A Study on Risk Sharing of PPI Project Demand Risk
민간투자사업 수요위험 분담 방식에 관한 연구

Sung-Hwan Shin
2012 Korean Journal of Construction Engineering and Management  
One of key success factors in PPI(Public Private Investment) is the structure of risk sharing between the public and the private, and the determination mechanism of fair return to private participants relative to the risk that private participants undertake. In Korea, two basic types of PPI exist. One is BTO and the other is BTL. In BTO, most risks are taken by the private whereas the opposite is the case in BTL. No intermediate form exists. As a result, BTO type projects had difficulty in
more » ... cting private participants because of the excessive risks. In this study, one intermediate form is studied where demand risk is shared between the public and the private. In the setting where the public authority takes all the project revenues and then pays ladder type payments to private participants depending upon the level of project revenues, appropriate level of fixed payments is endogenously derived using the real option pricing model. From the fixed payments, expected investment returns are calculated based upon a certain distributional assumption. The results of this study is expected to help introducing diverse forms of PPI in Korea.
doi:10.6106/kjcem.2012.13.2.102 fatcat:hhgz3cxgpjcztcr4vmwpvzesvm