1. Introduction
Public–Private Partnership (PPP) has been popular for 15 years, and continues to grow at a fast pace in China. The Chinese government continuously encourages the expansion of PPP applications to boost economic revenues; this emerging management pressure has made the study of PPP project management a research hotspot, and several achievements have been made [
1,
2,
3].
As a new financing model, the relevant theory of PPP is imperfect [
4] and the process of PPP holds great uncertainty [
5]. Many uncertain factors can affect the implementation process of PPP projects, including environment risk, payment risk, etc. [
6], thus many scholars have conducted an in-depth study for this problem. For example, Marques examined how risk is reflected in infrastructure regulatory contracts and got a conclusion that risk is the key issue in contracting with the private sectors [
7]. Roehrich et al. applied the logic of bounded rationality and explored the extent to which companies implement responsible supply chain management (RSCM) as a result of their reputational risk exposure, and how bounded rationality impacts on the decision of RSCM [
8,
9]. Many other scholars have studied the relationship between public and private sectors in PPP projects [
10]. Barlow proved that European governments were increasingly partnering with the private sector to underwrite the costs of constructing and operating public hospitals and other health care facilities and delivering services by constrained national budgets [
11]. Hoejmose et al. proposed that responsible supply chain management can help protect a firm’s corporate reputation by shielding it from negative media attention and consumer boycotts [
12]. However, many studies explored the role of organization and ecosystem in complex PPP projects [
13,
14,
15]. Even though there are so many studies on PPP projects, unfortunately, little attention has been given to sustainability risk of PPP projects. Here, sustainability risk is the combination of likelihood and consequences of events which affect the achievement of organization’s sustainable development. It is related to the concepts of sustainable development and the “triple bottom line” [
16], which emphasizes “the development should meet the needs of the present world without compromising the ability of the future generations to meet their own needs” [
17]. Sustainability risk has been brought into many areas, and numerous studies have been conducted to discuss its connotations, applications and mechanisms. Among them, Touboulic and Walker [
18] investigated theoretical perspectives in sustainable supply chain management and contributed to understanding the current state in the field of PPP and its future development. Cucuzzella [
19] presented a series of design projects to illustrate the difference in thinking and outcomes when sustainability is thought of in varying temporal and spatial perspectives. Harclerode et al. [
20] developed a foundational framework to define and integrate the sustainability and risk management objectives in the life cycle of complex project towards a more sustainable state. In the area of PPP project management, the common perception of sustainability risk evaluation involves economy, society, resources, and environment aspects, and aims at monitoring changes of PPP projects, adjusting strategies so that a balance among economy, society, resources, and environment can be found. However, there is no recipe for reaching this balance [
21,
22]. Furthermore, complex arrangements and incomplete contracting in PPP projects have led to increased risks of unsustainability, for both public and private partners [
23,
24]. Effective sustainability risk evaluation of PPP projects is therefore challenging and demanding.
At the same time, the accuracy of sustainability risk evaluation is crucial for PPP as a whole [
25]. Risk evaluation of PPP projects is fundamentally different from that of traditional projects, where traditional projects emphasize the temporary and disposable nature of which risk evaluation is limited to the processes of design and implementation. In PPP projects, investors place special emphasis on the sustainability of projects and are entitled to reducing investments or terminating projects if PPP fails to achieve sustainability standards. Accordingly, one of the most important drivers for value-for-money is sustainability risk evaluation, which means the sustainability risk of a PPP project can be evaluated, prevented, and controlled during the implementation process [
26]. As a result, lower-risk and higher-quality PPP projects may be implemented relative to conventional methods.
This work is intended to reduce project risk incidents and achieve the sustainable development of the organization by accurately evaluating the sustainability risk level of PPP projects and achieving the most important objective of providing a reference for the public and private sectors when making decisions on PPP project management. The rest of this paper is organized as follows.
Section 2 analyzes the main influencing sustainability risk factors of PPP projects, by classifying these factors into five categories: culture and society, cost and economy, ecology and environment, project and organization, politics and policy, via an extensive literature review, and then this paper builds a factor system of sustainability risk of PPP projects. In
Section 3, a fuzzy comprehensive evaluation model for assessing the sustainability risk level of PPP projects, based on FCEM and FMECA, is proposed, which provides a holistic view focused on reflecting the sustainability risk level factors of PPP projects by evaluating the sustainability risk level of each category.
