Yongjian Ke

Risk allocation and management in public-private partnerships

· 5 min

Over the past decade and a half, my research program on risk in public-private partnerships (PPPs) has built a cumulative, evidence-based playbook for identifying, assessing, allocating, and governing risk, especially in the Chinese PPP context with insights generalisable to other settings. Taken together, these nine papers move from foundations (what risks matter and how they should be shared), to methods (how to evaluate and allocate fairly), to practice (what actually happens and why misallocation persists), and finally to sectoral application (how critical risk factors manifest in water PPPs).

Laying the foundations

I began by clarifying who should hold which risks in China's PPPs and how those preferences compare across contexts. Two 2010 studies mapped the terrain: one established preferred risk allocation patterns for Chinese PPPs (Ke et al., 2010a), while a comparative analysis showed how risk allocation varies across PPP infrastructure projects by context and project characteristics (Ke et al., 2010b). To support practical decision-making, I co-developed a fuzzy synthetic evaluation model that integrates multiple criteria to assess PPP risks systematically (Xu et al., 2010).

In 2011, I extended this base in three ways. First, I led a Delphi study to articulate equitable risk allocation, not merely preferred, but defensible against principles of control and incentive alignment (Ke et al., 2011a). Second, I produced a risk ranking that orders risks by probability and consequence, giving practitioners a prioritised risk landscape (Ke et al., 2011b). Third, with collaborators I documented how Chinese practitioners assess and allocate risks empirically on real PPPs (Chan et al., 2011). This early body of work established a coherent chain: identify salient risks, measure and compare them, allocate to the party best able to manage and mitigate them, and verify against practice.

From methods to practice

Having specified principles and tools, I examined how risk is actually managed in practice and where gaps remain. A survey of risk management practice in China's PPPs mapped common processes and shortfalls, including limited integration between early risk assessment and downstream contract management (Ke et al., 2012). I then investigated risk misallocation (when risks are placed with parties lacking control or capacity) and its consequences for disputes, cost and schedule performance, and value for money (Ke et al., 2013).

This work showed that even when organisations know "textbook" allocations, institutional incentives, bargaining power, and information asymmetries can push allocations off-optimal, creating latent vulnerabilities that surface during delivery.

Sectoral specificity

To demonstrate portability and nuance, I contributed to a cross-sectional analysis of critical risk factors for PPP water projects in China (Chan et al., 2015). The study highlights sector-specific exposures, such as demand uncertainty, tariff and affordability risks, regulatory change, and interface risks, showing why allocation must be contextual. Even strong general rules (for example, allocate to the party best able to manage) require tailoring to sector economics, policy regimes, and stakeholder salience.

What this program changes in practice

Methodological through-line and lasting impact

Methodologically, I combine expert elicitation, large-sample surveys, comparative analysis, and multi-criteria modelling to triangulate findings. This mixed-methods approach improves external validity (what practitioners prefer and do), internal coherence (allocations track control and incentives), and actionability (tools such as fuzzy evaluation can be embedded in PPP appraisal and contracting).

By linking principles (equitable allocation), tools (risk ranking and fuzzy assessment), practice diagnostics (state of play and misallocation pathways), and sectoral insights (water PPP risk structure), this program provides a governance-first template for PPP risk that agencies and concessionaires can use to design contracts that perform under stress, not just on paper.

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