Risk management in the public private partnership (ppp) of technical infrastructure construction and investment projects in Da Nang

28] 2.1.4. The role of technical infrastructure Technical infrastructure is a complex work that directly or indirectly participates in the production and social activities of the society, closely linked to the object that the system serves, which is a condition for continued development urban development. 2.2. Theoretical foundations of the public private partnership 2.2.1. Public private partnership (PPP) concept Public private partnership is a cooperation agreement based on a long-term contract between the State and the Private Sector in infrastructure development and provision of public services for the purpose of taking advantage of that sharing risks and reasonable benefits among the parties involved in the project 2.2.3. Types of project contracts implemented of the public private partnership (PPP) Currently, in Vietnam and other countries in the world, the public- private partnership (PPP) has the following 10 types of contracts [11]: Build - operate - transfer (BOT) contracts; Build-transfer-operate (BTO) contracts; Build - Transfer (BT) Contract; Build-own-operate (BOO) contract; Build - Transfer - Hire (BTL) Contracts; Contract of Construction - Lease of Services - Transfer (BLT); Business - Management Contract (O&M); Mixed contracts; Contract of exploitation concession (Franchise); Design - build - sponsor - operate (DBFO) contract 2.2.4. Characteristics of the public private partnership + PPP is a long-term cooperation commitment (about 10-50 years) + PPP creates a dynamic mechanism for proper assignment between parties in PPP project contracts 9 + PPP distinction should be made with privatization 2.2.5. Advantages and disadvantages of the public private partnership 2.2.5.1. Advantages of public private partnership + Improve the efficiency of using resources + Improve the quality of assets and services + Improving public sector management + Overall improvement of public sector procurement 2.2.5.2. Disadvantages of public private partnerships + PPP projects are likely to require high costs as private investors expect a higher return + PPP projects in many cases may cause the State sector to lose control of management + PPP create opportunities for developing group interests in the State sector, this is an objective risk that is difficult to control. 2.3. Theoretical foundations of risk management in technical infrastructure construction and investment projects of public private partnership (PPP) method 2.3.1. The concept of risk management in technical infrastructure construction and investment projects of PPP method a. Risk concept Risk is the occurrence of random factors (uncertainties), the occurrence of uncertainty events (risks) of technical infrastructure projects implemented in PPP method, changing the results project outcomes in the direction of negative or opportunistic and that (random) uncertainty can be measured or cannot be measured by probability theory. b. Risk management concept Risk management is the process of identifying and classifying risks, measuring to determine the level of risk, reasonably allocating risks, proposing solutions to deal with risks, and finally auditing risk control aims to check, monitor and adjust the risks on a regular basis to minimize the systematic and effective risks throughout the life of a project, while also maximizing opportunities, helping the project achieve its expected goals 2.3.2. The process of managing risks in technical infrastructure construction and investment projects of PPP method Risk management process is a logical sequence of 4 main steps: Identifying and classifying risks; Analyze and assess risks; Handling risks (coping with risks) through appropriate allocation of risks and proposing solutions to minimize risks; Risk control 2.3.3. Content of steps of risk management process in technical infrastructure construction and investment projects of PPP method a. Risk identification and risk classification 10 * Risk identification: Risk identification are the search, the discovery, the detection and evaluation systematically and continuously assess the risks that may affect the investment project of technical infrastructure construction in the form of PPP and recognize its characteristics to effectively and systematically reduce risks throughout the life of a project, to maximize opportunities, help the project achieve its expected goals * Risk classification: Risk classification is the division and arrangement of risks in technical infrastructure construction and investment projects of PPP method, according to a certain order at certain levels based on the similar and different signs between them and depending on the purpose that used in the analysis of economic activities in order to identify risks clearly, smoothly, without duplication and without omission * Classifying risks in technical infrastructure construction and investment projects of PPP method In Vietnam, as in many countries around the world, although there is no agreement on classification, many researchers have pointed out a series of identifiable risks, thereby dividing risks according to many different ways. In the dissertation, based on the typical characteristic of PPP project, is the cooperation agreement based on long-term contracts between the two partners, the State and the Private Sector, so the author studied and Proposing 2 ways of classification as follows: * Method 1: In order to effective risk management according to the scope of occurrence, the author classified general risks and specific risks into 10 risk groups as shown in Figure 2.2. * Method 2: In order to effective risk management according to the impact environment of risks, the author classified risks into risks caused by internal environment and risks caused by external environment with 8 specific groups as shown in Figure 2.3.. b. Risk analysis and evaluation: Risk analysis is the calculation and assessment of the level of the