Step 4: Risk Allocation
Identify in this section which party should bear each risk identified in Step 1. The main objective is to allocate risk to the party best able to manage, control, and mitigate it. Risk can be assigned to either the Government Entity, or the Bidder, or a risk can be shared between parties.
An illustrative table providing an allocation of the risk under Design and Build (DB), Design, Build, and Operate (DBO), Design, Build, Operate, and Finance (DBFO), and Concession contracts is provided below:
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Figure 13: Illustrative allocation of risk between parties under various PPP structures
Legend: GE = typically retained by Government Entity; C = typically transferred to the Contractor |
