1. Josip Saša Marenjak1, Diana Car-Pušić2, Ivan Marović2
Involving Stakeholders in Risk Allocation of Public Investment Projects
Saša Marenjak1, Diana Car-Pušić2, Ivan Marović2
1University of Osijek, Faculty of Civil Engineering (GFOS)
2University of Rijeka, Faculty of Civil Engineering (GFRI)
Croatia

2. Moving Beyond Risks: Organising for Resilience |Bled, Slovenia
Introduction
Managing public investment projects – a complex business process (public administration and social community)
Public administration needs to identify the one common or compromise interest of the entire community within the pluralism of individual interest of particular group
Every wrong decision can cause long-term disaster
Proactive stakeholder management
Moving Beyond Risks: Organising for Resilience |Bled, Slovenia

3. Moving Beyond Risks: Organising for Resilience |Bled, Slovenia
Introduction
Public-private partnership (PPP) can have its advantages over the classical public financed projects
Primarily related to covering financing costs as well as operational and maintenance risks
Facilities constructed according to PPP model
GB > 830 projects / € 78 billion total capital value
CAN ≈190 projects of € 50 billion total capital value
Croatia and other post-transition countries (gathering first experiences)
Past experience in public project implementation in Croatia has shown freq. occurrence of risks in contracting, design and construction stages
poorly defined project task, incomplete project documentation, unrealistic price and construction schedule, etc.
Moving Beyond Risks: Organising for Resilience |Bled, Slovenia

4. Moving Beyond Risks: Organising for Resilience |Bled, Slovenia
Josip
Problems studied
Research objective
To give an answer how opinions of public investment project stakeholders can influence the risks and project success
Special emphasis
At the importance of involving all stakeholders in decision making process of public investment projects in order to allocate risks and reduce the costs of negative events
To achieve higher Value for Money (VfM)
Moving Beyond Risks: Organising for Resilience |Bled, Slovenia

5. Theoretical research framework
PPP is defined as:
“contractual agreement between public and private parties, in which both parties will receive significant benefits, whereby the private party perform some public function on behalf of the public party for a specified time and within a negotiated framework of transferred risk and outcome-based financial rewards” (USAID Regional Infrastructure Program 2002)
PPP strengths
A swifter implementation,
Reduced WLCC,
A better risk allocation,
A higher-quality service,
More effective management, …
PPP essence – financial engagement (private sector) and risk allocation among public and private partners
Moving Beyond Risks: Organising for Resilience |Bled, Slovenia

6. Theoretical research framework
For success of a project it is important:
To foresee the risks related to certain components and phases of the project
To allocate them so that the balance ensures the best value for invested resources
To manage stakeholders in order to understand their expectations and thereby increase their positive input and maximize the project value
Stakeholder:
“a person or organization that can affect, be affected by, or perceive themselves to be affected by a decision or activity” (ISO Guide 73:2009)
Proactive stakeholder mgmt. Proactive risk mgmt.
Moving Beyond Risks: Organising for Resilience |Bled, Slovenia

7. Theoretical research framework
To deal with such decision making problems in such complex environments a various multi-criteria group decision-making method have (MGDM) been developed:
AHP
PROMETHEE
AHP+PROMETHEE
MGDM’s enabled stakeholders to be involved in medias res
Especially important for end-users of PPP projects
Moving Beyond Risks: Organising for Resilience |Bled, Slovenia

8. Moving Beyond Risks: Organising for Resilience |Bled, Slovenia
Research methodology
Experiences of public facilities implemented in the Republic of Croatia
Legal and other documents significant to the PPP model in the Republic of Croatia
Moving Beyond Risks: Organising for Resilience |Bled, Slovenia

9. Research methodology
Experiences of public facilities implemented in the Republic of Croatia
Numerous problems are occurring in the project preparation stage, implementation stage, and utilization stage
Technical and public structure quality standards are not matched
Public developer generally doesn’t entrust project management to professionals
No pre-investment studies – no project optimization …
Design engineer is selected through public tender by the lowest-price criterion
Design contract doesn’t realistically set time and/or price
Short terms related to the “time- delivery” …
Facility routine maintenance costs are higher than expected
Energy costs are higher than expected
Necessary interventions on the facilities are required during defects liability period …
Moving Beyond Risks: Organising for Resilience |Bled, Slovenia

10. Moving Beyond Risks: Organising for Resilience |Bled, Slovenia
General framework for involving stakeholders in optimal risk allocation of public investment projects
Moving Beyond Risks: Organising for Resilience |Bled, Slovenia

11. Moving Beyond Risks: Organising for Resilience |Bled, Slovenia
Conclusion
During success evaluation of PPP and PFI project, public partner needs:
To implement different risk allocation model
To take into account various criteria
General framework for involving stakeholders in optimal risk allocation of public investment projects is presented
Further research: to identify more suitable stakeholder involvement (early in projects development phase) in order to define appropriate risk allocation structure reduction of negative consequences and higher VfM
Value for Money
Moving Beyond Risks: Organising for Resilience |Bled, Slovenia

12. Thank you for your attention
This work has been fully supported by the University of Rijeka under the project number