Public-Private Partnership ("PPP") is a tool for collaboration between public and private entities and is used in multiple sectors to finance, build and operate infrastructure or provide services of public interest. The ability to allocate different types of risk to the agent best equipped to deal with them is one of the features that make this form advantageous compared to traditional public procurement practices. However, this attribute makes the issue of risk management fundamental in such context. The occurrence of the COVID-19 pandemic in 2020 disrupted international markets in every sector. Associated conventionally with the broader and more controversial Force Majeure risk, the recent health emergency has also put a strain on the construction sector, where the contractual clauses usually put in place for such events have sometimes proved insufficient to cover all the effects the pandemic had in the PPP context. The purpose of this study is to identify the direct and indirect effects caused by the COVID-19 pandemic in the construction industry and to assess the extent to which traditional clauses for Force Majeure events can compensate for them. To this end, after a literature review about the topics of PPP, risk management and Force Majeure events, the case study of the turnkey contract for the construction of the Hospital in Køge, a small town in Denmark, is considered. This case exemplifies some of the difficulties encountered by the general contractor and of the risk mitigation practices employed to ensure the survival of the project. The combination of the literature review and the case study highlights that delays caused by COVID-19 are sufficiently covered by the Force Majeure clauses while, for price increases due to direct and indirect effects, the recognition of additional measures of risk mitigation for the private is more challenging, potentially compromising the financial position of the contractor.
Il Partenariato Pubblico-Privato (“PPP”) è uno strumento di collaborazione tra enti pubblici e privati ed è utilizzato in molteplici settori per finanziare, costruire e gestire infrastrutture o fornire servizi di interesse pubblico. La possibilità di allocare le diverse tipologie di rischio all’agente meglio predisposto ad affrontarle è una delle caratteristiche che rendono questa forma conveniente, tuttavia ciò rende il tema della gestione del rischio fondamentale in tale contesto. Il verificarsi della pandemia di COVID-19 a partire dal 2020 ha stravolto i mercati internazionali di ogni settore. Associato convenzionalmente al più ampio e controverso rischio di Forza Maggiore, esso ha messo a dura prova anche il settore delle costruzioni, dove le clausole contrattuali solitamente messe in atto per tale tipologia di eventi si sono dimostrate talvolta insufficienti a coprire tutti gli effetti che la pandemia ha avuto nel contesto delle PPP. Lo scopo della presente Tesi è di individuare quali siano stati gli effetti diretti e indiretti causati dalla pandemia di COVID-19 nel settore delle costruzioni e di valutare in che misura le tradizionali clausole per gli eventi di Forza Maggiore possano compensarli. A tal fine, dopo un’analisi della letteratura riguardo al concetto di PPP, al risk management e agli eventi di forza maggiore, viene preso in considerazione il caso studio del contratto turnkey per la costruzione dell’Ospedale di Køge, una cittadina in Danimarca. Tramite questa applicazione pratica, viene fornito un esempio concreto delle difficoltà incontrate dall’appaltatore e delle pratiche di mitigazione del rischio impiegate per garantire la sopravvivenza del progetto. La combinazione della revisione della letteratura e del caso pratico evidenziano come i ritardi causati dal COVID-19 siano sufficientemente coperti dalle clausole di Forza Maggiore mentre, per gli aumenti dei prezzi dovuti a effetti diretti e indiretti, il riconoscimento di misure addizionali di mitigazione del rischio per il privato sia più ostico, compromettendo potenzialmente la posizione finanziaria dell’appaltatore.
Covid-19 impact on risk management practices of PPPS in the construction industry: a danish case study in the healthcare sector
Polito, Rebecca
2021/2022
Abstract
Public-Private Partnership ("PPP") is a tool for collaboration between public and private entities and is used in multiple sectors to finance, build and operate infrastructure or provide services of public interest. The ability to allocate different types of risk to the agent best equipped to deal with them is one of the features that make this form advantageous compared to traditional public procurement practices. However, this attribute makes the issue of risk management fundamental in such context. The occurrence of the COVID-19 pandemic in 2020 disrupted international markets in every sector. Associated conventionally with the broader and more controversial Force Majeure risk, the recent health emergency has also put a strain on the construction sector, where the contractual clauses usually put in place for such events have sometimes proved insufficient to cover all the effects the pandemic had in the PPP context. The purpose of this study is to identify the direct and indirect effects caused by the COVID-19 pandemic in the construction industry and to assess the extent to which traditional clauses for Force Majeure events can compensate for them. To this end, after a literature review about the topics of PPP, risk management and Force Majeure events, the case study of the turnkey contract for the construction of the Hospital in Køge, a small town in Denmark, is considered. This case exemplifies some of the difficulties encountered by the general contractor and of the risk mitigation practices employed to ensure the survival of the project. The combination of the literature review and the case study highlights that delays caused by COVID-19 are sufficiently covered by the Force Majeure clauses while, for price increases due to direct and indirect effects, the recognition of additional measures of risk mitigation for the private is more challenging, potentially compromising the financial position of the contractor.| File | Dimensione | Formato | |
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Thesis_Polito_10622166.pdf
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Descrizione: COVID-19 IMPACT ON RISK MANAGEMENT PRACTICES OF PPPs IN THE COSTRUCTION INDUSTRY: A DANISH CASE STUDY IN THE HEALTHCARE SECTOR
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https://hdl.handle.net/10589/197008