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International Journal of Project Management 31 (2013) 424 – 433

www.elsevier.com/locate/ijproman

Public private partnership projects in Singapore: Factors, critical risks and

preferred risk allocation from the perspective of contractors
Bon-Gang Hwang a , Xianbo Zhao a,⁎, Mindy Jiang Shu Gay b

a
Department of Building, National University of Singapore, 117566, Singapore
b
Shimizu Corporation (Incorporated in Japan), 079120, Singapore

Received 22 March 2012; received in revised form 1 August 2012; accepted 7 August 2012

Abstract

Public private partnership (PPP) procurement was introduced into Singapore in 2003, and 10 PPP projects were successfully completed and
have been in operation. This study aims to examine the critical success factors as well as the relative importance of positive and negative factors
influencing the attractiveness of PPP projects in Singapore, and to identify the critical risk factors and preferred risk allocations for PPP projects in
Singapore. The questionnaire survey results indicated that negative factors were more affirmative than the positive factors, and that 23 risk factors
had significant criticalities. Eight risks would be preferably allocated to the public sector while 19 risks could be assigned to the private sector.
11 risks were preferred to be shared by both parties and the allocation of four risks depended on project circumstances. The findings of this study
provide valuable information for organizations that intend to participate in PPP projects in Singapore.
© 2012 Elsevier Ltd. APM and IPMA. All rights reserved.

Keywords: Public private partnership; Critical success factors; Attractiveness; Risk criticality; Risk allocation

1. Introduction Board (PUB) for a desalination plant (Gunawansa, 2010). The

Public private partnership (PPP) has been widespread in
infrastructure development in Asia and considered as an effective
way to achieve better value for money in delivering infrastructure
projects (Ke et al., 2010; Li et al., 2005b). Some countries have
adopted PPP due to fiscal deficit, budgetary pressure, demand–
supply gap, and inefficient public services to infrastructure, while
other countries choose PPP for operational efficiency, innovative
technological and management skills, and more active involve-
ment of private players in public services (Chowdhury et al.,
2011).
The concept of PPP was introduced to Singapore in 2003
when the first PPP contract was awarded by the Public Utilities
⁎ Corresponding author. Tel.: +65 9345 2665; fax: + 65 6775 5502.
E-mail address: zhaoxb1984@gmail.com (X. Zhao).
0263-7863/$36.00 © 2012 Elsevier Ltd. APM and IPMA. All rights reserved.
http://dx.doi.org/10.1016/j.ijproman.2012.08.003
Ministry of Finance (MOF) published the PPP Handbook in
2004, which provides the public and private sectors with the
guidelines for successful structuring and management of PPP
projects in Singapore. Subsequently, the government outsourced
projects worth S$1.3 billion (S$1 ≈ US$0.79) to the private
sector for the next 3 to 5 years (Li, 2006). 10 PPP projects were
successfully completed and are in operation now, while three
projects were terminated or on hold (Gunawansa, 2010; Weaver,
2010).
The nature of PPP projects makes risk an important factor in
the project procurement. Most PPP projects are involved with
risks that are difficult to control and analyze. Hence, risk
management is critical for both public and private parties in
PPP projects to attain their objectives. In addition, it is necessary
to balance the risks and rewards of public and private sectors in
PPP projects (Grimsey and Lewis, 2002). Appropriate risk
allocation was recognized as critical to successful PPP projects
(Chan et al., 2010; Zhang, 2005) and should be done at the
early stage of the projects. A commonly accepted principle is to
 B.-G. Hwang et al. / International Journal of Project Management 31 (2013) 424–433
allocate risks to the party best able to manage it at least cost
(EC, 2003).
The objectives of this study are (1) to examine the critical
success factors (CSFs) as well as the relative importance of
positive and negative factors that influence the attractiveness
of PPP projects in Singapore; and (2) to identify the critical risk
factors and preferred risk allocations in PPP projects in Singapore.
The findings of this study help both public and private sectors to
better understand the important factors for PPP projects as well as
risk factors and their allocation, providing valuable information
for organizations that intend to participate in PPP projects in
Singapore.
Following the introduction to this study, the second section
provides the background information relating to PPP projects.
In the third section, research methodology and a profile of the
respondents are presented. Then, data concerning the CSFs for
PPP projects, positive and negative factors for PPP projects,
risk criticalities and risk allocation preferences are analyzed,
and the results are discussed in the fourth section. Finally, the
fifth section draws conclusions of this study and recommends
further research.
2. Background
2.1. Current status of PPP in Singapore
According to the MOF (2004), implementing PPPs in
Singapore enables the public sector to get better value for money
in delivering public services, provides the private sector with more
business opportunities to innovate and offer efficient solutions for
public services, and combines the expertise of the government and
the private sector to meet the needs of the public effectively and
efficiently. Hence, all government infrastructure projects that are
worth over S$50 million need to be considered for suitability as
PPP projects. A number of sectors in Singapore have been
identified by the MOF as suitable for PPPs. These include sports
facilities, incineration plants, water and sewerage treatment works,
large IT infrastructure deals, education and healthcare facilities,
expressways and government buildings. In addition, the govern-
ment ensures that the private sector can meet the public needs
effectively; there is clear accountability when services are delivered
by the private sector and the public knows who to approach for
service queries and feedback; public security, health and safety
are not compromised in PPP projects; and confidentiality of
information is observed.
2.2. CSFs for PPP projects
CSFs have been widely used as a method to make explicit the
key areas that are necessary for management success (Boynton and
Zmud, 1984). A number of previous studies have been conducted
to identify the CSFs for PPP projects. Qiao et al. (2001) identified
eight CSFs for build-operate-transfer (BOT) projects in China:
appropriate project identification; stable political and economic
situation; attractive financial package; acceptable toll/tariff levels;
reasonable risk allocation; selection of suitable subcontractors;
management control; and technology transfer. Zhang (2005)
425
examined the significance of five main CSFs for PPP projects
based on a worldwide questionnaire survey: favorable investment
environment; economic viability; reliable concessionaire consor-
tium with strong technical strength; sound financial package; and
appropriate risk allocation via reliable contractual arrangements.
Li et al. (2005a) identified five groups of CSFs for PPP projects in
the UK: effective procurement; project implementability; gov-
ernment guarantee; favorable economic conditions; and available
financial market. Chan et al. (2010) explored five underlying
CSFs for PPP infrastructure projects in China: macroeconomic
environment; shared responsibility between public and private
sectors; transparent and efficient procurement process; stable
political and social environment; and judicious government
control. These previous studies enabled this study to select
8 CSFs for PPP projects based on the context of Singapore. The
importance of these 8 CSFs is identified in this study, which
demonstrates the factors most critical to a successful PPP project
in Singapore.
2.3. Positive and negative factors for PPP projects
There are positive and negative features that influence the
attractiveness of PPP in the delivery of public facilities and
services. Li et al. (2005c) summarized a list of positive and
negative factors for PPP projects via a comprehensive literature
review, and identified the relative importance of these factors
based on the perceptions of PPP project participants in the UK. Li
et al. (2005c) found that the four most important groups of positive
factors were associated with better project technology and
economy, greater benefit to the public, public sector avoidance
of regulatory and financial constraints, and public saving in
transaction costs, while the three most important groups of
negative factors were related to the inexperience of the public
and private sectors, the over-commercialization of projects,
and high participation cost and time for participants. Similarly,
Cheung et al. (2010) explored the perceived importance of
positive and negative factors for PPP projects using questionnaire
surveys conducted in Hong Kong and Australia, respectively, and
found that the attractive factors were more affirmative than the
negative ones. Based on the previous studies, seven positive
factors and seven negative factors were selected in accordance
with the context of Singapore. The relative importance of the
positive and negative factors is shown in this study, revealing
the attractiveness of PPP projects to the public and private
sectors in Singapore.
2.4. Risk identification in PPP projects
Risk identification is a critical phase in a project risk
management process. It is desirable to identify the risks as
early as possible (Wang et al., 2004), and a simple but valid
method is the development of a risk checklist (Fang et al., 2004).
As an integrative part of risk identification, risk categorization
structures the diverse risks that affect a project (Zou et al., 2007).
Xu et al. (2010) and Ke et al. (2010) identified 37 risk factors
associated with China's PPP projects, and Ke et al. (2010)
categorized them into country, project and market risks. Based
426 B.-G. Hwang et al. / International Journal of Project Management 31 (2013) 424–433

