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.
Selasa, 02 Oktober 2012
Challenges in Implementing the Public Sector Comparator For Bid Evaluation of PPP Infrastructure Project Investment
The
public private partnership (PPP) is indisputable and international experience
has indicated that cooperation between the public and private sectors can be a
powerful incentive to achieve value for money in infrastructure project
development. However, the appropriate risk allocation between the public and
private sectors is the key requirement for the achievement of value for money.
Public Sector Comparator (PSC) is used for demonstrating potential value for
money of the proposed PPP project. PSC enables a financial comparison including
costs/gains and risks, and can be an alternative evaluation method which
includes risk transfer aspect to facilitate risk negotiation properly. On the
other hand, there are challenges in the development of PSC due to controversy
regarding manipulation issue, reality of risk transfer in practice, and public
sector ability to perform risk management methodology. An extensive literature
review was conducted to elaborate some urgency of used PSC and its controversy
in practice. It includes some lessons learned in the development of PSC such as
the need for structuring risk management application, focusing on priority
risk, improving the accuracy of risk-return analysis, realizing the allocation
of risk, and enhancing risk management capability.
A Comparative Review of Quantitative VFM Methodology for PPP Infrastructure Project in Indonesia and Australia
The Government of Indonesia (GoI)
increasingly relies on the private sector financing to build and operate
infrastructures through public private partnership (PPP) schemes. However, PPP
does not automatically provide the solution for the financing scheme due to
value for money (VFM) issues. The procurement authority must show whether a PPP
proposal is the optimal solution that provides best VFM outcome. The paper
presents a literature review of comparing quantitative VFM methodology for PPP
infrastructure project procurement in Indonesia
and Australia.
Public Sector Comparator (PSC) is used to assess the potential project VFM
quantitatively in Australia.
In Indonesia,
the PSC has not been applied, where the PPP procurement authority tends to
utilize a common project evaluation method that ignores the issues of risk.
Unlike the conventional price bid evaluation, the PSC enables a financial
comparison including costs/gains and risks. Since the construction of PSC is
primarily on risk management approach, it can facilitate risk negotiation
processes between the involved parties. The study indicates that the
quantitative VFM methodology of PSC is potentially applicable in Indonesia for water
supply sector. Various supporting regulations are available that emphasize the
importance of VFM and risk management in infrastructure investment. However,
the study also reveals a number of challenges that need to be anticipated, such
as the need of a more comprehensive PPP policy at both central and local
government level, a more specific legal instrument for bidding evaluation
method and the issue of institutional capacity development in PPP Units at the
local level.
Assessing Risk Management Capability of Public Sector Organizations Related to PPP Scheme Development for Water Supply in Indonesia
The success of Public Private Partnership (PPP) for
water supply investment is inseparable from the capability of risk management
of the parties within the project. This study investigates the risk management
capability of Indonesian local public sector organizations that are potentially
involved in PPP schemes for water supply. A risk management maturity model based
assessment tool probing the culture, process, experience, application and
partnership aspects is used in the survey. The model describes risk management
capability in four levels (adhoc, initial, competent, excellent). The survey
shows that their risk management capability is still in-average at the initial
stage (level 2), meaning that the adopted risk management postures are mostly
supported only by unstructured, ad-hoc and non-formal processes. The result of
this study can help decision makers in choosing appropriate risk management
methods and tools to be used by the local public
authorities for managing risks in PPP schemes.
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