A Comparative Study on the Risk Perceptions of the Public and Private Sectors in Public-Private Partnership (PPP) Transportation Projects in Vietnam

Large transportation projects such as highways are expensive, complex, and dynamic in nature. Acquiring large investment capitals for these projects is always a major challenge for every nation. To solve this problem, Vietnamese government has called for the participation of private entities in the form of public-private partnership (PPP). Attracting private investors is a vital and challenging step for implementing PPP transportation projects in Vietnam. This paper examines the similarities and differences of risk perceptions of the public and private sectors for the investment of PPP transportation projects in Vietnam. Questionnaire surveys are used to collect data for assessing the likelihoods of occurrence and impacts of risk factors from 123 experienced professionals from both public and private entities. We found that the two most critical risk factors (CRFs) are land acquisition and compensation, and delay in project approvals and permits. The results from an independent sample t-test indicate the different risk perceptions of the public and private sectors for eight CRFs: (1) corruption, (2) change of project scope, (3) lack of transparency in bidding, (4) inflation, (5) payment issues, (6) inadequate feasibility study, (7) inappropriate allocation of responsibility and risk, and (8) fluctuation of interest rate. These eight CRFs are categorized into three major groups: the tendering process, commercial problems, and payment issues. These results can be used for establishing appropriate public policies to promote private investments in PPP transportation projects. Meanwhile, private investors would also have a better understanding of PPP transportation project development in Vietnam.Large transportation projects such as highways are expensive, complex, and dynamic in nature. Acquiring large investment capitals for these projects is always a major challenge for every nation. To solve this problem, Vietnamese government has called for the participation of private entities in the form of public-private partnership (PPP). Attracting private investors is a vital and challenging step for implementing PPP transportation projects in Vietnam. This paper examines the similarities and differences of risk perceptions of the public and private sectors for the investment of PPP transportation projects in Vietnam. Questionnaire surveys are used to collect data for assessing the likelihoods of occurrence and impacts of risk factors from 123 experienced professionals from both public and private entities. We found that the two most critical risk factors (CRFs) are land acquisition and compensation, and delay in project approvals and permits. The results from an independent sample t-test indicate the different risk perceptions of the public and private sectors for eight CRFs: (1) corruption, (2) change of project scope, (3) lack of transparency in bidding, (4) inflation, (5) payment issues, (6) inadequate feasibility study, (7) inappropriate allocation of responsibility and risk, and (8) fluctuation of interest rate. These eight CRFs are categorized into three major groups: the tendering process, commercial problems, and payment issues. These results can be used for establishing appropriate public policies to promote private investments in PPP transportation projects. Meanwhile, private investors would also have a better understanding of PPP transportation project development in Vietnam

Risk-sensitive Markov Decision Process for Underground Construction Planning and Estimating

This paper presents an application of dynamic decision making under uncertainty in planning and estimating underground construction. The application of the proposed methodology is illustrated by its application to an actual tunneling project—The Hanging Lake Tunnel Project in Colorado, USA. To encompass the typical risks in underground construction, tunneling decisions are structured as a risk-sensitive Markov decision process that reflects the decision process faced by a contractor in each tunneling round. This decision process consists of five basic components: (1) decision stages (locations), (2) system states (ground classes and tunneling methods), (3) alternatives (tunneling methods), (4) ground class transition probabilities, and (5) tunneling cost structure. The paper also presents concepts related to risk preference that are necessary to model the contractor’s risk attitude, including the lottery concept, utility theory, and the delta property. The optimality equation is formulated, the model components are defined, and the model is solved by stochastic dynamic programming. The main results are the optimal construction plans and risk-adjusted project costs, both of which reflect the dynamics of subsurface construction, the uncertainty about geologic variability as a function of available information, and the contractor’s risk preference

A Building Information Modeling (BIM)-Integrated System for Evaluating the Impact of Change Orders

Change orders are inevitable in most construction projects. The conventional change order practice is usually associated with 2D drawings and various paper-based documents, which cannot illustrate the existing and altered building conditions efficiently. This often leads to misinterpretation and miscommunication among project participants. In addition, cost and schedule information, which is basic inputs for analyzing the impact of change orders, is usually scattered and poorly organized resulting in difficulties in retrieving it. The evaluation of cost and schedule impacts is often subjective and unsystematic contributing to construction disputes. Building information modeling (BIM) is widely used in modern construction projects. BIM is a promising construction information management tool, which can address the aforementioned challenges. In this paper, we develop the BIM-Integrated System for Evaluating the Impacts of Construction Change Orders (BIM-ISICO), which can systematically analyze three main impacts of a change order: physical conditions, schedule, and cost. The BIM-ISICO assists users in observing and visualizing the effect of a change order on building conditions systematically via 3D BIM models. The system can also evaluate the impacts of such change order on project cost and schedule. It establishes a new paradigm of delay and cost analysis by minimizing subjectivity and providing the auditing trails of change orders. To demonstrate its efficacy and practicality, the system is applied to an actual 18-story building project for analyzing the impact of a construction change order. The system can successfully assess and report all three aspects of change order impacts. These results can mitigate the conflicts between the project owner and the contractor about the construction claims resulting from change orders

