Modelling Risk Perceptions of Stakeholders in Public–Private Partnership Toll Road Contracts

This paper investigates the risk perceptions of key stakeholder groups typically involved in public–private partnership (PPP) toll roads. Risk perceptions have an important impact on these PPP schemes for investing in public infrastructure. However, the nature and extent of risk associated with the specification of a PPP contract that commits contracting parties to deliver on their obligations remain unclear. In the context of major transport infrastructure, such as a new toll road, the often‐cited key risk to investors is the traffic (and hence demand) risk. There are, however, other risks, including political risk and media risk, the latter often causing untold harm resulting in modifications to the planned infrastructure. This paper develops a method to capture evidence on how public sector and private sector partners involved in previous PPPs perceive the levels of risk associated with each risk attribute, as a way of identifying the ex ante risk setting brought to negotiations in PPP toll road investments. Using a sample of 101 experts with contract experience in 32 countries, we develop a stated choice experiment and estimate a discrete choice model to quantify a risk profile index (RPI) to capture the perceived (relative) influence of each dimension of risk, and then identify sources of systematic differences in the RPI as a way of understanding the influence of personal traits and contextual and contractual factors.