allocation mechanism in public-private partnership projects : an empirical study in a transaction cost economics perspective
Author(s) Jin, Xiao-Hua
Doloi, Hemanta
Journal name Construction management and economics
Volume number 26
Issue number 7
Start page 707
End page 721
Publisher Routledge
Place of publication London, England
Publication date 2008
ISSN 0144-6193
1466-433X
Keyword(s) risk management
risk allocation
organizational capability
commitment
uncertainty
transaction cost economics
PPP
Summary Risk allocation in public-private partnership (PPP) projects is currently claimed as capability driven. While lacking theoretical support, the claim is often 'violated' by current industrial practice. There is thus a need for formal mechanisms to interpret why a particular risk is retained by government in one project while transferred to private partners in another. From the viewpoint of transaction cost economics (TCE), integrated with the resource-based view (RBV) of organizational capabilities, this paper proposed a theoretical framework for understanding risk allocation practice in PPP projects. The theories underlying the major constructs and their links were articulated. Data gathered from an industry-wide survey were used to test the framework. The results of multiple linear regression (MLR) generally support the proposed framework. It has been found that partners' risk management routine, mechanism, commitment, cooperation history, and uncertainties associated with project risk management could serve to determine the risk allocation strategies adopted in a PPP project. This theoretical framework thus provides both government and private agencies with a logical and complete understanding of the process of selecting the allocation strategy for a particular risk in PPP projects. Moreover, it could be utilized to steer the risk allocation strategy by controlling certain critical determinants identified in the study. Study limitations and future research directions have also been set out.
Language eng
Field of Research 120201 Building Construction Management and Project Planning
Socio Economic Objective 870501 Civil Building Management and Services
HERDC Research category C1.1 Refereed article in a scholarly journal
Persistent URL http://hdl.handle.net/10536/DRO/DU:30017844

Document type: Journal Article
Collection: School of Architecture and Built Environment
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