Managing risks in public-private partnership formation projects

While sourcing by means of Public-Private Partnerships has been lauded over recent years, increasingly risks appear to jeopardise public organisations' unique societal tasks. Integrated Risk Management has not yet been applied to public organisations getting involved in PPP in the sense of understanding risk management capabilities. This article explores risk awareness and risk management practices underpinning maintenance partnership formation by means of a dual case study of two PPP projects and a short industry survey. The results suggest that organisations face several “intolerable risks” linked to project governance and project management responsibilities: insufficient representation of qualified employees, absence of a shared performance system, assignment of responsibilities and decision-making authority, impractical or inappropriate partnership agreement, and timing of the partnership initiative. Cross-case analysis revealed the role of different levels of risk awareness and senior management involvement. Drawing on these findings, a framework for risk management for PPP formation projects is developed.