OBJECTIVE

In this part of the P3 business case, the project sponsor should:

•  Systematically identify and quantitatively assess project risks (see Figure 10 for an illustrative list of project risks) and allocate these risks between the sponsor and the private sector partner for the delivery models under consideration;

•  Outline the process and methodology used to identify, assess and allocate project risks;

•  Provide a robust description of the risk profile of the project and the allocation of key risks between the public sector and the private sector, the rationale underlying the allocation, and summary tables showing the value of the risks retained and transferred under both the PSC and Shadow Bid (see Figure 11). The description of the project's risk profile should discuss the underlying structure of the risks (e.g., are there a few big risks or a series of smaller risks that sum to a significant risk exposure) and relate back to the sponsor's risk management objectives;

•  Describe the type of statistical analysis used to arrive at the distribution of impacts for each risk. The sponsor should disclose any adjustments made for optimism biases, competitive neutrality and other factors that may be relevant to the accuracy of the VFM; and

•  Where qualitative risk workshops were used to further define the risks, list the participants in the workshop, describe the workshop methodology, and highlight the main points of discussion.

Figure 10: Illustrative risk categories

Figure 11:Sample summary risk quantification table