Over the last few decades, public agencies have increasingly implemented large-scale transportation projects. Such projects are typically complex, have a variety of risks, and involve multiple stakeholders that often have conflicting interests and incentives. Oftentimes, alternative contracting methods such as design-build or design-build-finance-operate-maintain are used to deliver these projects. In these arrangements, the allocation and management of risks becomes paramount since the inappropriate allocation of risks can lead to project management inefficiency, high transaction costs, high frequency of disputes, and can reduce private sector participation. Recent trends in the market suggest that public agencies are transferring too much risk in these projects, which has caused major industry players to exit the market or they have become far more selective about the sectors or projects that they will pursue.
This webinar examined risks in major transportation projects by presenting findings from a recent investigation that identified:
· How risks are typically allocated
· Which risks are particularly problematic
· How risk allocation and management can be improved
The findings make it clear that the allocation and management of risks, such as those related to third-parties, are a significant challenge. Yet, strategies such as better counterparty communication and employing risk pools provide opportunities to remedy current problems in the market.