| Risk Type | Describe | Allocation | Mitigation |
|---|---|---|---|
| Technology Performance | Existing technology unproven in terms of revenue service | Private Vendors | Warranties |
| Environmental Flaws or Delay | Lengthy studies Permitting delays Regulatory approval periods |
Public | Strong process management Private Partner assistance |
| Market Revenues | Customer willingness to pay for level of service (LOS) unknown; affects interest rate and marketability for project-based revenues financing Traffic and revenue below projections Competing/alternative projects Excessive capital maintenance Insufficient revenues to fund ongoing O&M |
Public and Private (funders/lenders) | Investment grade traffic and revenue studies accepted by rating agencies Adequate debt coverage ratios Adequate reserves Credit enhancement, insurance Toll adjustment flexibility Careful budgeting processes and O&M controls Non-compete protections |
| Completion Costs | Cost and schedule overruns | Private (construction contractor) and Public |
Use of fixed price/guaranteed maximum contract Adequate contingency funds Liquidated damages Force major insurance Design and construction management/over sight by Public Partners (which may be outsourced) Financially viable Private Partners Specialized surety products Allowing Private Partners to undertake majority of design |
| O&M Costs | Excessive costs of operations Excessive capital maintenance expenditures Unpredictability of costs Regulation of DUC rates and contractor ROR |
Private (O&M contractor) and Public | Non-recourse financing Minimum guarantees Toll adjustment flexibility Credit enhancement, insurance Careful budgeting processes Capital asset replacement assurances Warranties, incentives, and penalties Financially viable Private Partners Use of private O&M contract Use of fixed price/guaranteed maximum pricing, with escalations and adjustments over time |
| Policy/Political Constraints/ Support | Uncertainties regarding public policy and change in law Regulatory uncertainties Funding support |
Public and Private | Persuasive and supported arguments for project Early regulatory agency involvement Public relations and citizen/policymaker education campaign Community engagement and buy-in strategy |
| Phasing Timing and Resources | Uncertainties regarding initial vs. subsequent phase economics | Public and Private | Strong process management Early regulatory agency involvement Expedited and streamlined procurement process Early and continuous contact with other states and local governments |
| Liability | Construction Defects Day-to-day operational Subcontractor claims Environmental |
Public and Private | Warranties Insurance Well-thought out allocation of liability in contract based upon party best able to control and mitigate Innovative insurance products |