A BIM-Integrated Relational Database Management System for Evaluating Building Life-Cycle Costs

Sustainable procurement is an important policy for mitigating environmental impacts attributing to construction projects. Life-cycle cost analysis (LCCA), which is an essential requirement in sustainable procurement, is a principal tool for evaluating the economic efficiency for the total life-cycle budget of a building project. LCCA is a complex and time-consuming process due to repetitive complicated calculations, which are based on various legal and regulatory requirements. It also requires a large amount of data from different sources throughout the project life cycle. For conventional data management systems, data are usually stored in the form of papers and are input into the systems manually. This results in data loss and inconsistent data, which subsequently contribute to inaccurate life-cycle costs (LCCs). Building information modeling (BIM) is a modern technology, which can potentially overcome the asperities of the conventional building LCCA. However, existing BIM tools cannot carry out building LCCA due to their limited capabilities. The relational database management system (RDBMS) can be integrated with BIM for organizing, storing, and exchanging LCCA data in a logical and systematic manner. In this paper, a BIM-integrated RDBMS is developed for compiling and organizing the required data and information from BIM models to compute building LCCs. The system integrates the BIM authoring program, the database management system, the spreadsheet system, and the visual programming interface. It is part of the BIM-database-integrated system for building LCCA using a multi-parametric model. It represents a new automated methodology for performing building LCCA, which can facilitate the implementation of sustainable procurement in building projects

Success Factors for Public-Private Partnership Infrastructure Projects in Vietnam

Infrastructure projects require a great amount of capital investment resulting from their tremendous size, complexity, and risk. Due to the limitation of public finances, the private sector is invited to participate in infrastructure project development. The private sector can entirely or partially invest in an infrastructure project in the form of a public-private partnership (PPP) scheme, which has been an attractive option for several developing countries, including Vietnam. Unfortunately, despite the PPP scheme will improve project efficiencies and attract capital investments of private investors, the success of PPP implementation is not guaranteed. This paper investigates the critical success factors (CSFs) of PPP infrastructure projects in Vietnam. Relevant data were collected through in-depth interviews with six PPP experts and questionnaire surveys with 150 interviewees and then analyzed by the word cloud technique and the one-way analysis of variance (ANOVA) test. The CSFs were ranked based on the viewpoints of the public sector, the private sector, and the PPP consultants. The outcomes show that there was no significant difference in the perceptions of all three parties concerning the success factors for PPP infrastructure projects in Vietnam. The top five critical success factors are (1) timely land acquisition and appropriate compensation, (2) financial capacity of the private sector, (3) effective project management, (4) favorable and complete legal framework and regulations, and (5) financial feasibility and attraction. Recognizing the CSFs is indispensable to ensure the success of PPP infrastructure project implementation

Different Perceptions of Concern Factors for Strategic Investment of The Private Sector in Public-Private Partnership Transportation Projects

This paper identifies the concern factors of private investors associated with Public-Private Partnership (PPP) transportation projects in Vietnam. The concern factors are incorporated into four main groups: (1) company profile; (2) finance; (3) opportunities; and (4) risk perceptions. The paper examines the different perceptions by the public and private sectors about these concern factors adopted by experienced professionals related to PPP transportation projects. Based on a questionnaire survey in Vietnam, the most concern factors of private investors are their own capacity, demand issues, legal and political risks, long-term income, and financial sources issues of the PPP project. Moreover, five factors that represent the significant differences between the private and public sectors includingpolitical risks, enhancement of company’s strength in its industry, construction risks, demand issues, and financial viability of the company are also discovered. Addressing the different perceptions is indispensable to ensure the public sector can establish necessary policies that appeal to both domestic and foreign private investors. The paper at the same time hopes to provide some of lessons for the private sector

Impacts of risk factors on the performance of public-private partnership transportation projects in vietnam