on the comprehensive literature review and content analysis, Table 1

this study identified risks for PPP projects. Content analysis Risk identification in PPP projects.
can assist in classifying textual material, and reduce it to more Risk factors References Total
relevant and manageable bits of data (Weber, 1990). This method A B C D E F G H I J
is often adopted to determine the major facets of a set of data, by Lack of support from government * * * * * 5
simply counting how many times an activity occurs, or a topic is Unstable government * * 2
depicted (Fellows and Liu, 2003). In this study, risks identified in Strong political interference * * * * * * 6
each literature were first marked down, and then similar risks Corruption and bribery * * * * 4
Nationalization/expropriation * * * * * * 6
were assembled. Thus, a total of 42 risks were finally identified
Poor financial market * * 2
from the analyzed literature, as Table 1 shows. Inflation * * * * * * 6
In addition, Li et al. (2005b) proposed a three-level meta- Interest rate * * * * * * * 7
classification approach by considering the relationship between Lack of legal/regulatory framework * * * 3
risk factors and projects. Macro level risks have their origins Inconsistent legal/regulatory * * * * * * * 7
framework
beyond the system boundaries of projects; meso level risks occur
Change in tax regulation * * * * * 6 *
within the system boundaries of the project; and micro level risk Level of public opposition to project * * * * 5 *
factors are associated with the stakeholder relationships in the Environment * * 3 *
procurement process. This classification approach is adopted in Force majeure * * * * * 6 *
this study because it can provide a comprehensive overview of Weather * * 3 *
Geological conditions * * 3 *
risk factors in PPP projects.
Construction time delay * * * 5 * *
Site safety and security * * 2
Poor quality workmanship * 1
2.5. Risk allocation in PPP projects Construction cost overrun * * 2
Excessive contract variation * 1
Material availability * * * * * * 6
Risk allocation in PPP projects can be the primary measure of
Availability of finance * * * * * 5
assigning risks to project participants, i.e. public and private High finance cost * * 2
sectors. When both parties bear a certain risk together, there is a Financial attraction of project to * 1
shared risk allocation mechanism (Li et al., 2005b). Identifying investors
risk allocation preferences of the stakeholders prior to project Delay in approval and permits * * * * 4
Design deficiency * * * * 4
procurement and contract negotiation is important for confirming
Scope variation * * * 3
value-for-money for the public sector and revenue flows for the Unproven engineering techniques * * * * 4
private sector (Roumboutsos and Anagnostopoulos, 2008). Hence, Level of demand for project * * * * * * * * 8
a number of studies have been conducted to obtain risk-sharing Site availability * * * * 4
schemes in PPP projects in various regions. For example, Thomas Operation cost overrun * * * * * 5
Low operation productivity * 1
et al. (2003) investigated risk allocation in BOT road projects in
Maintenance cost higher than * 1
India, and found that the principle that the most capable party for expected
managing the risk should assume it was often not followed due to Maintenance more frequent than * 1
the difference in the perception of risk management capabilities expected
among project participants; Li et al. (2005b) explored the preferred Residual asset risk * * * 3
Inadequate experience in PPP * * 2
risk allocation in PPP projects in the UK via a questionnaire
Organizational and communication * * * * 4
survey, and found that some risk factors should be handled on a risk
case-by-case basis; Abednego and Ogunlana (2006) provided Inadequate distribution of * * * * 4
good project governance for proper risk allocation in PPP toll responsibilities
way projects in Indonesia using a case study of a toll way project; Inadequate distribution of authority * * 2
Lack of commitment of between * * 2
Ng and Loosemore (2007) identified the rationale behind
parties
decisions about risk allocations between public and private Differences in working method * 1
sectors by presenting a case study of a railway PPP project in
* Inclusion of the specific risk factor in the reference.
Sydney; Roumboutsos and Anagnostopoulos (2008) identified References: A = Kumaraswamy and Zhang (2001); B = Grimsey and Lewis
the risk allocation preferences of the stakeholders of the Greek (2002); C = Li et al. (2005b); D = Shen et al. (2006); E = Ng and Loosemore
PPP projects based on a questionnaire survey and compared the (2007); F = Estache et al. (2007); G = Medda (2007); H = Zou et al. (2008); I =
results with those in the UK. More recent studies focused on the Thomas et al. (2003); J = Xu et al. (2010).
risk allocations in PPP projects in China. Xu et al. (2010)
developed a fuzzy risk allocation model, while Ke et al. (2010) 3. Methodology and data presentation
explored the preferred risk allocation via a two-round Delphi
survey. However, little effort has been committed to research on A comprehensive literature review was conducted to establish a
risk allocation preferences in PPP projects in Singapore. This foundation for this study and to support the development of a
paper attempts to fill this knowledge gap based on the opinions of survey questionnaire. A pilot study was conducted with a couple of
the private contractors. project managers with PPP experience in PPP projects to validate
 B.-G. Hwang et al. / International Journal of Project Management 31 (2013) 424–433 427

