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A principal-agent theory perspective on PPP risk allocation

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Version 1 2019-11-19, 10:26
journal contribution
posted on 2019-01-01, 00:00 authored by Asheem ShresthaAsheem Shrestha, Jolanta Tamošaitienė, Igor MartekIgor Martek, M. Reza Hosseini, David J Edwards
This study proposes a framework for the allocation of risk in public private partnerships (PPP) projects. Its contribution lies in the recognition and incorporation of risks introduced by project stakeholders, and as articulated by the principal-agent theory (PAT). The framework assesses risks and routes these risks to those parties best equipped to mitigate their impact on the project. This allocation of risk is facilitated by a thirteen-step process. The practical benefit of this study lies in outlining a clear, systematic method for allocating risk efficiently to both the government and private enterprise parties of the project. In so doing, risk mitigation can be expected to improve project performance, optimize stakeholder goals, and enhance sustainability objectives, including improved operational life-cycle efficiency and elevated social and community benefits.

History

Journal

Sustainability

Volume

11

Issue

22

Article number

6455

Publisher

Mary Ann Liebert

Location

New Rochelle, N.Y.

ISSN

1937-0695

eISSN

2071-1050

Language

eng

Publication classification

C1 Refereed article in a scholarly journal

Copyright notice

2019, The Authors