Risks are usually identified by reference to generic risk categories and/or risks based on different phases of the project. Care must be taken when using generic categories, as many overlap and if used in isolation, could be misleading. Even skilled practitioners may fail to comprehensively and accurately identify all relevant risks. A change in policy risk, for example, may equally be a network risk or an operational risk.
A useful starting point may be to use a checklist of the risks that typically apply to infrastructure and service delivery projects delivered through public private partnerships. The use of generic risk categories or a general checklist should not, however, take the place of detailed consideration of the risks of a particular project by experienced technical personnel such as engineers and planners. A risk workshop should be conducted to identify project risks and attended by experienced technical personnel. The workshop may use the standard categories or phases to give an underlying structure to the risk profile for a particular project.
Typical project phases include:
• bid phase
• construction phase
• operational phase
• transfer of asset.
The first phase is not documented in the contract, but contains various process risks that government must consider. For further detail on this subject, refer to the supporting document on probity and process governance.
Typical risk categories for infrastructure and service delivery projects (in general) and in public private partnership projects (in particular) are:
• site risk
• design, construction and commissioning risk
• sponsor and financial risk
• operating risk
• market or demand risk
• network and interface risk
• industrial relations risk
• legislative and government policy risk
• force majeure risk
• asset ownership risk.
Each of these categories is discussed in detail in part two of this document.