The rapidly increasing demand and the inefficacy of financing transportation infrastructure project investments have contributed to various challenges for Vietnam in recent decades. Since the country’s budget is inadequate for investing in all necessary infrastructure projects, the Vietnam government has been inviting other economic sectors, especially the private sector, to participate in infrastructure development. The cooperation between the government agencies and the private entities, called Public-Private Partnership (PPP), must encounter various challenges leading to difficulties in attracting private investors. A main reason is that private investors must deal with critical risks concerning PPP investment environment. It is a challenging task for the government to optimally manage such risks to enhance the attractiveness of PPP projects for private investors. This paper examines the critical risk factors that influence the private sector’s investment decisions on PPP transportation projects in Vietnam. Risk factors inherent in typical PPP projects were compiled by comprehensive literature review. To reflect unique characteristics of PPP projects in Vietnam, the compiled risk factors were reviewed by a group of PPP experts from both the public and private sectors in Vietnam through in-depth interviews and questionnaire surveys. In addition, ten PPP project case studies in Vietnam were analyzed to derive the risk profile of PPP transportation projects of the nation. These risk factors were quantitatively assessed based on their probabilities and impact levels. We found that the critical risk factors of PPP infrastructure projects in Vietnam are acquisition/compensation problems, approvals and permits, inadequate feasibility studies, finance market issues, subjective evaluation methods, and change in laws and regulations. By performing factor analysis, these critical risk factors were grouped into four categories: (1) bidding process, (2) finance issues, (3) laws and regulations, and (4) project evaluation issues. These critical risk factors represent the obstacles that repel private investors from PPP transportation projects in Vietnam. Thus, the Vietnam government agencies should meticulously address these issues to attract both domestic and foreign private investors in PPP projects

Different Perceptions of Concern Factors for Strategic Investment of The Private Sector in Public-Private Partnership Transportation Projects

This paper identifies the concern factors of private investors associated with Public-Private Partnership (PPP) transportation projects in Vietnam. The concern factors are incorporated into four main groups: (1) company profile; (2) finance; (3) opportunities; and (4) risk perceptions. The paper examines the different perceptions by the public and private sectors about these concern factors adopted by experienced professionals related to PPP transportation projects. Based on a questionnaire survey in Vietnam, the most concern factors of private investors are their own capacity, demand issues, legal and political risks, long-term income, and financial sources issues of the PPP project. Moreover, five factors that represent the significant differences between the private and public sectors includingpolitical risks, enhancement of company’s strength in its industry, construction risks, demand issues, and financial viability of the company are also discovered. Addressing the different perceptions is indispensable to ensure the public sector can establish necessary policies that appeal to both domestic and foreign private investors. The paper at the same time hopes to provide some of lessons for the private sector

A risk-based dynamic decision support system for tunnel construction.

Efficient tunnel construction planning requires that contractors determine the optimal sequence of tunnel excavation methods and primary support systems based on available information. Important tunneling factors, including geologic uncertainty, uncertainty in the productivity of tunneling processes, the dynamics of tunneling operations, and a contractor's risk sensitivity influence a contractor's decisions significantly and must be addressed directly. This dissertation develops a computerized risk-based dynamic decision support system that addresses the aforementioned issues by structuring a contractor's tunneling decisions as a risk-sensitive dynamic probabilistic decision process based on three interrelated models. The probabilistic geologic prediction model characterizes both uncertainty and variability of geologic conditions along the tunnel profile in the probabilistic form of ground class transitions. The probabilistic tunnel cost estimating model evaluates tunneling time and cost performance for different excavation and support methods as applied to different prevailing ground classes by using discrete-event simulation. The resulting ground class transition probabilities and tunneling unit costs determined by both models provide inputs for the risk-sensitive dynamic decision model. To capture a contractor's risk sensitivity, the tunneling unit costs are converted to a utility unit using the contractor's exponential utility function. Based on the assumption of constant risk aversion, the risk-sensitive stochastic dynamic programming model can be solved by using backward recursive fixing algorithm. The final outputs are optimal tunneling policies and estimated costs for the project, both of which reflect the contractor's risk preference. The results from applying the proposed system in a case study show that it can determine optimal tunneling policies and cost estimates as a function of a contractor's degree of risk sensitivity. The significance of this dissertation stems from the fact that it has accomplished several firsts. It incorporates uncertainty in both geologic prediction and performance of tunneling processes. It establishes a probabilistic estimating procedure based on a contractor's work breakdown structure. It is also the first system that can be used to systematically price the risk associated with tunneling and to investigate the effects of a contractor's risk preference on his optimal tunneling policies and cost estimates.Ph.D.Applied SciencesCivil engineeringMining engineeringOperations researchUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttp://deepblue.lib.umich.edu/bitstream/2027.42/123434/2/3079489.pd