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Title: An investigation of private sector participation project appraisal in developing countries using elements of value and risk management
Author: Sutrisno, Mei
ISNI:       0000 0001 3491 7966
Awarding Body: University of Manchester : UMIST
Current Institution: University of Manchester
Date of Award: 2004
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The promotion of Private Sector Participation (PSP) projects has increased significantly throughout the world over the last decade. This has been a consequence of the greater capacity and motivation of the private sector in providing finance to manage such projects. PSP projects in developing countries face significant challenges as the result of the threat from critical risks, which may cause sudden increases in costs and/or decrease revenues. These may provide obstacles to the growth of PSP projects, which are considered essential by most developing countries for economic growth. The appraisal stage is crucial in determining project viability. This research has proposed an appraisal mechanism, which may assist decision-makers seeking better solutions and clearer information in anticipating the occurrence of critical conditions. The Proposed Appraisal Mechanism for PSP Projects (PAM-PSPP) has been developed by utilising Risk Management (RM) and Value Management (VM) in conjunction with traditional appraisal techniques, such as IRR, NPV, benefits/costs ratio and Cost Benefit Analysis (CBA). Quantification of outputs from the mechanism is achieved using the @Risk and CASPAR software packages. This mechanism is designed to meet the requirements of PSP projects in developing countries and consists of five stages. The pre-study stage is used to define appraisal objectives based on project objectives, project characteristics, all key stakeholders' objectives, and the project environment. The information stage involves the collection and development of information associated with downside and upside risks. The optioneering stage generates options based on elements of the RM and VM techniques. The evaluation stage involves ranking of options based on three important criteria: (i) fulfilling economic viability as the involvement of private sector in PSP projects, (ii) obtaining sustainability over the project life cycle including securing the project from the threat of critical risks, and (iii) achieving value in term of accommodating the various interests of PSP project stakeholders and achieving value for money. The recommendation stage involves reporting and identification of preferred outputs. The application of PAM-PSPP in two project case studies in Indonesia has demonstrated its effectiveness in improving the viability of proposals. This was firstly derived from the use of RM in reducing the impact of common and critical risks. Secondly, it was helped by the use of VM in managing a reconciliation of all key stakeholders' objectives. This may potentially improve their motivation in providing support and commitments to the project during critical periods in order to secure the project from critical conditions and to sustain it over the project life cycle. Additionally, the use of VM may improve the achievement of value for money, which may potentially reduce the life cycle costs of the projects and may also increase revenues. In comparison to the previous appraisal methods, the PAM-PSPP has provided some contribution to improving the accuracy of risk analysis in relation to critical risks and providing the synergistic mechanism. The mechanism integrates the use of RM and VM in three loops learning processes of appraisal, and determines evaluating criteria based on economic viability, value, and sustainability
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available