EFFECTIVE MANAGEMENT IN PUBLIC PRIVATE PARTNERSHIP PROJECT

International Research Journal of Engineering and Technology (IRJET) e-ISSN: 2395-0056

Volume: 09 Issue: 12 | Dec 2022 www.irjet.net p-ISSN: 2395-0072

EFFECTIVE MANAGEMENT IN PUBLIC PRIVATE PARTNERSHIP PROJECT

N. Dhivyasri1 , P. Latha2

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Abstract - The combination of Government and private sector isknownasPublicandPrivatePartnershipproject.The Contract agreement is necessaryforallconstructionprojects now it is important in public and private sectors for establishing effective risk allocation strategies in PublicPrivate Partnership (PPP) projects. The Public private partnership infrastructure projects that leads tothevaluefor moneyandbalanceofinterestsbetween publicandendusers. It is used in various sectors such as Transportation, Industrialization, water, prisons, health, welfare, and urban regeneration. On an average around 26 percent of construction projects are failed or delayed due to risks in construction contracts. There is no proper framework for managing risks in contracts. This paper found that properly assessingrisk.Thefollowingriskare (planninganddesigning risk, construction risk, financial risk, environmental risk and political risk) for a successful Public private partnership project, risks should be managed carefully,this study focused on the managing risk in PPPrelations between public and private entities toachievesuccessinPPPprojects Themajor objective of this research is analysis the risk using SPSS analysis software and provide effective risk mitigation measures for major risk occurred in PPP project

Key Words: Combination - value for money - urban regeneration - frame work - assessing risk- SPSS analysis - mitigation measures

1. INTRODUCTION

InIndiathenumberofpublic-privatepartnership(PPPs) opportunities is increasing. The private sector Entities provide public sector goods and services such as utilities, social services, public real estate and infrastructure. The success of Public private partnership depends on the successful identification, allocation, mitigation, and managementofrisks.

Politicalrisks,designandplanningrisk,constructionrisk, financialriskandlegalriskarekeyrisksinthepublic-private relationship. Some political risks are currency inconvertibility and transfer restriction (CI/TR) Expropriation, Breach of contract, Politicalviolence, Legal, regulatory, and bureaucratic risks. The respondents were asked to indicate their perception by using likelihood functionsfrom“extremelylow”to“extremelyhigh”.

1.1 NEED FOR THE STUDY

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The Ministry of Statistics and Programmed Implementation,GovernmentofIndiahasreported

Thereporthastooutof782constructionprojects inIndiamonitoredbyit,

Atotalof215projectsaredelayedwiththe time over-runrangingfrom1to61months.

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Theprimarycauseswhicharenoted aredelayin tenderingandcontractualissues.

On average around 26 percent of construction projects are failed or delayed due to the risks in constructioncontracts.

Hence there is a need for risk management in construction contracts to reduce delay in the construction projects.to find out the risk and to providepropermitigationmeasuresforovercome theissuesisthebasicneedofthisstudy.

2 LITERATURE REVIEW

Patrick X.W. Zou (2010)Thispaperdiscussedthatthe purpose of ppp is to develop a life cycle risk management framework. The infrastructure projects that lead to the realization of the value for money andbalance of interests betweenpublicandendusers.Theppparrangementshave beenusedindifferentsectorssuchastransport,technology, water,prison health,welfare,andurbanregeneration.Itmay beanextensiveasprivatizingfacilitiesandservices,ormaybe an simply obtaining management or financing techniques from the private sector as PPP arrangements are project specificanddependentonmanyfactorssuchaspublicand private partners’ skills, capabilities, limitations Each participant bringssomething of value to the partnership; Sharing of risks and responsibilities for the outcomes or activitiesbetweenpartiesinvolved,isessentialThefinancial risk requiring analysis at feasibility studystage and a risk managementmechanismshouldbedevelopedtomonitorthis risk.

