Risk Management and Governance for PFI Project ... - Title Page - MIT

Table 9: The Statistics of Risk Allocation
Stage Risk
57
Risk Allocation (%)
Public Private
Public
and
Private
Common Force majeure 9.30 2.00 88.70
Laws and regulations change 15.00 2.40 82.60
Funding 0.40 92.60 7.10
Acquisition of permit 1.50 26.40 72.20
Residents Corresponding 7.10 3.00 89.90
Third person liability 0.40 31.80 67.80
Tender documentation 99.20 0.00 0.80
Tax change 2.40 13.90 83.70
Environmental 0.00 66.80 33.20
Interest rate 3.80 49.10 47.20
Agreement 1.00 12.60 86.40
Research and Design Surveying and research 2.90 11.20 86.00
Design change 16.50 6.50 76.90
Site procuring 40.00 26.30 33.70
Construction Delay construction 0.70 23.40 75.90
Increased of construction cost 0.70 9.70 89.50
General damage 0.40 90.30 9.20
Performance s 0.00 96.10 3.90
Price fluctuation 1.60 63.40 35.10
Operation and Maintenance Unachieved requirement level 0.40 90.90 8.70
Facility damage 3.10 20.20 76.70
Maintenance cost 3.80 33.30 62.90
Plan change 62.70 2.90 34.40
Source: Japan Research Institute (2009). Research for Risk Management of PFI Project
First, I propose a framework, the “risk allocation matrix 16 ”, classifying the individual risks into
a two-dimensional matrix (See Figure 13). As stated above, the main principle of risk
allocation is that the risk should be borne by those who can ‘manage’ it. If the word “manage”
is considered more carefully, it should be categorized roughly into two processes, as follows:
“perception or analysis” and “control or communication”. The former is based on the
standpoint of identifying the risk itself, while the latter addresses how to deal with the risk. The
16 Miller and Lessard proposed a similar risk classification approach along two axes: the extent to which risk are
controllable and the degree to which risk are specific to a project or systematically affect large numbers of actors. It is the
framework for managerial strategies to cope with risks classifying the space into four risk management techniques: (1)
shape and mitigate; (2) shift and allocate; (3) influence and transform institutions; and (4) diversify through portfolios
(Miller & Lessard, 2001). The “risk allocation matrix”, on the other hand, classifies the space from the private sector’s
relative perspective for risk compared to private sector.