ABSTRACT
Infrastructure development is considered as one of the key factors that have a positive influence towards economic growth, especially in developing countries (ADB 1996). However, the capital-intensive nature of infrastructure projects left most of the developing countries in peril due to the unavailability of the required amount of capital for developing the necessary infrastructure on their own. In order to keep pace with the inevitable economic growth and also fulfilling the increasing demand from the continuously growing population, private sector participation was introduced with an initial intention to assist the government of these developing countries through the provision of additional capital investment for financing the development of infrastructure sector.
Public-Private Partnership (PPP) is considered by many and has so far been the appropriate approach based on private sector participation that allows better allocation of government’s limited resources. Though such approach has been implemented for some time, quite a few problems still occur in this procurement system. One of the most significant problem is the lack of knowledge that PPP-based project have governance concerns (long-term issues) in addition to the well-known management concerns (short-term issues), resulting in improper allocation of risks that may occur in such project. Due to the level of importance that proper risk allocation has for determining project success, Good Project Governance (GPG) concept was developed to help achieve proper risk allocation during the design, planning, construction and operation stages of a project, which would enable better project performance, thus increasing the possibility of overall project success.
The GPG concept has four core principles, fairness, transparency, accountability and sustainability that are used to assess the influence of the applied risk allocation arrangements towards project success, especially in the long-term. Through this assessment, it was discovered that there are clearly different risk perceptions between the government and the private sector. Moreover, such differing view is caused by their lack of knowledge on the unique characteristics of PPP projects as well as failure to recognize the existence of governance concerns in addition to general management concerns within such project, thus overlooking the long-term issues that affect its overall success.
In the Thailand case study, four significant project risks were identified using the GPG concept, namely political risk, financial risk, legal and contractual risk and management risk. Although the project did not experience significant difficulties during its construction stage, it suffers some consequences in the long-term, which are mostly due to the government’s lack of experience in carrying out a project under the PPP procurement system. In addition to that, the government also did not have the required commitment towards the project, shown by their lack of support in providing the necessary guarantee for the private sector in the form of regulations, laws as well as policies relevant to private participation. As a result, conflicts and disputes between the government and private sector was inevitable, causing further damage in the long run.