Section 4 verifies the effectiveness and feasibility of this model using a computational experiment.
Section 5 draws the conclusions.
2. Factor System of Sustainability Risk of PPP Project
Risk management exerts a profound influence on PPP project management and its success [
26]; especially, sustainability risk evaluations have been found to be highly variable, intuitive, subjective, and unsophisticated [
27,
28]. Given its critical importance in PPP projects, many studies have been conducted to seek an approach to evaluate the level of sustainability risk evaluation effectively, such as the work of Xu et al. [
25], where a fuzzy synthetic evaluation model for assessing the level of a particular critical risk group, and the sustainability risk level associated with PPP projects in China, based on objective evidence rather than subjective judgment, was developed. Effah Ameyaw [
29] conducted a risk perception analysis in water supply projects in Ghana to evaluate the risk criticality, risk management capability, and risk factors that could influence the sustainability risk level of water supply projects. Kumaraswamy [
26] analyzed the factors of sustainability risk from the perspective of project teams to empower them to focus on developing sustainable infrastructures and, ultimately, overall sustainable development. Jin [
24] established an artificial neural network model for modeling risk allocation decision-making processes in PPP projects. Hayford and Partner [
30] proposed an optimal sustainability risk model which could enable partners to deal with external changes and events, and explore the behaviors between different partners, even while confronted with opposite objectives in the allocation of risks. However, this work either deems the sustainability risk level as one that is only affected by the status of the PPP project itself [
25] or management capability [
29], but lacks foundations and empirical evidence to support their claims.
More importantly, sustainability risk evaluation of PPP projects is a complex process, in which all project stakeholders cooperate and compete with each other in accordance with its sustainable development strategic objectives [
31]. Running a PPP project at the lowest level of sustainability risk is a challenge for any enterprise, since many unpredictable factors could influence it [
26]. This is probably because the studies on PPP project management, including risk management, are mainly concerned with processes and techniques [
32,
33]. PPP projects have a great impact developing the social economy and building a harmonious society [
34]; thus, merely using risk indicators of a PPP project to measure the sustainability risk level is insufficient [
35]. Zhang et al. [
36] argued that measurements supported by other factors, such as society and the environment, need to be employed. Nonetheless, no further empirical studies have been conducted to support their conclusions.
Recently, Valipour et al. [
37], Li and Zou [
38] and Chou et al. [
39] argued that the sustainability risk factors of PPP projects, if integrated with the aspects of financial, legal, and political risks, can contribute to the evaluation of the sustainability risk level of PPP projects, and allow a more logical and holistic understanding and interpretation of the sustainability risk evaluation process. In addition, although many scholars have already used the determinants of PPP project sustainability risk factors in aspects of economy, society, environment, management ability, and techniques, some of them lacked integrity [
40,
41].
To evaluate the sustainability risk level of PPP projects and maintain the systematic nature of the factors, the 1st-level sustainability risk factors of PPP projects can be generalized into five categories: culture and society, cost and economy, ecology and environment, project and organization, and politics and policy [
24,
36,
42]. These factors can help evaluate the sustainability risk level of PPP projects and maintain the systematic nature. There are many 2nd-level evaluation factors in each 1st-level sustainability risk factor, so it is important to build a sustainability risk factor system before evaluating the sustainability risk level of a PPP project. Based on existing research and literature, the factor system of the sustainability risk of a PPP project can be built, as shown as
Table 1.
4. Computational Experiment and Results
PPP model has been widely used to deliver infrastructure projects. Over the past two decades, the Chinese government has been embarking on an ambitious program of large investments on infrastructure development. To facilitate urbanization in China, the funds required for urban infrastructure development during the first twenty years of the 21 century are expected to be around 3500–5000 billion RMB. Funds supported by government is unlikely to be used only to finance such large investments and so, reforms need to be undertaken by Chinese government regarding the investment and financing of infrastructure projects. Therefore, the model of PPP was brought in China to alleviate this problem.
