Evaluating Risks in Public-Private Partnerships: The Case of Portuguese Road Sector
- *Corresponding Author:
- Mário Correia Fernandes
University of Lisbon-Lisbon School of Economics and Management (ISEG)
Portugal, Oil and Gas Economist at Galp Energia, Lisbon, Portugal
Tel: +351 21 796 7624
E-mail: [email protected]
Received Date January 08, 2015; Accepted Date January 27, 2016; Published Date February 03, 2016
Citation: Fernandes MC (2016) Evaluating Risks in Public-Private Partnerships: The Case of Portuguese Road Sector. Arabian J Bus Manag Review 6:198.
Copyright: © 2016 Fernandes MC. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
Throughout the last few decades, it has been verified a significant raise in the use of Public-Private Partnerships, by part of the world’s economic governments as an alternative in the management and financing of infrastructural investments to joust the problematic of the infrastructure gap. From the projects sponsors’ point of view, the capital investment’s strategic decisions are fundamental, so that the feasibility studies of partnerships are a critical factor for operational success and their management. However, for these agents, the risk-return question is preponderant, due to the soaring of financial, political and market risks, which will organize the imperative of application of new evaluation methods, as the case of the IRR-at-Risk, Cash Flow-at-Risk and the NPV-at-Risk, where the latter combines the dual issue of risk-return and the average weighted cost of capital. Therefore, this investigation aims to proceed to the application of the listed methods for the Public-Private road institutions in Portugal. Based in a sample from the 7 SCUT and 7 new concessions (highways), we will seek to apply the decision methods of riskreturn in order to prove that these can provide better decisions in matters of risk and investments analysis compared to the methods of traditional financial evaluation. The results show that, for the sponsors, the methods of risk-return provides better decisions if include the element of risk in projects.