Model for Management of Whole Life Cycle Risk Uncertainty in the Private Finance Initiative (PFI)

Abstract

Based on empirical data, the authors have developed a dynamic model of whole life cycle risk uncertainty for PFI projects. This model is both an assessment and a management tool for PFI risks. It presents a clear picture of how uncertainty progresses throughout the whole life cycle, and is comprehensive so as to avoid the wishful-thinking attitude that might prevent the adoption of correct risk-management measures. The whole life cycle model of risk uncertainty can be quantified and used to classify projects according to their degree of uncertainty and maturity. It recognizes that uncertainty is dependent on both the particular risk and on the period of the project's life cycle. This model can be used as a tool for structuring strategic decisions.