Yu River Wetland Park (YRWP), in Xi’an, is a PPP demonstration project of the Ministry of Finance of the People’s Republic of China, the total area of this park is 5236 acres and the total planned investment is 1.17 billion RMB which will be used in the construction of lake, heap mountain, wetland restoration, landscape greening, sculpture sketch, square construction, as well as other projects. This is a public welfare infrastructure project which focus on the ecological construction, environmental protection and sustainable development of Xi’an and will become the largest wetland park in the Xi’an if built in 2018. Many stakeholders such as Xi’an Municipal Government, GC Investment Group, SBG Construction and Development Co., Ltd. (Shanghai, China) participated in the construction process of this project. Obviously, the construction form of this park is a typical application of PPP model which emphasizes the effective cooperation between government and social capital. Therefore, the YRWP is representable of the wider PPP population. In addition, Xi’an is the ancient historical and cultural capital of China, with many historical sites and many ethnic groups; thus sustainability risk evaluation of this PPP project involves history, economy, culture, and many other aspects. Thus, the YRWP project can be chosen as an example for computational experiments to introduce the application and effectiveness of the sustainability risk evaluation model in this paper.
According to
Table 1 and the process of sustainability risk evaluation, described in
Section 3.1, the risk evaluation factor set of YRWP, Q, can be established (shown in
Table 2).
In
Table 2,
is the risk assessment factor set of YRWP,
is the number of 1st-level sustainability risk factors in set
, which is
.
is the
1st-level sustainability risk factor,
is the
2nd-level risk factor of
, and
is the number of 2nd-level risk factors. As shown in
Table 2, the number of YRWP’s risk factors are
.
According to the criterion of FCEM, and Equation (3), the risk assessment comment set of YRWP,
, can be established, where
. Fuzzy comprehensive evaluation matrix
and
could also be determined based on the results of the questionnaire survey (the sample of this survey questionnaire is shown in
Appendix A).
To collect the risk assessment comments of YRWP, a questionnaire survey was designed (
Appendix A). The objective of this questionnaire survey included three categories: Management, implementation, and technical staff, which could ensure the correctness of the survey results. A total of 500 questionnaires were issued and 448 were collected, including nine unfinished and seven identical questionnaires; these 16 questionnaires were considered as invalid according to statistical principles, thus 432 questionnaires were valid. The recovery rate and the valid questionnaire were 89.6% and 86.4%, respectively. Therefore, the results of this survey are considered real and effective, and can be used for further analyses.
Based on the results of the assessment comments of 2nd-level sustainability risk factors, the fuzzy comprehensive evaluation matrix of 1st-level sustainability risk factors, was constructed. This section takes the 1st-level sustainability risk factors, (was selected because the number of 2nd-level sustainability risk factors of is the minimum), as an example to introduce the calculation process of fuzzy comprehensive evaluation matrix .
By analyzing the results of the survey questionnaires, the assessment comment of sustainability risk factor
can be obtained (
Table 3).
In
Table 3, the level of comment of 2nd-level risk factor
can be calculated by
; here,
is the time that the object of this questionnaire survey evaluated the sustainability risk level of
is
(
). Then, fuzzy comprehensive evaluation matrix
can be established:
Similarly, the fuzzy comprehensive evaluation matrix of the other 1st-level sustainability risk factors
, and
, can be established:
Weight vectors
and
are very important to determine the level of sustainability risk and can be calculated using FMECA according to
Section 3.2. To obtain the weights of sustainability risk factors, five experts of PPP risk management were invited to score the values of
and
with the principle shown as Equations (15)–(20) (the scoring table is shown in
Appendix B), and the scoring results of the 1st-level sustainability risk factors are shown in
Table 4. Taking the average as the final score, the weight of 1st-level sustainability risk factors,
, can be obtained after normalization:
Similarly, the weight of 2nd-level sustainability risk factors
can be obtained:
According to Equation (11), the fuzzy comprehensive assessment matrix of 1st-level risk factors can be calculated:
According to Equations (9) and (10), fuzzy comprehensive assessment matrix
, which reflects the sustainability risk level of YRWP, can be established:
According to Equations (12)–(14), the value of YRWP’s sustainability risk assessment,
and the sustainability risk level of 1st-level risk factors,
, can be calculated:
In addition,
Figure 1 shows the sustainability risk level of 1st-level risk factors.
means that the value of YRWP’s sustainability risk level is 3.061, which is higher than the average value of risk comments, 2.5, which indicates that the YRWP’s sustainability risk level is relatively higher and needed for scientific management in process of project implementation.
