Risk Allocation and Management Practices in Highway PPP Contracts: Pilot Study of Virginia

Risk is often discussed in connection with public-private partnerships (PPPs). Despite being central to the delineation and allocation of risks, contracts have not been used directly to examine risks in PPPs, especially in the US. This pilot investigation examines risk allocation and related provisions in four Virginia highway PPP projects whose total value is $5.4 billion. A developed risk matrix and rubric supported content analysis of the contracts, which identified 27 risks, their allocation, and their risk sharing mechanisms. The study consequently characterizes contractual risk allocation and provisioning in Virginia’s highway PPP market. Variances from project to project are typically related to project-specific risks, although some shifts were observed in macro-level risks. Future research will examine the rationale for unexpected allocation practices. The study will also be expanded to the US highway PPP market to explore contractual risk allocation and provisioning practices and to conduct comparative analyses over a range of parameters such as scope, jurisdiction and time.