Allocation Model of Macro Economy Risk Associated With PPP Projects

A common objective in PPPs is the transfer of project risks to the party who is best able to control and mange the risk. However, in practice, the allocation pattern for macro economy risk is difficult to be determined, as neither the government nor the private sector is capable to control. This paper aims to explore the rationale behind those decisions about the distribution of macro economy risk. Meanwhile, demonstrates the complexity and the difficulties in distributing them appropriately. The findings should provide a better understanding of the risk allocation on macro economy risk between the public and private sectors; hence a more efficient risk allocation framework for PPP development in China can be established. The purpose of this paper is to explore the rationale behind decisions about the distribution of macro economy risk between the public and private sectors and demonstrates the complexity and the difficulties in distributing them appropriately.