the questionnaire. The questionnaire consisted of three main Table 2

sections. The first section included questions meant to profile the Profile of respondents.
respondents and their companies. In the second section, the Respondent profiles Categorization N %
respondents were asked to rate the CSFs as well as positive and Registry grades of contractors A1 37 77.1%
negative factors for PPP projects in Singapore using a five-point A2 8 16.7%
Likert scale (1 = least important and 5 = most important). The B1 1 2.1%
B2 2 4.2%
third section investigated the risk criticality and risk allocation
Years of experience 0–5 5 10.4%
preferences within PPP projects in Singapore. A risk matrix was 6–10 17 35.4%
provided in order to make it easier for the respondents to rate 11–15 15 31.3%
the criticality of the risk factors which were identified from a 16–20 7 14.6%
comprehensive literature review. Since the evaluation of risk Above 20 4 8.3%
Job title Directors 4 8.3%
criticality is complex and vague qualitative linguistic terms are
Senior manager 3 6.3%
unavoidable (Wang et al., 2004), a five-degree rating system (1 = Project manager 25 52.1%
lowest; 2 = low; 3 = moderate; 4 = high; 5 = extreme) for the Quantity surveyor 12 25.0%
evaluation of risk criticality was adopted. Respondents were also Others 4 8.3%
asked to select a party to which each risk should be allocated.
The sampling frame used for this study was a list of the
contractors registered with the Building and Construction Author-
ity (BCA), which is an agency under the Ministry of National using a five-point Likert scale (1 = least important and 5 = most
Development in Singapore. As a probability sampling technique, important). The mean score ranking technique was used to rank
stratified sampling was adopted. The sample was stratified the CSFs for PPP projects. The perceived importance from the
according to contractors' grade, and consisted of 120 contractors respondents acted as scores used to calculate the mean score
with grades of A1, A2, B1 and B2 because they had higher tender for each factor. Then, the factors were ranked based on the
limits and resources to tender for PPP projects that involved mean score.
high capital costs. According to the BCA grading system, A1 The analysis revealed that practitioners recognized “well-
contractors enjoy no tendering limit. A2, B1, and B2 contractors organized public agency” as the most important CSF (mean =
can bid for projects worth up to S$85 million, S$40 million, and S 4.08) for PPP projects. This may imply that the public sector
$13 million, respectively. The target respondents included middle performing PPP projects should represent public interest (Li et
and top management, who assumed the responsibility of risk al., 2005a) and have adequate expertise and capacity to procure
management of projects. The data collection effort produced 48 PPP projects. “Appropriate risk allocation and sharing” was
completed questionnaires from 48 different contractors. The ranked second (mean = 4.02). Risks should be allocated to the
response rate was 40%, which was high compared with the party who are best able to manage it (EC, 2003). Hence, the
norm of 20–30% with most questionnaire surveys in the public sector should bear the risks out of the control of private
construction industry (Akintoye, 2000). participants and would transfer risks associated with asset
The mean score ranking technique was used to rank the procurement and service delivery to the private participants,
CSFs for PPP projects, positive and negative factors for PPP who are more experienced in managing them (Chan et al., 2010;
projects as well as risk factors. The perceived importance or the Zhang, 2005). In addition, appropriate risk allocation enables
risk criticalities from the respondents acted as scores used to contractors to be clear about their risk profile and reduces
calculate the mean score for each factor. As for the analysis of disputes during the project implementation stage. The third most
risk allocation preferences, the percentage of the respondents important CSF was “strong private consortium” (mean = 3.44),
who believed that a risk should be allocated to a party was which implied that the private consortium should be competent
analyzed. enough and financially capable of taking up the projects to ensure
A summarized profile of the contractors and respondents is successful PPP projects (Chan et al., 2010; Li et al., 2005a).
presented in Table 2. 77.1% of the respondents were from A1
contractors. 54.2% of them had more than 10 year experience in
the construction industry, and 66.7% held positions at middle and
top levels. Since all government infrastructure projects that are
Table 3
worth over S$50 million are actively considered for suitability of CSFs for PPP projects in Singapore.
adopting PPP procurement (MOF, 2004), large contractors (A1
CSFs Rank Mean Std.
and A2) would be more appropriate for PPP projects.
Well-organized public agency 1 4.08 1.33
Appropriate risk allocation and sharing 2 4.02 1.44
4. Data analysis and discussions
Strong private consortium 3 3.44 1.95
Transparency in procurement process 4 3.31 1.61
4.1. Importance of CSFs for PPP projects in Singapore Clear defined responsibilities and roles 5 3.19 1.55
Clarification of contract documents 6 3.06 1.57
As shown in Table 3, eight CSFs were presented in the Favorable legal framework 7 2.98 1.96
Shared authority between public and private sector 8 2.35 1.68
questionnaire. The respondents were asked to rate these CSFs
428 B.-G. Hwang et al. / International Journal of Project Management 31 (2013) 424–433
4.2. Importance of positive and negative factors for PPP projects
in Singapore
As shown in Table 4, seven positive factors and seven
negative factors were presented in the questionnaire and rated
using a five-point Likert scale (1 = least important and 5 = most
important). The mean score ranking technique was also used to
