Motorway

MEP 5, Group 8
Albert | Maulik | Nagaraju | Seshagiri | Venkat

1.
2.
3.

4.

Polands A2 Motorway
Assignment Questions

What are the major risks in this project? Have they been properly
identified, and mitigated under the current structure?
Who bears the major risks? What factors determine who should bear
the major risks?
What are the various strategies you can use to manage project risks?
For example when is it appropriate to prevent, hedge, insure allocate or
bear particular risks?
How should Wojciech Gebicki respond to the banks concerns in June
2000?

 Technology risk
Timing risk
Completion risk
Market variation risk Traffic
Supply risk
Throughput risk traffic
Force majeure
Sovereign risk

Classification of Project
Risks

(No Market
Exists)
Market
Risks
(e.g.,
country)

Demand =
f(GDP)
Inflation

Exchange
Rates
Interest Rates

Force Majeure (political

Expropriation
(taxes, regulation,
enforcement)
Currency Convertibility
Currency Devaluation

Macroecono
mic
and
some
Sovereign
Risks

(Market Exists)

Project
Specific
Risks

Force Majeure
(Acts of God)

Low

Operator Performance
Land Acquisition/Permits
Cost Over-run/Delay
Competing
Roads/Railroads
Support Roads
(Infrastructure)
Expropriation
Environmental Risks
Ability to Control

High

Construction,
Operating,
and
some
Sovereign
Risks

Generic Risk Management

Strategies
(No Market
Exists)
Market
Risks
(e.g.,
country)

BEAR

HEDGE
(Market
Exists)

INSURE
(with political risk insurance)
ALLOCATE
(with contract and profit
sharing)
or
DETER
with MLA/BLA participation

INSURE
Project
Specific
Risks

OR
DIVERSIFY

Low

Influen
ce

ALLOCATE
(with contracts)

Ability to Control

High