Risk Management of Infra Structure Project
Risk Analysis of Infrastructure Projects – A Case Study on Build ~Operate
~Transfer Projects in India
AUTHOR PROFILE:
NAME: Dr. Hiren M Maniar *
INSTITUTE: - L&T Institute of Project Management, Vadodara, Gujarat, India
E Mail:- hm_maniar@rediffmail.com
PHONE NO: +919898010291
* Dr.HIREN M MANIAR is currently working as a Faculty in Finance at L&T Institute of Project
Management, Vadodara, Gujarat, India. He may be contacted at hm_maniar@rediffmail.com
Paper Published in the in International Journal “The IUP Journal of Financial Risk
Management” Vol.II No.4 December 2010. For more details please refer link http://www.iupindia.in 1
Abstract:
The growth of the infrastructure sector in India has been relatively slow compared with the industrial and manufacturing sectors. The energy shortage, an inadequate transportation network, and an insufficient water supply system have caused a bottleneck in the country’s economic growth. The
Build-Operate-Transfer (BOT) scheme is now becoming one of the prevailing ways for infrastructure development in India to meet the needs of India’s future economic growth and development. There are tremendous opportunities for foreign investors. However, undertaking infrastructure business in
India involves many risks and problems that are due mainly to differences in legal systems, market conditions and culture.
It is crucial for foreign investors to identify and manage the critical risks associated with investments in India’s BOT infrastructure projects. Based on the survey, the following critical risks, in descen ding order of criticality, are identified: delay in approval, change in law, cost overrun, dispatch constraint, land acquisition and compensation, enforceability of contracts, construction schedule, financial closing, tariff adjustment, and environmental risk. The measures for mitigating each of these risks are also discussed. Finally a risk management framework for India’s BOT
~Transfer Projects in India
AUTHOR PROFILE:
NAME: Dr. Hiren M Maniar *
INSTITUTE: - L&T Institute of Project Management, Vadodara, Gujarat, India
E Mail:- hm_maniar@rediffmail.com
PHONE NO: +919898010291
* Dr.HIREN M MANIAR is currently working as a Faculty in Finance at L&T Institute of Project
Management, Vadodara, Gujarat, India. He may be contacted at hm_maniar@rediffmail.com
Paper Published in the in International Journal “The IUP Journal of Financial Risk
Management” Vol.II No.4 December 2010. For more details please refer link http://www.iupindia.in 1
Abstract:
The growth of the infrastructure sector in India has been relatively slow compared with the industrial and manufacturing sectors. The energy shortage, an inadequate transportation network, and an insufficient water supply system have caused a bottleneck in the country’s economic growth. The
Build-Operate-Transfer (BOT) scheme is now becoming one of the prevailing ways for infrastructure development in India to meet the needs of India’s future economic growth and development. There are tremendous opportunities for foreign investors. However, undertaking infrastructure business in
India involves many risks and problems that are due mainly to differences in legal systems, market conditions and culture.
It is crucial for foreign investors to identify and manage the critical risks associated with investments in India’s BOT infrastructure projects. Based on the survey, the following critical risks, in descen ding order of criticality, are identified: delay in approval, change in law, cost overrun, dispatch constraint, land acquisition and compensation, enforceability of contracts, construction schedule, financial closing, tariff adjustment, and environmental risk. The measures for mitigating each of these risks are also discussed. Finally a risk management framework for India’s BOT
References: 2. Grey, S. (1995), Practical Risk Assessment for Project Management, John Wiley & Sons Ltd, Chichester. 4 (Washington: The World Bank, 1996). 4. Kleimeier, S., Megginson, W. L., 1998. A comparison of project finance in Asia and the West. 5. Risk Management in PPP Projects – IL&FS Report (Construction Risk Management Conference India, August 2010) 6. Qiao, L., Wang, S. Q., Tiong, L. K. R. and Chan, T. S. (2001). Framework for Critical Success Factors of BOT Projects in China, The Journal of Structured and Project Finance, 7(1): 53-61. 7. Wang, S. Q., Dulaimi, M. F. and Aguria, M. Y. (2002). Building the External Wing of Construction: Managing Risk in International Construction Project, Research Report, National 8. Wang,G.Q,Jia,X.L (2005). Risk Management on the BOT Investment and Financing Mode, India Water & Wastewater, 21(9): 85-88