rank the positive and negative factors for PPP projects.
“Better value for money” was identified as the greatest positive
factor (mean = 4.54). Value for money, which was defined as the
optimum combination of whole life-cycle costs, risks, completion
time and quality in order to meet public requirements (Grimsey
and Lewis, 2002), is an important consideration for the public
sector (Cheung et al., 2010). According to the MOF (2004), PPP
projects enable public services to be delivered in a more value for
money way by making optimal use of the expertise of both the
public and private sectors, resources and innovation to meet public
needs effectively and efficiently. The emphasis of the respondents
on value for money revealed that the contractors in Singapore
recognized the purpose of adopting PPP procurement, and would
like to benefit from participating in PPP projects.
“Improved risk profile” was ranked second (mean = 4.42),
indicating that the risk profile of contractors could be improved
by PPP procurement. This is probably because contractors
were clear about the risks that were allocated to them and can
be better prepared for dealing with these risks. “Facilitated
creative, innovative and cost-effective approaches” was per-
ceived as the third most important (mean = 4.29). This is also
supported by Akintoye et al. (2003) and Cheung et al. (2010) who
argued that creativity and innovation had been viewed as an
important advantage that can be brought to public services by the
private sector and can contribute to less costs and higher-level
competitiveness of the private sector. Any cost-effective approach
adopted by the private sector would lead to cost saving and
increasing profit. Hence, contractors in Singapore would partici-
pate in PPP projects for competitive advantages and greater profits.
Table 4
Positive and negative factors for PPP projects in Singapore.
Factors Rank Mean Std.
Positive factors 3.91
Better value for money 1 4.54
Improved risk profile 2 4.42
Facilitated creative, innovative and cost-effective 3 4.29
solutions
Improved quality and services 4 4.00
Tap on private's expertise 5 3.50
Shared of total project cost 6 3.40
Optimal resource allocation 7 3.25
Negative factors 4.23
Lengthy delays in negotiation 1 4.92
High participation costs 2 4.77
Confusion on government objectives and criteria 3 4.56
evaluation
Lack of experience or appropriate skills 3 4.56
High project costs 5 4.13
High risk replying on private sector 6 3.71
Excessive restriction on participation 7 2.96
There are also some factors that discourage contractors from
participating in PPP projects. “Lengthy delays in negotiation”
was seen as the most important negative factor for PPP projects
in Singapore (mean = 4.92). This result confirmed that the
consideration of “lengthy delays in negotiation” can be a typical
feature of PPP projects regardless of their geographical location.
Previous studies also found this factor to be a highly ranked
negative factor for PPP projects in the UK (Li et al., 2005c),
Australia and Hong Kong (Cheung et al., 2010). Long PPP
procurement can be attributed to the large size and high complexity
of PPP projects and the procedural requirements (Li et al., 2005c),
and would discourage contractors from tendering for PPP projects
in Singapore. “High participation costs” was ranked second
(mean = 4.77). The complexity of PPP project requirements
increases participation costs for the private sectors. The costs
of tendering for Private Finance Initiative (PFI) projects were
found much higher than that for traditional procurement
systems (Birnie, 1999). Hence, “high participation costs” also
significantly reduced the attractiveness of PPP projects for
contractors in Singapore. The third most important negative
factor was “confusion on government objectives and criteria
evaluations”. Conflicting objectives tend to result in confusion on
the assessment criteria for both contractors and public partici-
pants, which makes participants operate inefficiently (Li et al.,
2005c). Contractors in Singapore also regarded this negative
factor as a significant barrier to being engaged in PPP projects.
Furthermore, “lack of experience or appropriate skills” had the
same mean score (mean = 4.56) as “confusion on government
objectives and criteria evaluations”. PPP projects are typically
large-scale and complex. “Lack of experience or appropriate
skills” increases the likelihood of suffering losses and thus makes
PPP projects less attractive to the private sector.
Comparison of the mean score between positive and negative
factors can assess the suitability of adopting PPP projects (Cheung
et al., 2010). The mean score of all the negative factors (mean =
4.23) was higher than that of all the positive factors (mean= 3.91),
which may imply that the negative factors were more affirmative
than the positive factors and that PPP projects were not well
accepted in the Singapore construction industry. Hence, efforts
should be made by the Singapore government to strengthen the
positive factors and weaken the negative factors.
The negative factors are also related to risk factors in PPP
1.32 projects. The following sections further discuss the criticality and
0.87 preferred allocation of risk factors in PPP projects in Singapore.
1.32
1.74
4.3. Criticalities of risk factors
1.53
1.53
1.73 42 risk factors that had been identified through the literature
review performed for this study were presented in the question-
0.28 naire. These risk factors were also categorized into three
0.59
meta-levels with reference to Li et al. (2005b): macro, meso
0.68
and micro levels. The respondents were asked to evaluate the
1.10 criticalities of the 42 risk factors using a five-point Likert scale
1.14 (1 = lowest; 2 = low; 3 = moderate; 4 = high; 5 = extreme). The
1.30 criticalities were ranked based on their mean scores, as shown
1.86
in Table 5.
 B.-G. Hwang et al. / International Journal of Project Management 31 (2013) 424–433 429

