PURPOSES : The purpose of this study is to derive implications by comparing overseas and domestic cases on the management of demand forecast risks in public-private partnerships (PPP) projects.
METHODS : Demand forecast risk management measures of PPP were classified into three categories: Expected project IRR, Minimum income guarantee, and LPVR mechanism. According to the classification method, the overseas demand risk sharing method was introduced. The risk methods of demand risk for PPP projects in Korea were classified and compared with that of overseas cases.
RESULTS : 1. The domestic PPP was developed from the perspective of investors rather than overseas. 2. The risk-sharing model was not considered during the bidding process. 3. The models for the demand forecasting errors were not diverse.
CONCLUSIONS : The domestic BTO project includes several risk factors, among which the burden on demand forecast risks is critical. Future studies will be required to quantitatively evaluate risk factors in PPP projects and properly share the risks between the government and the private sector.