impact of risks on the effectiveness of the technical infrastructure construction and investment project of PPP through the use of risk analysis methods and measurement techniques. The risk analysis process means calculating the probability of occurrence and the level of impact of the risk (weighted for risks) determined to serve the next action. c. Risk handling Risk Allocation: Risk allocation is the determination of which risks are allocated to whom and when and when is reasonable, the risk should be allocated to the party 11 capable of identifying the risk, the party can best control the consequences of the risk and the party can best handle that risk and handle the lowest cost in the shortest possible time. Risk response: Are reasonable activities to translate risks so as to be conducive to project success and minimize the negative impact of threats on project objectives. This process aims to identify effective response actions appropriate to the project d. Risk control: Risk control is the use of measures, techniques, tools, strategies, action plans, etc in order to prevent, avoid or minimize the damage, unexpected impacts may come to the project. That is the key work, connecting all risk management techniques of the project together which in order to early identify risks, analyze and assess in time risks and propose solutions to minimize risks appropriately to ensure the objectives of the project and improve project performance. 2.3.4. Factors affecting the management of risks in technical infrastructure construction and investment projects of PPP method Through the current status of implementing PPP, the author realized that many investment projects for construction of technical infrastructure in the form of PPP in Vietnam in general and Da Nang city in particular that have not been implemented effectively and objective causes of the problem. This problem is due to the risk management is still limited because the investment project for construction of technical infrastructure in the form of PPP is also influenced by many factors. Typically, there are five major factors affecting PPP project risk management: social factors, policy mechanisms, management capacity, dissemination, and project implementation. The factors are summarized through Figure 2.4. The impact of these 5 factors greatly affects the risk management of PPP projects. 2.4. Actual risk management in technical infrastructure construction and investment projects of PPP method in countries around the world and in Vietnam. 2.4.1. Actual in countries around the world England: England is one of the countries applying the earliest PPP and has had many experiences to succeed in implementing PPP. The issue of risk management has been interested by many people in the UK, typically by Li et al. (2005b) [99]. China: China has been planning and investing in road transport systems. Therefore, the demand for capital is increasing rapidly. Therefore, PPP is the optimal model to solve the capital problem for transport projects in China. In order to effectively implement the PPP 12 project in China, risk management is also an issue of interest, typically: Ke and Wang (2010a) [90]; Ke et al. (2010b) [91]. India: Recognizing the benefits of PPP from the 1990s to the present, India is an Asian country that has widely applied PPP to infrastructure development projects. Risk management has been concerned and effectively implemented in PPP projects in India. Typically, there are: Rajkumar et al (2013) [122]; Rajkumar et al (2016) [123] In developed countries such as Albania, Belgium, Ireland, Italy ... PPP is also used in many investment projects to build infrastructure and provide public services. Risk management in the project is also interested in research, typically: N. Carbonara et al. (2015) [114] 2.4.2. Actual in Vietnam The demand for infrastructure construction investment capital is increasing rapidly. This situation leads to the requirement of a comprehensive plan with long-term vision and goals for the PPP program. However, in this context, risk management has not really been implemented in Vietnam. Most studies have only investigated risk identification and allocation as well as proposed total solutions for PPP projects in transport development ([30], [72]). relating to risk management of technical infrastructure construction investment projects in the form of PPP. Risk management in general is still passive, only managed when risks occur, and there is no plan to identify and respond to risks right from the start of the project. 2.4.3. Practice of the legal system, mechanisms and policies on PPP method in Vietnam 2.4.3.1. System of legal documents about PPP Currently, in the legal framework governing PPPs in Vietnam, there are the following highest legal documents: Investment Law No. 67/2014/QH13, Bidding Law No.43/2013/QH13, Construction Law Construction No.0/2014/QH13; Public Investment Law 49/2014/QH13; Enterprise Law No. 68/2014/QH13; State Budget Law No. 83/2015/QH13 2.4.3.2. System of lower legal documents about PPP The Decree system related to the public private partnership form has been constantly researched, improved and perfected through the following stages: Decree 108/2009/ND - CP; Decision 71/2010/QD-TTg; Decree 15/2015/ND - CP; Decree 63/2018/ND – CP In general, the new points of Decree 63/2018 / ND - CP are mainly directed to or around the subject of the State. For investors and users, there are no additional provisions on rights and obligations that are significantly different from the old decree, except that some contents are presented fully, 13 clearly, closely and in a more logical sequence, creating a more transparent feel, but project information transparency is not required. CHAPTER 3: CURRENT SITUATION OF RISK MANAGEMENT IN TECHNICAL INFRASTRUCTURE CONSTRUCTION AND INVESTMENT PROJECTS OF THE PUBLIC PRIVATE PARTNERSHIP (PPP) IN DA NANG 3.1. Situation of implementing in technical infrastructure construction and investment projects of PPP method in Da Nang city 3.1.1. Current situation