The results of one-sample t-test (test value = 3; confidence introduced into Singapore has functioned largely as an entity to
level = 95%) indicated that 23 risk factors had significantly high promote PPP awareness, help draft relevant policy and provide
criticalities while nine risk factors had significantly low critical- guidance on PPP matters. However, a centralized agency within
ities in PPP projects in Singapore. The top five risk factors are the MOF or outside of the MOF to champion the cause of PPP is
discussed below. still required because it could act as the “one stop shop” between
As indicated in Table 5, “lack of support from government” public and private sector entities to facilitate PPPs (Gunawansa,
was assigned with the highest criticality (mean = 4.46), indicating 2010). Hence, just a PPP Handbook published by the MOF was
that the government support for PPP projects in Singapore was not viewed as an adequate support from the government, and that
perceived inadequate. This was probably due to the fact that the more efforts had to be made to ensure the government support for
Singapore government had sufficient funds to improve its social the PPP mechanism.
and other infrastructures (KPMG, 2007). The introduction of PPP “Availability of finance” was ranked second (mean = 4.25).
into Singapore is mainly focused on the need to achieve value for The private sector is not paid until the start of project operation.
money in the delivery of public services (MOF, 2004). Moreover, Unavailability of financial instrument, which leads to difficulty
the PPP Advisory Council that was established when PPP was in financing, would engender project termination and loss of
the funds invested. This factor was also ranked high in PPP
Table 5 projects based in Mainland China (Xu et al., 2010).
Criticalities of risk factors in PPP projects in Singapore. The third most critical risk factor was “construction time
Risk factors Level Rank Mean Std. p-Value delay” (mean = 4.21). Delay in construction can result in delay
Lack of support from government Macro 1 4.46 1.05 0.000 ⁎ in project completion, and thus postpone the start of operation.
Availability of finance Meso 2 4.25 1.08 0.018 ⁎ Hence, revenue gain is also postponed.
Construction time delay Meso 3 4.21 1.07 0.000 ⁎ “Inadequate experience in PPP” was ranked the fourth
Inadequate experience in PPP Micro 4 4.17 0.99 0.000 ⁎
(mean = 4.17), which implied that contractors in Singapore still
Unstable government Macro 5 4.15 1.30 0.000 ⁎
Lack of legal/regulatory framework Macro 6 4.13 1.02 0.000 ⁎ lacked experience in PPP arrangement even though 10 projects
Site safety and security Meso 7 4.08 1.32 0.000 ⁎ have been successfully completed since 2003. PPP projects are
Construction cost overrun Meso 8 4.08 1.50 0.000 ⁎ typically large-scale and complex, which makes the contractors
Organizational and communication risk Micro 9 4.06 1.26 0.000 ⁎ without adequate experience more likely to suffer losses.
Strong political interference Macro 10 4.04 1.32 0.000 ⁎
“Unstable government” was seen as the fifth most critical risk
Inflation Macro 11 3.98 1.28 0.000 ⁎
Interest rate Macro 12 3.85 1.24 0.000 ⁎ factor (mean = 4.15) in adopting PPP projects in Singapore. It is
Corruption and bribery Macro 13 3.79 1.41 0.000 ⁎ well-known that Singapore has enjoyed a long span of political
Inadequate distribution of Micro 14 3.77 1.40 0.000 ⁎ stability. However, given a long concession period involved in
responsibilities PPP projects, any change in government policies or the regime
Delay in approval and permits Meso 15 3.65 1.26 0.001 ⁎
can directly impose additional risks and increase cost.
Inconsistent legal/regulatory framework Macro 16 3.60 1.27 0.002 ⁎
Inadequate distribution of authority Micro 17 3.56 1.27 0.004 ⁎ By contrast, “residual asset risk”, “force majeure”, “weather”,
Lack of commitment of between parties Micro 18 3.54 1.27 0.005 ⁎ “maintenance more frequent than expected”, and “geological
Poor financial market Macro 19 3.42 1.18 0.000 ⁎ conditions” were the five least critical risk factors according to the
Differences in working method Micro 20 3.40 1.19 0.027 ⁎ respondents. The low rank of “residual assets risk” (mean = 2.48)
Excessive contract variation Meso 21 3.38 1.02 0.015 ⁎
is consistent with the study of Xu et al. (2010) in which the
Financial attraction of project to Meso 22 3.38 1.20 0.035 ⁎
investors “residual asset risk” was ranked bottom for PPP projects
Level of demand for project Meso 23 3.33 0.97 0.022 ⁎ performed in Mainland China. Moreover, it is not strange that
Operation cost overrun Meso 24 3.29 1.09 0.070 “force majeure” (mean = 2.46) and “weather” (mean = 2.42) were
Material availability Meso 25 3.28 1.18 0.119 perceived less critical because Singapore has experienced few
Low operation productivity Meso 26 3.23 1.13 0.168
natural disasters or severe weather conditions and is characterized
Nationalization/expropriation Macro 27 3.19 1.23 0.297
Design deficiency Meso 28 3.17 1.02 0.262 by politically steady, corruption free and investment friendly
Poor quality workmanship Meso 29 3.15 1.15 0.383 environments (Gunawansa, 2010; Peebles and Wilson, 2002).
Scope variation Meso 30 3.13 1.21 0.479 In addition, the low rank of “maintenance more frequent than
Change in tax regulation Macro 31 3.10 1.24 0.564 expected” (mean = 2.43) implied that maintenance frequency
High finance cost Meso 32 3.02 1.02 0.888
was under control in PPP projects. Furthermore, “geological
Unproven engineering techniques Meso 33 2.69 1.26 0.092
Level of public opposition to project Macro 34 2.54 1.17 0.009 ⁎ conditions”, which is a common risk factor in construction
Environment Meso 36 2.50 1.18 0.005 ⁎ projects, was ranked bottom by the respondents (mean = 2.23).
Site availability Macro 35 2.50 1.19 0.005 ⁎ This was probably because the geological conditions were
Maintenance cost higher than expected Meso 37 2.48 1.05 0.001 ⁎ favorable for the PPP projects that have been completed and in
Residual asset risk Meso 38 2.48 1.20 0.004 ⁎
operation in Singapore.
Force majeure Macro 39 2.46 1.32 0.007 ⁎
Weather Macro 40 2.42 1.22 0.002 ⁎
Maintenance more frequent than Meso 41 2.40 1.01 0.000 ⁎ 4.4. Risk allocation preferences
expected
Geological conditions Macro 42 2.23 1.20 0.000 ⁎ The respondents were asked to show their risk allocation
⁎ Significant at 95% level (two-tailed), test value = 3, degree of freedom = 47. preferences for the 42 risk factors. As indicated in Table 6, the
430 B.-G. Hwang et al. / International Journal of Project Management 31 (2013) 424–433

