Douglas Sanders, P.Eng., LL.B.
June 21, 2005
Allocation of risks in a standard contract is challenging, but allocating risks contractually among the owner, concessionaire, and the subcontractors in P3 projects create new and demanding issues from philosophical and contractual perspectives. It is crucial for the contract to accurately reflect the bargain and, most importantly, the risk allocation among the various participants.
This article considers the allocation of risk in P3 (public private partnership) projects and the feasibility of flowing risk from the concessionaire (the consortium of sponsors who manage and control the project) down to the engineering, procurement and construction (EPC) contractor [also called design build contractors], the operation and maintenance (O&M) contractor, and their subcontractors and suppliers.