In
Figure 1, the value of YRWP’s sustainability risk assessment is in accordance with the order, from highest to lowest: cost and economy (
), society and culture (
), project and organization (
), politics and policy (
), and ecology and environment (
). Cost and economy (
), and society and culture (
) are the highest sustainability risk level factors Therefore, if managers want to control the sustainability risk of YRWP effectively,
and
are the key factors to be addressed first.
According to
Figure 1, the 1st-level sustainability risk factor of cost and economy in YRWP is the highest, which is because the YRWP project is a social welfare project focused on ecological construction, environmental protection, and sustainable development of Xi’an, although the relationship between public and private sectors is not very clear causing the investment plan and expense being relatively unclear, which would keep the risks of cost and economy at a higher level. Compared to different PPP projects, it is not difficult to find that the sustainability risk level of the same factors, such as ecology and environment, society, and culture, in different projects are different due to the particularity of each project; it reflects that the sustainability risk level of different factor is relative, which requires managers to take the actual situation into account when making decision on sustainability risk management for different PPP projects.
5. Discussions and Conclusions
Nowadays, many studies on PPP project management have been carried out to study the problems of risk assessment [
6,
7,
8,
9], relationship recognition between public and private sectors [
10], and analysis of the roles for different organizations [
13,
14,
15]. Besides, many other scholars have researched the area of sustainability risk and presented the connotations, applications and mechanisms from different fields, including, but not limited to, organization’s sustainable development [
16], sustainable chain management [
18], and project design selection [
19]. These studies greatly contribute to promote the application of PPP model in infrastructure construction projects and provide a theoretical support for sustainable risk management. However, even though there are many studies about PPP projects and sustainability risk, little attention has been given to sustainability risk of PPP projects, especially the area of sustainability risk evaluation of PPP projects, and the method used to evaluate the sustainability risk level of PPP is also missed which causes the sustainability risk of a PPP project cannot be evaluated, prevented, and controlled during the implementation process. This emerging management pressure has made the study of sustainability risk evaluation of PPP projects important.
To solve this problem, this paper brings the concept of “sustainability” into the risk evaluation of PPP projects and constructs a factor system of sustainability risk of PPP projects covering five 1st-level factors and 72 2nd-level factors via an extensive literature review. In addition, this paper adapts a comprehensive approach to establish a fuzzy evaluation model for sustainability risk evaluation based on the methods of FCEM and FMECA for evaluating the sustainability risk level of PPP projects, the effectiveness and feasibility of which is verified by a computational experiment. According to the results of this computational experiment, we can see that the approach proposed in this paper is reasonable for evaluating the sustainability risk levels of PPP projects and could achieve the most important objective of providing a reference for stakeholders when making decisions on sustainability risk management of PPP projects. In addition, this evaluation model has also laid a useful foundation for future case analyses; the stakeholders of PPP, i.e., not only public sectors such as government departments, but also private sectors including enterprises and government agents, may adopt this model to assess the sustainability risk level of each PPP project and review the strengths and weaknesses of their current sustainability risk management, so that better risk management plans can be conceived toward the implementation of PPP projects.
This paper, to our knowledge, is the first study to research the sustainability risk in the field of PPP project management, which not only bridges the research areas of sustainability risk and PPP project management, filling the gap between traditional risk management and organization’s sustainable development, but also provides a reference for the public and private sectors for the sustainable planning and development. However, there are two shortcomings in this study: (1) the systematic deficiencies of the factors are induced by the negative synergistic relationship between factors having not been taken into account, and might affect the scientific nature of the evaluation results; and (2) the effectiveness and feasibility of this proposed model was verified using a computational experiment, however, the selected project to be implemented was only consistent for the problem of sustainability risk evaluation, thus, the results of the computational experiment should initially be generalized. These limitations should be studied in the future.