preferred risk allocation options are presented as percentages of
total counts of participant responses. Four risk allocation categories
are identified: (1) risks to be allocated to the public sector; (2) risks
to be allocated to the private sector; (3) risks to be shared between
the public and private sectors; and (4) risks to be negotiated
based on project circumstances. The analysis is based on the
majority opinion (N 50%). For example, if more than 50% of
the respondents chose to allocate a risk factor to the public
sector, the risk allocation preference for this risk factor is
categorized as “allocated to the public sector”. This principle is
also applied to the second and third categories. If none of the
percentages are over 50%, the risk allocation should be dependent
on the specific project circumstances.
4.4.1. Risks to be allocated to the public sector
As shown in Table 6, eight risks should be retained by the
public sector. Seven of them fell within the macro level: “unstable
government”, “strong political interference”, “nationalization/
expropriation”, “lack of support from government”, “change in
tax regulation”, “inconsistent legal regulatory framework “, as
well as “lack of legal/regulatory framework”. “Site availability”
was the only risk at the meso level.
The seven risks at the macro level are related to political and
government policies. It is not surprising that the political risks
are preferred to be allocated to the public sector. Singapore has
enjoyed political stability for a long time, and has a well-knit
legal framework that provides a sound architecture for efficient
and corruption free public procurement (Gunawansa, 2010).
Hence, the public sector is able to better manage these risk
factors at low costs and ensure that PPP projects are in a
favorable environment for private sectors.
The public sector should also retain the risk of site acquisition
as it has higher authority to control the process of land acquisition.
The Singapore Land Authority (SLA) has enacted the “Land