BelizOzorhona (2015) ThispaperidentifiedthePPPis oneofthemostwidelyusedmeansoffinancinglarge-scale public projects. The PPP agreements involve public and

International Research Journal of Engineering and Technology (IRJET) e-ISSN: 2395-0056

Volume: 09 Issue: 12 | Dec 2022 www.irjet.net p-ISSN: 2395-0072

private sector were resources and risks are appropriately allocated.Therehasbeenavastamountofresearchonthe PPPs recently focusing on different aspects including the financing, critical success factors, risks, and concession periods.PPPsbringanumberofbenefitssuchasefficientuse ofresources,reductioninproject costs anddurations,and increaseinthequality ofpublicservices.Dependingonthe complexity of the projectsand the procurement process, Publicprivatepartnershipinheritahighnumberofrisks.In thisresearchistoinvestigatetheriskmanagementprocessin a Public private partnership project. This paper first identifies the risks in this project, then presents the risk analysis,and finally mentions the risk response strategies. This paper provides recommendations on how to better allocaterisksamongtheparticipantsofaPPPscheme.Then the study suggest that the most significant risks are the political, legal and regulatory, financial, and construction risks.

Adama Johnathan, fabunmi foluke et al (2016) This study examines risk management in Public Private Partnership(PPP)projectscarriedoutinthefederalcapital city of Nigeria. A questionnaire survey approached was adopted in acquiring the data required for the analysis. A totalof155copiesofquestionnairewereadministered.Both partiesarepreferredtosharetheeconomicrisksandmarket risks.ThisfindingsindicatethatPPPisagoodapproachin buildingconstructionprojectsandalso, the findings show thatadequateallocationofriskisnecessaryforthesmooth implementation of any PPP model. In This paper provides investorsabetterunderstandingofriskpreferencesamong thestakeholdersintheNigerianconstructionindustrysothat theycouldbetteradjustandplantheirstrategiesthespecific riskfactorsachievebettervalueformoneywhenexecuting PPPprojects.

Shaunak Singh Monga (2018) This paper briefly discussedthatThePublicPrivate Partnerships(PPPs)have emerged as a very feasible, reliable, viable, and growing modeofcreatinginfrastructurefordevelopingcountrylike India.Thepublicsectorplaysadominantroleinbuildingof infrastructure, the PPPs have enabled us to channelize private sectorinvestment ininfrastructure. In India is still starvedofinfrastructurerequiredforhighleveldevelopment, and the opportunities for the growth of joint venture between both the sectors are huge and desirable. The anticipatedpercentageofparticipationtheprivatesectoris twelfthplaninmuchhigherthantheearlierplans.TheIndian Publicprivatepartnershipscenarioasitstandsanoptimistic picture. Some of the major challenges is to relate the regulationandavailabilityoffinanceforprivatesectors.The Government of India fully aware of the benefits that such partnerships can offer to the country and has been taking stepstoremovesomeoftheseproblems.thusthepublicand privatesectorshascertainstrategiestoovercometheissues inconstructioncontract.

Ulrika badenfelt (2011) Thepaperexaminestoincrease ourunderstandingofcollectiveoutcomesbyexploringboth microandmacrolevelstrategiesfordealingwithproblemsin incompletecontracts.CasestudiesregardingSwedishinter organizationalfrombothconstructionandITindustriesare usedas examples. Investigation of those projects are done using semi-structured interviews in which the data were categorized using qualitative analysis method then the selectionoffinancialincentivesandtypeof changeclauses areexaminedinempiricalanalysis.Finallytheresultssuggest that it identified four strategies for incomplete contract in constructionindustriessuchas financial incentiveschange clauses,contractdurationandlong-termrelationships.

2.1 ANALYSIS AND RESULTS

There are five risk are Planning and designing risk, Construction risk, financial risk, Environmental risk, and Political risk. These risks are identified by the expert interview. Questionnaire survey from experts has been conducted to get the value of probabilityand severity parameters of risks. The construction and financial risk playsthemajorroletoaffecttheconstructioncontract.The riskassessmentmatrixwereidentifiedthemainobjectiveof riskmatrixtoolisgettingaRRN(RiskRatingNumber)which isobtainedbytwofactorsviz.

2.1.1 OVERALL PERCENTAGE OF RISK IN PPP

S.N RISK FACTOR MITIGATION

1 DELAY OF PAYMENT

2 COST OVERRUN

Under the clause14.8 says the contractorshallbeentitled to receive financingchargescompoundedmonthly onanamount,unpaidduringtheperiod ofdelay.

Under the clause 82 state that to allocateadequatecontingencyfundand sufficient time and to develops good monitoringandcontrollingsystem.

