Underestimating future demand jeopardizes project returns and the fiscal solvency of the project itself.
As explained earlier, shifting risk to the private sector is a major part of the rationale for PPPs. In the United States, most road PPPs transfer all or most of the demand risk to the private sector. Down under, Melbourne's EastLink project transfers 100 percent of the project risk to the private sector. To be sure, when the private provider faces problems with demand and is unable to continue the contract, it may terminate the partnership, but it cannot take the facility with it. In most cases, the facility reverts to the public sector.
A variation on the conventional DBFO/M is the DB/FO/M model, a two-stage model used in the Highway 407 project in Canada, which has been successful in bringing projects with uncertain revenue streams to the market. The model is usually employed in situations when there is uncertainty about the future needs. Initially the public sector finances a DB project undertaken by the private partner and later sells the completed facility to a private consortium responsible for its operations. This model is dependent, however, on the availability of public funds.77