Table 6
Preferred risk allocation in PPP projects in Singapore.
Allocation Risk factors Level Public Private Shared
Public sector Unstable government Macro 73% 10% 17%
Nationalization/expropriation Macro 90% 9% 10%
Strong political interference Macro 73% 21% 6%
Lack of support from government Macro 67% 6% 27%
Change in tax regulation Macro 52% 34% 14%
Inconsistent legal regulatory framework Macro 75% 13% 13%
Lack of legal/regulatory framework Macro 52% 34% 14%
Site availability Meso 70% 10% 20%
Private sector Geological conditions Macro 0% 88% 12%
Weather Macro 0% 90% 10%
Environment Macro 9% 50% 41%
Poor financial market Macro 0% 83% 17%
Level of demand in project Meso 9% 50% 41%
Availability of finance Meso 14% 63% 23%
Financial attraction of project to investors Meso 5% 77% 18%
High finance cost Meso 2% 68% 30%
Design deficiency Meso 4% 86% 10%
Construction cost overrun Meso 0% 94% 6%
Construction time delay Meso 0% 100% 0%
Material availability Meso 0% 81% 19%
Poor quality workmanship Meso 0% 100% 0%
Site safety and security Meso 0% 100% 0%
Operation cost overrun Meso 0% 80% 20%
Low operation productivity Meso 0% 92% 8%
Maintenance cost higher than expected Meso 0% 100% 0%
Maintenance more frequent than expected Meso 0% 100% 0%
Organizational and communication risk Micro 0% 100% 0%
Shared Inflation Macro 34% 17% 51%
Interest rate Macro 34% 13% 53%
Force majeure Macro 0% 6% 94%
Corruption and bribery Macro 15% 12% 73%
Residual asset risk Meso 13% 34% 53%
Scope variation Meso 14% 34% 52%
Inadequate experience in PPP Micro 23% 14% 63%
Inadequate distribution of responsibilities Micro 4% 29% 67%
Inadequate distribution of authority Micro 13% 13% 75%
Differences in working method Micro 27% 23% 51%
Lack of commitment between parties Micro 13% 13% 75%
Negotiated based on specific circumstances Level of public opposition to project Macro 46% 42% 13%
Delay in approvals and permits Meso 30% 34% 37%
Unproven engineering techniques Meso 33% 33% 33%
Excessive contract variation Meso 30% 34% 37%
 B.-G. Hwang et al. / International Journal of Project Management 31 (2013) 424–433
Acquisition Act” to provide the legal framework for private sectors
in order to ensure that acquisitions are properly justified through
close scrutiny.
4.4.2. Risks to be allocated to the private sector
The survey results indicated that 19 risk factors (representing
45% of all the risk factors identified) were preferred to be
allocated to the private sector. The percentage can be used to
evaluate the extent to which the objective of risk transfer from the
public sector to the private sector is achieved. Li et al. (2005b)
found that 70% of all the catalogued risks were allocated to the
private sector in the UK, but Ke et al. (2010) found the percentage
to be only 27% in PPP projects in China. Hence, the analysis
result at this study showed that the extent of transferring risks to
the private sector was higher than that in China, but much lower
than that in the UK. This may be because PPP procurement has
become relatively mature in the UK since the first PPP project
was launched in 1992.
Four macro-level risks, including “geological conditions”,
“weather”, “environment”, and “poor financial market”, were
preferred to be transferred to the private sector. “Geological
conditions”, “weather”, and “environment” are natural risks that
are crucial in construction stage and should be taken by the
private sector, which echoed the findings of Li et al. (2005b).
The financial market should be investigated by the private
sector because it is closely associated with project financing.
Hence, the private sector should bear this risk.
14 meso-level risks within the project boundaries were
preferably allocated to the private sector. Financial risks, including
“availability of finance”, “financial attraction of project to
investors”, and “high finance cost” should be considered during
the detailed feasibility study by the private consortium, who should
provide public services efficiently. Hence, the private sector was
more experienced in dealing with project financing issues than
the public sector and should bear the financial risks. Similarly,
financial risks were also preferred to be assigned to the private
sector in PPP projects in the UK (Li et al., 2005b), China (Ke et
al., 2010) and Greece (Roumboutsos and Anagnostopoulos,
2008).
In addition, the private sector should be more familiar with
design and construction risks, including “design deficiency”,
“construction cost overrun”, “construction time delay”, “ma-
terial availability”, “poor quality workmanship” and “site
safety and security”. Hence, it is not surprising that they were
preferably assigned to the private sector, which confirmed the
findings of several previous studies (Ke et al., 2010; Lam et al.,
2007; Li et al., 2005b; Ng and Loosemore, 2007; Roumboutsos
and Anagnostopoulos, 2008).
Unlike conventional project, the private sector is responsi-
ble for PPP project operation and depends on the operation to
obtain its revenue. Hence, operation risks, including “level of
demand in project”, “operation cost overrun”, “low operation
productivity”, “maintenance cost higher than expected”, and
“maintenance more frequent than expected” should be borne
by the private sector, which was consistent with the findings of
Arndt (1998), Li et al. (2005b), Ke et al. (2010), as well as
Roumboutsos and Anagnostopoulos (2008).
431
Finally, “organizational and communication risk” was the
only micro-level risk that was assigned to the private sector.
The rationale of this lies in the fact that this risk is related to the
daily operational requirements of the project and operational
responsibility is taken by the private sector (Li et al., 2005b).
4.4.3. Risks to be shared
11 risks were preferably shared between the public and private
sectors. Four of them were macro-level risk factors. Macroeco-
nomic risks such as “inflation” and “interest rate” should be
shared because both parties would not deal with it well alone (Ke
et al., 2010) and the government has the ability to influence the
macroeconomic conditions. The results coincided with the findings
of Grimsey and Lewis (2002) and Ke et al. (2010), but contrasted
with the results of Li et al. (2005b). In addition, “corruption and
bribery” was preferred to be shared between both parties, which
implied that the private sector should also play a part in ensuring a
corruption free and transparent procurement process, even if the
Singapore government has been recognized to be free of corruption
(Gunawansa, 2010). Moreover, “force majeure” is an unforeseen
risk and was found to be shared in several previous studies (Arndt,
1998; Ke et al., 2010; Li et al., 2005b; Ng and Loosemore, 2007;
Roumboutsos and Anagnostopoulos, 2008) because it cannot be
handled well by any party alone.
The two meso-level risks to be shared were “residual asset
risk” and “scope variation”. “Residual asset risk” should be
