Risk Weighting and Accounting Choices in Public-Private Partnerships: Case Study of a Failed Prison Contract

A case study of a failed PPP contract shows how ex ante assessments of the extent of risk transfer from public-sector agencies to private-sector contractors were inadequate. Those assessments placed undue weight on some risks, and failed to assess others. The experience suggests that it is inappropriate to choose accounting treatments on the basis of ex ante assessments of risk transfer and risk sharing.