The quantification of risks is an important factor in evaluating value for money over the life of the project. The risks retained by the public sector in a Traditional Procurement are not the same as the risks retained in a P3 procurement. As a result, the quantitative impact of the risks over the life cycle of the project under review must be evaluated for each procurement alternative.
For most identified risks the impact can be quantified by identifying the probability of the risk occurring and the cost if that risk occurs. The cost may only be quantifiable as a range. Both the probability and cost should be evaluated based on actual experience when sufficient verifiable information is available.
Statistical analysis is generally used to calculate the impact of the risk allocations. Statistical analysis may not be required when risk allocations have been standardized for that infrastructure type and the risk quantification based on historical data has been well developed for that infrastructure type.
Early, rigorous and realistic analysis of risk allocation is needed to achieve efficiencies in the P3 procurement. A risk register should be developed during the feasibility analysis and updated as the project moves through the approval process.