shared because the ability to operate the project transferred to the
public sector at the end of the concession period is concerned
with not only the operation responsibility of the private sector but
also the work of the public sector. In addition, “scope variation”
may be resulted from the creativity and innovative solutions
proposed by the private sector and the requirements from the
public sector. Hence, it should be shared by both parties.
The other remaining five micro-level risks to be shared
were: “inadequate experience in PPP”, “inadequate distribu-
tion of responsibilities”, “inadequate distribution of authority”,
“lack of commitment between parties” and “differences in
working method”. These risks were labeled as relationship
risks by Li et al. (2005b) and can be caused by both parties in a
PPP project. Hence, one party should rely on the other to
manage these risks.
4.4.4. Risks to be negotiated
Four risks, including “level of public opposition to project”,
“delay in approvals and permits”, “unproven engineering tech-
niques” and “excessive contract variations”, were found to be
difficult to be clearly classified into the above three risk allocation
preferences. Roumboutsos and Anagnostopoulos (2008) suggested
that these risks should be negotiated based on specific project
circumstances.
4.5. Limitations
This study involves some limitations. Low response rate
from the contractors with grades of B1 and B2 made the sample
represent contractors of relatively large size, even if large
contractors with grades of A1 and A2 would be more appropriate
432 B.-G. Hwang et al. / International Journal of Project Management 31 (2013) 424–433
for PPP projects. In addition, risk criticalities were evaluated based
on the experience and subjective judgments of the respondents.
Another limitation is that while 42 risk factors studied in this paper
were identified by caring out a comprehensive literature review
(see Table 1), some biases might exist in the selection of the 42
factors. Also, the eight CSFs, seven positive and seven negative
factors that were selected from a preliminary set through the pilot
study would not be exhaustive. Nonetheless, through this study,
specific factors for PPP projects in Singapore have been identified.
Moreover, there are common and geographically specific factors
affecting PPP projects. This study confirms some common factors
affecting PPP projects performed in other countries. However, the
findings from this study may not be readily generalized due to
some specific aspects of the Singapore construction industry that
may be different from the industries of other countries. Lastly, this
study only focused on the opinions of the contractors, and did not
involve third parties such as financial banks, legal firms and
insurance companies who may have different views on the risk
allocation in PPP projects. This may make the findings of this
study unable to be generalized to other stakeholders.
5. Conclusions and recommendations
This study examined the CSFs as well as positive and negative
factors of PPP projects in Singapore and identified the critical
risks and preferred risk allocation based on the inputs from
construction companies in Singapore.
The respondents perceived “well-organized public agency”,
“appropriate risk allocation and sharing” and “strong private
consortium” as the top three CSFs for PPP projects. The relative
importance of positive and negative factors that influence the
attractiveness of PPP projects was also identified. “Better value
for money”, “improved risk profile”, and “facilitated creative,
innovative and cost-effective solutions” were the top three
positive factors. “Lengthy delays in negotiation”, “high partici-
pation costs”, “confusion on government objectives and criteria
evaluation” and “lack of experience or appropriate skills” were
recognized as the top four negative factors for PPP projects in
Singapore. The survey results also indicated that the negative
factors were more affirmative than the positive factors and that
PPP projects were not well accepted by contractors in Singapore.
Hence, the Singapore government needs to take more measures to
promote PPP projects.
42 risk factors, which were identified from literature review,
were ranked based on their criticalities, and 23 of them were
found to have significantly high criticalities (mean scores) that
ranged from 4.46 to 3.33. “Lack of support from government”,
“availability of finance”, “construction time delay”, “inade-
quate experience in PPP”, and “unstable government” were the
top five critical risk factors in PPP projects in Singapore.
Risk allocation preferences were explored based on the
opinions of the contractors. Seven out of the 42 risks were
preferably allocated to the public sector. Six of the seven risks
were concerned with political and government policies while
the remaining one was the availability of the project site. In
addition, 19 risks were preferred to be assigned to the private
sector, which implied that the extent of transferring risks from
the public sector to the private sector was relatively low
compared with that in the UK. These risks were mainly natural
risks, financial risks, design and construction risks, as well as
operation risks. Moreover, 11 risks, which were difficult to be
handled well by only one party alone, fell within the shared risk
category. Five of the 11 risks were associated with the relation-
ships between the parties of PPP projects. There were still four
risks that can neither be allocated to a party nor shared by both
parties. Their allocation should be negotiated based on specific
project circumstances.
It should be noted that there are common and geographically
specific factors and risks affecting PPP projects no matter where
these projects are performed. The implication of this study lies in
identifying the CSFs, positive and negative factors, as well as the
risk criticalities and allocation preferences, which are geograph-
ically specific to the PPP projects in Singapore. Nonetheless, the
implication of this study is not limited to Singapore because the
findings of this study provide valuable information for the
international organizations that intend to participate in PPP
projects to be performed in Singapore. Thus, this study also
contributes to the knowledge body on PPP procurement in the
broader global community.
Further research can be focused on case studies of successful
PPP projects that were completed in Singapore. This is because
such case studies can help both public and private sectors learn
lessons, strengthen the importance of positive factors and thus
increase the attractiveness of PPP procurement. Similar studies
can also be conducted to discover the current status of PPP
procurement in other countries of ASEAN (Association of
Southeast Asian Nations).
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