Skip to Main Content
Table 3

Summary of critical risk factors and mitigating strategies for the PPP water projects in the Asutifi North District

Risk categoryDescriptionMitigation strategies in project documentsProject phase likely to be affected
Political risk Interference with project designs, award of contracts, procurement of goods and services, biased selection of project sites, and arbitrary termination of PPP agreements Defined project goals, expectations, roles, and responsibilities; use of procurement standards, involvement of a neutral party (CWSA) in procurement processes Pre-construction 
Financing risk Difficulty in raising funds for the project Clarity on total project cost; diversified funding source between DA and SWN; flexible payment schedule for DA Pre-construction 
Government credit risk Failure to honor credit guarantees Not addressed Pre-construction 
Inflation risk Fall in the exchange value of the local currency; fall in effective demand for PPP services Short timeframe allocated for construction works; costing of the PPP project in US dollars; payment of contributions at the prevailing exchange rate Pre-construction and construction 
Inaccurate market forecast risk Substandard decision-making procedures, lack of PPP project operational experience and capacity, inadequate preparations, unequal information-sharing among project partners Market assessment survey by SWN to determine project viability; sharing of project documents in draft for partners’ inputs before finalization; leverage SWN's long experience in SWEs; organize review and townhall meetings Pre-construction and Service delivery 
Product price risk Undervalued prices which may decrease expected profits and reduce the competitiveness of PPP projects, or outrageous prices which could cause chaos and affect the use of the services provided through such projects Opportunities for tariff reviews Service delivery 
Technical risk Failure or below-expectation performance of the technology adopted for the production, transmission, storage, and distribution of piped water Use of maintenance reserve account for servicing repairs and long-term sustainability of the water facilities Service delivery 
Contract risk Potential changes in the social, political, and economic environment may not be anticipated in contract documents; ambiguities, inconsistencies, and errors in contract documents Possibility of the review of key project documents including partnership proposal and financing agreement Service delivery 
Legal risk Absence of a robust and dedicated legal system to handle PPP contracts and related cases Not addressed Service delivery 
Market demand risk Demand and use of the services provided through a PPP project Not addressed Service delivery 
Lack of supporting infrastructure risk Conditions and facilities which are external to the PPP project, and yet basic to their optimum performance Not addressed Service delivery 
Risk categoryDescriptionMitigation strategies in project documentsProject phase likely to be affected
Political risk Interference with project designs, award of contracts, procurement of goods and services, biased selection of project sites, and arbitrary termination of PPP agreements Defined project goals, expectations, roles, and responsibilities; use of procurement standards, involvement of a neutral party (CWSA) in procurement processes Pre-construction 
Financing risk Difficulty in raising funds for the project Clarity on total project cost; diversified funding source between DA and SWN; flexible payment schedule for DA Pre-construction 
Government credit risk Failure to honor credit guarantees Not addressed Pre-construction 
Inflation risk Fall in the exchange value of the local currency; fall in effective demand for PPP services Short timeframe allocated for construction works; costing of the PPP project in US dollars; payment of contributions at the prevailing exchange rate Pre-construction and construction 
Inaccurate market forecast risk Substandard decision-making procedures, lack of PPP project operational experience and capacity, inadequate preparations, unequal information-sharing among project partners Market assessment survey by SWN to determine project viability; sharing of project documents in draft for partners’ inputs before finalization; leverage SWN's long experience in SWEs; organize review and townhall meetings Pre-construction and Service delivery 
Product price risk Undervalued prices which may decrease expected profits and reduce the competitiveness of PPP projects, or outrageous prices which could cause chaos and affect the use of the services provided through such projects Opportunities for tariff reviews Service delivery 
Technical risk Failure or below-expectation performance of the technology adopted for the production, transmission, storage, and distribution of piped water Use of maintenance reserve account for servicing repairs and long-term sustainability of the water facilities Service delivery 
Contract risk Potential changes in the social, political, and economic environment may not be anticipated in contract documents; ambiguities, inconsistencies, and errors in contract documents Possibility of the review of key project documents including partnership proposal and financing agreement Service delivery 
Legal risk Absence of a robust and dedicated legal system to handle PPP contracts and related cases Not addressed Service delivery 
Market demand risk Demand and use of the services provided through a PPP project Not addressed Service delivery 
Lack of supporting infrastructure risk Conditions and facilities which are external to the PPP project, and yet basic to their optimum performance Not addressed Service delivery 

Source: Authors’ construct 2020.

Close Modal

or Create an Account

Close Modal
Close Modal