REVIEWING RISK ALLOCATION FOR INFRASTRUCTURE PFI: BETWEEN THEORY AND PRACTICE

Risk allocation (RA) in PFI infrastructures resides in a complex milieu. Tackling this issue from both theoretical and practical perspectives is important in order to understand its complexities. It is claimed that PFI deals can result in better value for money through proper RA. However, the common notion of the public sector transferring ALL risks to the private sector does not describe the reality nor define the optimum way of dealing with risks in infrastructure PFIs. In order to analyse the process of RA, an extensive literature review is undertaken to compare the theory and the practice of the process. It is concluded that a considerable gap exists and the main reason for that is the absence of consensus around the logic/theory of the PFI itself.