International Research Journal of Engineering and Technology (IRJET) e-ISSN: 2395-0056

Volume: 09 Issue: 12 | Dec 2022 www.irjet.net p-ISSN: 2395-0072

3 CHANGES IN GOVERNMENT REGULATION AND LAWS

4 LACK OF CONTRACTOR EXPERIENCE

Clause13.7statesthat the contractor shall give notice to the engineer. Thenthe contractorriseto claimthelawbutthenoticeshall not be laterthan28daysafterthelawas passed.

Clause 4.3 says if the contractors representative isto be temporarily absentfromthesite during the execution of works a suitable replacement person shall be appointed.

5 IMPROPER Under the clause

DOCUMENTAT I-ON 1.5says if an ambiguity or Discrepancyisfound indocumentthe Engineer hasauthority to issue any instructionwithheconsidersnecessity toresolveanambiguity or discrepancy.

designing, 2, construction 3, financial 4, environmental 5, politicalriskmainlyFinancialandConstructionriskpaysthe major role to affect construction. Out of 100 samples 70 samples were responded by engineer and contractor and totally46riskfactorsareidentifiedwiththehelpofexpert interview.Finallytogetthevalueofprobabilityandseverity parametersofriskthenanalysistheriskusingSPSSanalysis softwareit is very useful forsurvey companies, marketing organizations,healthresearchers,governmententitiesand dataminershencetofindthemajorriskfactorbyusingspss analysissoftware.Theriskassessmentmatrixwereusedto identify criticalfactorinapictorialform.Theprobabilityhas beenratedaslow,verylow,medium,highandveryhighand this study involves developing mitigation measures for major risk with the help of guidelinesprovidedin“FEDIC REDBOOK”thiswillhelptomanagetheconstructionriskItis atoolthatplaysanimportantroleinRiskmanagementand helps totrackissuesandproblemsastheyarise.

REFERENCES

6

POOR FINANCIAL STRENGTH

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IMPROPER PROJECT COST ESTIMATION INTENDER QUANTITIES

FORCE MAJEURE

The clause 13.8says in case ofprice adjustmentthe amount willbeadded ordeducteddetermined by the formulae Pn = a + b Ln/Lo + c En/Eo + dMn/Mo

Accordingtoclause1.8,ifthereisany errorinestimationonepartyshall promptly give notice to the other party.

Under the clause19.4statesthatthe contractorshallbeentitledasubject toextension of time for suchdelay if completion is or it will be delayed thentheengineer has to determine thesematter.

1 S.M.AbdulMannanHussain,AsraFatima,Dr.T.Seshadri Sekhar (2014), “Study of Risk inConstruction Contracts”, International Journal of Innovative Research and development.

2 Amitbijondutta(2014),“StudyofRisksinConstruction Contracts”,InternationalJournalofResearchinEngineering &Technology.

3 AlfredoSerpella*,XimenaFerradab,RodolfoHowarda (2015), “Assessing the client’s risk management performance in construction procurement and contracting”:Casestudies.ProcediaEngineering

9 SAFETY PROCEDURE

10 DESIGN CHANGES

Clause 4.8 says if the contractor is sharingoccupation onsite

Withothers.Itmaybeappropriatefor himtoprovidesomeofthelisteditems in these circumstance and the employer obligation should be specified.

4 Francisk.adams(2008),“RiskperceptionandBayesian analysis of international construction contract risks: the case of payment delays in a developing economy”. InternationalJournal ofProjectManagement.

5 Jasperbachu,SamuelTaylor(2014),“Contractualrisks in the New Zealand construction industry: Analysis and mitigationmeasures”.InternationalJournalofConstruction SupplyChainManagement.

11 POLITICAL VIOLENCE

3. CONCLUSION

Under the clause4.6 says the design managershouldbe

adequately updated, highlighted and also capturing all design changes on a register.

BYOWNER

Clause18.1saysgetthesiteensured to avoidpoliticalviolence.

Thisstudyinvolvesidentificationofriskfactorinppp(public privatepartnership)projectlocatedinTamilNadu.Thereare fivedifferenttypeofriskwereidentifiedare1,planningand

6 Nur Syaimasyaza Mansor*, Khairuddin Abdul Rashid (2016),“IncompleteContractinPrivateFinanceInitiative (PFI) contracts: causes, implications and strategies” Procedia-SocialandBehavioralSciences.