From a public partner viewpoint, the transfer of operating risk to its private partner is a key reason for entering into PPP agreements. The 'transferring' of operating risk, however cannot be said to eliminate risk for the public partner because the private partner's ability to manage operating risk is limited to its share of equity and may therefore be illusory (UK Parliament 2011). This means that the public partner retains residual risk as its private partner cannot guarantee that it will fulfill its legal obligations for the life of the contract (Partnerships Victoria 2001a: p.68), and because of this, government remains ultimately accountable for the delivery of public services (UK Parliament 2011). The fact that the Clem7 Tunnel was put into receivership (Hepworth 2011) due to consistently low traffic volumes demonstrates that PPP projects can be delivered within schedule and to budget but can suffer financially during operations because of inaccurate forecasting (The Australian 2010).
Although extant approaches to risk classification tend to involve a blend of sources, trigger events and consequences (Edwards and Bowen 2005: p.26), references from this literature review of risk management of PPP suggests that contract variation, change of consortium members, contract termination, end of concession hand-over, skills transfer and reputation damage are issues that the government, as the public partner, should be concerned about, particularly in the operational phase of PPP. Each of these factors is discussed, in turn.