The allocation of risk will depend on the project and the method of procurement. There are many ways of allocating risks but the purpose is to clearly define risks and who bears that risk. There is generally little risk transfer to the private sector in a Traditional Procurement. For a P3, the risks that the private sector can price, mitigate and/or insure are appropriate risks to transfer. The government should retain those risks that it can manage more effectively than the private sector. Risks that are outside the control of either party should be shared or retained by the public sector.
The inappropriate transfer of risk to the private sector will impact the value for money offered by a P3. Transferring risk that the private sector should not carry will result in cost premiums; retaining risks with the government that should be transferred or shared will reduce private sector incentive.