When undertaking a P3 project it is important to understand all project risks. Project risks are factors or events that may jeopardize the GOA's and proponents' ability to achieve the anticipated benefits of the project or that may increase the cost of the project. It is essential to assess the probability and impact of each category of risk, and to determine how each risk will be mitigated or managed. The probability and impact of risks should be based on actual experience when appropriate using verifiable data .
The Business Case template (Appendix D.2) includes a table of typical risks for a GOA P3 project, but it must not be relied upon as a substitute for proper analysis. The identification, allocation and management of risk will ultimately be considered project by project.
Potential risks may be categorized as:
• Site risk including physical suitability, availability, environmental, historical resources, statutory approvals, First Nations' land use, geotechnical;
• Design, construction and commissioning risk;
• Contractual risk including that the private sector party (usually a special purpose vehicle created by a consortium) its sub-contractors or the government/SIO will not fulfil their contractual obligations;
• Financial risks including that private financing will not be available, that the project cannot be financed competitively, changes in the financial parameters before financial close or that the project fails financially later;
• Operating and performance risk;
• Industrial relations risk;
• Demand or usage risk;
• Asset ownership risk including latent defect, obsolescence, upgrade, residual and force majeure; and
• Change in law.