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Kwok, C, Young, R J and Kirkham, R J (2010) Risk and asset management in privatization/private finance of public utiliities: a risk investigation of water infrastructure projects in China. In: Egbu, C (Ed.), Proceedings 26th Annual ARCOM Conference, 6-8 September 2010, Leeds, UK. Association of Researchers in Construction Management, Vol. 2, 1279–88.
- Type: Conference Proceedings
- Keywords: asset management; China; privatization; risk management; wastewater treatment; whole life cycle costing
- ISBN/ISSN: 978-0-9552390-4-5
- URL: http://www.arcom.ac.uk/-docs/proceedings/ar2010-1279-1288_Kwok_Young_and_Kirkham.pdf
- Abstract:
The provision of public utilities, such as water, electricity or gas is usually characterized b\y an asset-intensive environment. The costs associated with operating and maintaining this are significant, and more so where infrastructures are ageing or unsupported by a pro-active maintenance and life cycle renewal strategy. A growing number of governments have sought to take these costs “off balance sheet” through privatization, on the premise that this reduces the taxpayer burden, transfers risk and creates added value for money. There continues to be a complex debate surrounding privatization, the use of private finance and commercial management of public utilities, and this falls beyond the scope of this paper. What this paper will reflect upon are the notions of risk, risk management and how it may suitably be applied within the context of public utilities procurement and management. Literature reviews are used to examine relevant risks to infrastructural projects. This paper also considers the impact of”whole-life” evaluations of asset costs and provides examples of implementation of asset management methodology PAS-55 in utility services. Taking the Chinese context, the work then moves on to describe the potential risks found in the Chinese potable water market. The paper concludes by recognizing the importance of the political landscape in China and the aggressive market growth that has characterized its economy of late. It is clear that whilst political risk is an important variable in the risk management process, the “management” of it can be exceptionally complex and fluid.