Transport infrastructure public private partnership (PPP) projects are very diverse and complex in nature not only because of their mode-specific intricacies but also because of their inherent economic characteristics that relate to the scope of involvement of the private sector in
the project, the large sunk costs incurred, and ultimately, the competition to which these projects are exposed. The allocation of revenue risk is of paramount importance for the successful implementation of such projects and a sub-optimal allocation may lead to project structuring that is
unnecessarily expensive and vulnerable to failure. At the same time, the revenue risk depends critically on the remuneration model used (user-based versus budget-based) and may, in turn, take the form of demand risk, counterparty risk or combinations of the two. This review explores the issues
related to revenue risk allocation for transport infrastructure PPP projects. Overarching principles for the allocation of revenue risk that transcend mode-specificity are identified and compared to case studies generated in the context of the COST Action TU1001. The results show that theory
and practice are divergent, leading to sub-optimal structuring and exposing projects to potential failure.
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Document Type: Research Article
Department of Shipping, Trade and Transport, University of the Aegean, 2A Korai str, Chios, 82100, Greece
The Bartlett School of Construction & Project Management, UCL, 1-19 Torrington Place, London, WC1E 6BT, UK
March 4, 2015
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