A hybrid multi-criteria decision making method for risk assessment of public-private partnership projects

Abstract

As governments embark on Public Private Partnership (PPP) projects to develop their infrastructure, effective risk assessment has become an important step to ensure success of these projects. However, there are many unsuccessful stories of PPP projects that have been reported all around the world. Thus, it is essential for both public and private sectors to apply efficient risk assessment approaches to allocate and manage risks more effectively. Literature review revealed a continuous endeavor for better PPP project risk modelling and assessment. Various techniques have been developed for use in the management of risks in construction. However, these techniques are limited to addressing risks relating to only cost, schedule, or technical performance individually or at best a combination of cost and schedule risks. Previous work so far is lacking a comprehensive model capable of handling impact of risks on all project objectives simultaneously; namely cost, time and quality. Thus, the main objective of this study is to develop a hybrid risk assessment method that capable of capturing impact of risks on the three project objectives comprehensively. To achieve this aim, this research explores the risk assessment approaches and proposes a hybrid alternative method based on the Fuzzy Analytic Network Process (FANP) and Multiple Objective Particle Swarm Optimization (MOPSO). The Fuzzy logic was used to convert linguistic principles into systematic quantitative-based analysis. Also, in order to consider the dependency and feedback between risks and criteria, ANP method is applied as a Multi-Criteria Decision Making (MCDM) method. Then, MOPSO, as a MCDM method, was used to assess the risks based on the project objectives. Objective functions have been developed to minimize the total time and cost of the project and maximize the quality. The research approach was a mixed-method approach and the field work included a series of questionnaires and interviews. It started with semi-structured interviews with PPP professionals. A mail survey was administered and more than 114 questionnaires were sent to construction and PPP professionals based in Malaysia. Out of 114, 88 valid responses have been received. An on-line survey was carried out as well in order to enrich the findings of the mail survey. The proposed hybrid approach was used to assess the collected data. A total of 30 significant risks were identified and evaluated. According to the results, it was found that “construction completion”, “construction cost overrun” and “interest rate volatility” are the highest ranks associated with the Malaysian PPP projects risks. Finally, the viability of the proposed hybrid approach was investigated through conducting semi-structured interviews with PPP professionals from construction and administration sector. It is concluded that the proposed hybrid MCDM method for risk assessment is a viable alternative to the existing practice. This may help bridging the gap between theory and practice of risk assessment in construction projects. It also can be applied through the public and private sectors to improve risk assessment and management. The research findings recommend further exploration of the potential applications of hybrid MCDM methods in construction management domain.