Selasa, 02 Oktober 2012

Integrating Qualitative and Quantitative Risk Analysis for Investment in Public–Private Partnership Scheme for Water Supply in Indonesia


The success of public-private partnership (PPP) investment scheme in water supply provision can not be separated from the implementation of risk management concept within the project. Proper risk management processes ensure a profitable operation to the private party as well as considerable benefit to the public interest. In risk management, risk analysis is a key step to understand the risk involved in such scheme and subsequently in defining appropriate risk management action. The paper presents a risk analysis approach integrating both qualitative and quantitative methods in assessing the feasibility of investing water supply infrastructure through PPP concession contract in Indonesia. Qualitative risk analysis is conducted using risk ranking-at-confidence level method to determine the priority risks, which are subsequently analysed using latin hypercube sampling cash flow simulation. The result of the analysis shows that uncertainty in tariff change (water price), non revenue water, and exchange rate fluctuation are significant risk factors. However, the impact of those factors is not always damaging to the investment, as there are cases where certain events lead to positive impact. Risk prioritizing should be conducted to prevent unnecessary exaggeration of risk notion in the investment scheme.

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