of demand for investment in construction of technical infrastructure in the PPP The situation in Table 3.1 shows that the demand for infrastructure construction and investment in general and technical infrastructure in particular is increasing, while capital from the Central Budget is limited, the demand for foreign loans is increasing. PPP is an effective solution for infrastructure construction and investment in Da Nang city. In the context that the demand for investment capital for infrastructure development in the city is very large while the budget is limited, if all the investment projects of the city use 100% of the budget capital, there will not be enough power; If only private investors do the project without the participation of the State, the risk level will be higher. Therefore, PPP is a good method and an effective tool to mobilize capital for development in the current context 3.1.2. Actual situation of PPP implementation + In the city of Da Nang, PPP has been implemented for a relatively long time, from 2009 to the present. + Among the 42 projects of construction investment and technical infrastructure construction in the form of PPP in Danang city, only 15 projects have been implemented or are being implemented, and 27 projects have not been implemented. Most of the completed projects and ongoing projects are implemented in the form of BT contracts through the method of exchanging land for projects. + Therefore, Da Nang needs to have solutions and policies to encourage PPP projects to be more diversified with many different forms of contracts to overcome the future depletion of land fund of the city 3.2. Current situation of awareness about PPP in investment in construction of technical infrastructure in Danang City A quantitative research on the status of awareness of PPP forms, risk awareness and risk management of investment project for construction of technical infrastructure in the form of PPP has been conducted in Da Nang City through the survey of 200 subjects combined with the survey. survey of 24 experts from parties related to the project of technical infrastructure 14 construction investment in the form of PPP in Danang city by the author. PPP in investing of technical infrastructure construction in the PPP in Danang City is considered a very important form of investment, currently there is a high demand for knowledge and investment. However, awareness of PPP in Da Nang in technical infrastructure investment is still very limited: most of the survey respondents are only aware of the right concept of PPP (172 people perceive the concept correctly), most know only 3 main types of PPP contracts are BT, BOT and BTO; 142 subjects considered that socio - economic efficiency was the most important factor in the PPP project, 92 subjects considered the second most important financial efficiency; only 34 subjects knew a lot about PPP documents The awareness about risk and risk management are also limited. Only 31 subjects are aware of risks in PPP projects; most surveyed experts said that risk is only determined when the project has a problem of risk, the risk appears at the stage managed by which party is responsible for handling. The risk is not foreseen and not allocated at the beginning, all BT projects are mostly allocated to Investors. Only 45 subjects were interested in and knew about risk sharing in the process of implementing PPP projects in Da Nang city. Through the results of the survey, the author found that the perception of PPP in Danang is an objective cause of risk perception, risk management in technical infrastructure construction and investment projects of the PPP method in Da Nang city that is still limited and passive. That is the reason why many infrastructure construction and investment projects in the form of PPP in Danang city are not effectively implemented and many projects have not been implemented and actualized in reality 3.3. Situation of risk management in technical infrastructure construction and investment projects of public private partnership (PPP) method in Da Nang city 3.3.1. General research order: A case study on the risk management in technical infrastructure construction and investment projects of public private partnership (PPP) method has been conducted in Da Nang city through the following steps: Step 1: Research the actual works that have been implemented in Da Nang city Step 2: Qualitative research through relevant documents at home and abroad Step 3: Quantitative research through a survey of 24 experts of the parties involved in technical infrastructure construction and investment projects of PPP method in Da Nang city by the author. 3.3.2. Actual identification and classification of risks 15 Based on the actual research through PPP projects in Da Nang city, the author has compiled a list of 41 risks, combining domestic and foreign research through the collection of secondary data from Relevant documents, the author initially identified 59 risks of technical infrastructure construction investment project in Da Nang city. On that basis, through direct surveys from experts, with the creation of hypotheses and testing of hypotheses in quantitative research conducted by the author, the results identified 59 risks of PPP project in the technical infrastructure construction investment project in Da Nang city, which is classified into 10 groups according to the scope of occurrence of risks and classified into 8 groups of results according to the environment of impact of risks. The list of risks has been summarized and generalized into a concept through Appendix 16 (Page 92, PL) 3.3.3. Situation of risk analysis and risk ranking a. Actual situation of analyzing and ranking risks in case of classifying risks according to the scope of occurrence of risks In order to effectively manage risks according to the scope of occurrence, the author classified general risks and specific risks into 10 risk groups are shown in Figure 2.2. Results of ranking the level of risk for the risk groups of the investment project for construction of technical infrastructure in the PPP in Da Nang city are shown through Table 3.6. b. Situation of risk analysis and ranking in case of classifying risks according to the impact environment of risks In order to effectively manage risks according to the impact environment of risks, the author categorized risks caused by internal environment and outside risks caused by projects outside the project into 8 specific groups are shown through Figure 2.3 The results of ranking the level of risk for the risk groups of the investment project for technical infrastructure construction in the form of PPP in Da Nang city are shown through Table 3.7. 