Appropriate risk allocation between the public and private sectors is key for achieving value for money on projects of this type. In many cases the private sector is better placed to manage risks that traditionally the public sector has borne. If, however, the public sector seeks to transfer a risk that the private sector cannot manage, value for money will reduce as the private sector seeks to charge a premium for accepting such risks. Similarly, value for money will reduce if the public sector retains a risk that it cannot manage.
The NSW Government's Working with Government Guidelines stress that the aim is to optimise risk allocation so that value for money is maximised in each project on a whole-of-life basis; the aim is not to maximise risk transfer from government to the private sector.