5.1 Categories and types of direct risk, organized by project stage

Direct project risks

Direct project risks originate from project-related activities. In most cases, their connection to project-related activities means that the public or private parties involved in a project can control, manage, and mitigate them.

Table 5.1 shows the elements of direct project risk classified in categories that align with stages of the project development process. Each risk category is identified with a different color, which is consistent throughout the analytical framework.

The risk categories discussed here reflect the project functions that commence after an urban bus project has been selected for development as a PPP. The tables below indicate the related functions by color, consistent with table 5.1. These functions may be defined as follows:

• Planning. Identifying a need and identifying, appraising, and structuring a project to meet that need. • Design. Developing the technical solutions and finalizing the technical specifications of the project elements. • Financing. Raising and repaying the project’s debt and equity (reaching financial closure). • Construction. Building infrastructure to specified design standards and providing all the components necessary to begin operations on time; may include the provision of rolling stock and other equipment. Depending on the contract, the construction stage ends with the substantial completion of works or on the commercial operation start date. • Operations. Providing services to users, beginning on the commercial operation start date and ending when the contract reaches term. Operations may include different business units that can, in turn, be provided under different arrangements. Functions include O&M of buses, fare collection, and operation of stations, terminals, workshops, and depots. • Maintenance. Providing preventive service and maintenance of rolling stock, infrastructure, and systems at contractually mandated standards. This stage begins on the commercial operations start date and ends when the contract reaches term.

Table 5.2 defines each direct project risk (again, using the same color format as throughout the analytical framework).

TABLE 5.1 Categories and types of direct risk, organized by project stage

PROJECT STAGE AND CATEGORY

Project stages 1–3: planning, preparation, and structuring

Planning Design Finance

Project stage 4: implementation

Construction

Operations

RISK ELEMENTS

Land availability and acquisition, stakeholder management, permits and licensing Changes in scope of work, environmental and social factors Financial risk, financial closure, evasion and cash management, affordability, financial coordination, changes in ownership

Construction delays, interface, geotechnical details, completion and commissioning Quality and level of service, demand, congestion, transportation fares, technology obsolescence, fuel, incumbent operators, other infrastructure, default Fleet, repair parts, infrastructure