3.3.4. Situation of risk allocation On the basis of direct survey of 24 experts who have been doing the project of constructing technical infrastructure construction project under PPP in Da Nang city. Through SPSS.16 software, the author has analyzed, calculated and checked the consistency in the evaluation of experts, the author proposed risk allocation solution for the State and Investors or allocated to both parties. An expert survey was conducted to find out the priority in risk allocation of stakeholders in the PPP of technical infrastructure construction and investment project in Danang City. Analysis of feedback data shows 16 that: Risks should be best allocated (standard allocation) to the State with 6 risks, to investors with 27 risks and to both parties to 26 risks. However, in reality only 2 risks accounting for 3.39% were allocated to the State sector, 38 risks accounting for 64.41% were allocated to both parties and 19 risks accounted for 32.20% were allocated. Complementary to investors. Thus, most of the risks are allocated to the two parties to bear the same risks, the State bears only very few risks. The allocation results are summarized in Table 3.8. 3.3.5. The information technology application situation in the PPP of risk management in project In the world: + There have been many studies focusing on developing a quantitative model that to solve various problems in risk management of technical infrastructure construction and investment project of the PPP method. + Most of those studies only stop at setting up software to apply each model separately to solve each problem that arises in the risk management of technical infrastructure construction and investment project of the PPP method. In Vietnam: + No research has been conducted on applied research integrating many quantitative models to solve many different issues in risk management of PPP projects, no studies have applied the information technology to build software integrates many models that to solve many problems of risk assessment and analysis in risk management of the PPP projects. + The research is just limited to the study of model theory and the application of manual tools to solve the model, there is no research and application of information technology in risk analysis to manage risks effectively in the PPP project 3.3.6. Causes of risks for investment projects on construction of technical infrastructure in the PPP in Da Nang city Based on the analysis of the status of the implementation of PPP projects in general and the risk management of the technical infrastructure project construction and investment in the PPP in particular in Danang City, there are many causes of risks for the technical infrastructure construction project according to PPP that makes many PPP projects implemented ineffectively 3.3.7. Evaluation the status of risk management in technical infrastructure construction and investment projects of the PPP method in Da Nang city 17 Risk management has not been given adequate attention; The process of allocating risks is usually determined when the project has a problem, the risk occurs at the stage managed by the party, that party is responsible for handling, there is no mechanism to identify risks and allocate risks. ro from the beginning. The application of information technology in evaluation analysis to manage risks has received little research attention CHAPTER 4: ORIENTATIONS AND SOLUTIONS TO PERFECT THE RISK MANAGEMENT IN TECHNICAL INFRASTRUCTURE CONSTRUCTION AND INVESTMENT PROJECTS OF THE PUBLIC PRIVATE PARTNERSHIP (PPP) IN DA NANG 4.1. Orientation for development of technical infrastructure of Danang city to 2030, vision to 2045 4.1.1. Orientation for development of Danang city to 2030, vision to 2045 Development orientation to 2030 and vision to 2045 of Danang city is “Danang strives to become a green city, modern - intelligent, global and identifiable, with the following characteristics: Green City; modern - smart city: having modern technical infrastructure and management mechanism, applying modern technologies on the basis of industrial revolution 4.0; Global cities: global connectivity and connectivity; The city has its own identity: worth living and memorable” 4.1.2. The objective of developing the technical infrastructure of Danang city till 2030, with a vision to 2045 On the basis of the technical infrastructure development orientation to 2030 and a vision to 2045, Da Nang city sets the goals: Socio-economic development in line with the development orientation of the whole region and the country; It is truly a major economic center and a strong growth area of the Central Coast - Central Highlands 4.2. Orientation of solutions to complete the risk management in technical infrastructure construction and investment projects of public private partnership (PPP) method in Da Nang city The solution must satisfy the following two criteria: Firstly, it must meet the balance of benefits for both public and private sides in controlling and controlling risks. Secondly, it must be clear, transparent, feasible and highly effective according to the project's objectives. The solution besides contributing to minimizing risks in the direction of strategy and overall, also contributing to proposing the solution in detail, specify on the basis of each cause of risk and each factor causing risk 18 4.3. Solutions to complete the r