Risk mitigation in PFI/PPP project finance

Purpose Earlier studies on risk evaluation in private finance initiative and public private partnerships (PFI/PPP) projects have focussed more on quantitative approaches despite increasing call for contextual understanding of the bankability of risks. The purpose of this paper is to explore the perspectives of UK PFI financiers' regarding the bankability of four critical risks (construction and completion risk, operations, supply and offtake risk) in PPP projects. Design/methodology/approach Multiple case study strategy was adopted to investigate the phenomenon within real-life context of PFI/PPP projects in UK. Using purposive sampling approach, the study examined school and road PFI/PPP projects through interviews, documentations and focus group discussions. Findings Results from the study unravelled 36 suitable bankability criteria and some mitigation strategies for evaluating the four critical risks in PFI/PPP during due diligence appraisal. Further evidences from the study also show that, financiers' bankability criteria, when paired along with corresponding risks and mitigation strategies within with a single framework, provides a quick and effective view of bankability of risks in PFI/PPP funding application. Social implications This study addresses the social concerns of too much complexity and ambiguity in PFI/PPP structuring especially regarding factors that could make a project acceptable to lenders. Originality/value The study proposes a "Bankability and Risk Qualitative Framework", which presents bankability information on critical risks in clear manner and represents critical parameters for winning financiers' funding approvals for PFI/PPP projects.