RISK MANAGEMENT IN BOT HIGHWAY PROJECTS IN PAKISTAN

Abstract

flourish and sustain economic growth of any country requires good combination of infrastructure network and their related services. The economic growth is essential for social development of a society. The emerging countries of third world face scarcity of capital for expenditures thus lack capability for adequate provision of infrastructure network. In many developing countries of world like Malaysia, Thailand, Philippines, Turkey and India, the governments have turned towards build operate transfer (BOT) project delivery method. The concept was applied by Turkey in 1984. In Pakistan, BOT concept is yet at its sprouting stage, particularly in highways sector. The national roads / highways fall under jurisdiction of National Highway Authority (NHA) which lacks vast experience in BOT delivery method. Many highways projects were conceptualized to be undertaken through BOT method; very few achieved success. Greater part of projects couldn’t reach construction phase. The unsuccessful projects indicate that the investors and concessionaires couldn’t get the expected response from public sector. At the same time public sector also faced problems in supporting such projects through grantees. The risks are present as deterrents for both public and private sectors. These risks are required to be evaluated, identified and allocated to the best suitable responder. For this purpose a questionnaire survey was conducted of 53 identified risks from literature faced by developing countries in BOT highway projects. The responses were sought from different stakeholders of BOT having exposure about BOT and Highways. The main respondents were concessionaires’/contractors, consultants/engineers, state departments/clients and investors. The response rate was encouraging being 71.8%, indicating keen interest of respondents. Statistical methods/procedures were applied on collected data for extraction of results about ranking of risks through mean score (MS) and relative importance index(RII), perception of respondents about identified risks and preferred risk allocation. The top two of the risks identified were law and order situation and political instability in Pakistan. The critical phase was found to be initiation phase which indicates that the respondents were well alert of the questions asked. The preferred allocation of risks was done according to frequency allocation by respondents. The study recommends development of supportive environment for private investment which requires bureaucratic support, political will, public acceptance and acceptable return on investment. Future research is required for analysis of initiation and implementation phase of BOT highways projects in detail.