A life-cycle risk management framework for PPP infrastructure projects Patrick X.W. Zou, Shouqing Wang and Dongping Fang Abstract Purpose – The purpose of this paper is to develop a life cycle risk management framework for public private partnership (PPP) infrastructure projects that lead to the realization of value for money and balance of interests between different partners including the public and end users. Design/methodology/approach – This paper draws on extensive theoretical research and literature reviews, coupled with case study methodologies. A comprehensive review of current literature in the field was first carried out. Then three PPP infrastructure projects, two from Australia and one from China, are studied to scrutinize reasons leading to their dilemma and articulate the valuable lessons learnt in relation to risk analysis and mitigation. Findings – The paper found that properly assessing risks (financial, government’s political and public’s acceptance/rejection risks), ensuring value for money and protecting the public (and end users’) interests are essential in PPP infrastructure projects and this can only be achieved through optimal risk identification, assessment, allocation and management from a life cycle perspective and balanced interests between the Government/public and private partners as well as product end users. Research limitations/implications – The paper was limited to proposing the framework; therefore the next step should be testing the framework. Practical implications – The framework proposed in this paper should be practical and useful for professionals in managing the risks associated with the procurement of PPP infrastructure projects. Originality/value – The PPP method has been increasingly used to procure large-scale infrastructures such as freeways, railways, tunnels and bridges worldwide. While there have been many successful PPP projects, unsuccessful cases abound and studying them can help people better manage the risks in future PPP infrastructure projects. To ensure the success of PPP infrastructure projects, it is important for all partners to manage the risks from a project life cycle perspective, in which risks are identified and assessed in the earliest possible project stage and are allocated to the parties who are in the best position to control them. Furthermore, it is also important to continuous monitor the risks and develop proactive risk respond strategies throughout the project life cycle. To this end, this paper provides a life-cycle risk management framework for PPP infrastructure projects. Keywords Risk management, Australia, China, Partnership, Public sector organizations, Private sector organizations Paper type Research paper Introduction Public private partnership (PPP) arrangements have been used in different sectors such as transport, technology, water, prisons, health, welfare, and urban regeneration. It may be as extensive as privatizing facilities and services, or may be simply obtaining management or financing techniques from the private sector (McDonough, 1998, cited in Li and Akintoye, 2003). The basic PPP format is that the state or federal government departments are transformed from being owners and operators of infrastructures and public assets into the purchasers of services from the private sector, with the private sector becoming the long-term provider of services by taking the responsibility for the financing, feasibility study, design, construction, and the operation of the infrastructure and facilities (Ahadzi and Bowles, 2004). The Canadian Council for Public Private Partnerships defined PPP as ‘‘a DOI 10.1108/13664380810898131 VOL. 13 NO. 2 2008, pp. 123-142, Q Emerald Group Publishing Limited, ISSN 1366-4387 j Journal of Financial Management of Property and Construction j PAGE 123 Patrick X.W. Zou is at The University of New South Wales, Sydney, Australia; and Shouqing Wang and Dongping Fang are both at the Tsinghua University, Beijing, China. The authors would like to thank Mr Hossein Darvish for his assistance in data collection for this paper. The authors also thank their colleagues for valuable comments. The first author is grateful for being appointed senior visiting academic by Tsinghua University during the writing of this paper.