Assessing the impact of risk allocation on sustainable energy innovation (SEI)

Abstract

Purpose – The allocation of risk among project participants is an important determinant of innovation success in construction projects. The purpose of this paper is to examine the capacity of risk allocation to encourage the implementation of environmental innovation, particularly sustainable energy innovation (SEI), within the private finance initiative (PFI) project delivery model. Design/methodology/approach – A four-case qualitative research methodology is adopted within the context of the UK government’s building schools for the future programme. Findings – The findings identify that SEIs are encouraged on the innovative projects by the perceived clarity, appropriateness, and manageability of the risks associated with the project’s energy performance on the PFI contract. The main SEIs were largely developed as strategies to manage long-term energy performance risks allocated to private sector actors and safeguard their long-term commitment to the project. However, the findings indicate that excessive perceived innovation-related risks, particularly capital cost risk, may restrict further SEIs to be implemented. Research limitations/implications – The qualitative case study approach adopted may limit the generalisability of the findings. Practical implications – The study and provides practical guidance to policymakers and project managers in developing strategies to support the implementation of SEI in PFI projects. Originality/value – The study attends to a significant gap in knowledge as there is a lack of conceptual and empirical work on managing innovative processes for sustainable energy in PFI projects.

Economic Decision-Making and Risk Management

“…According to Nadine & Joan (2016); Badi & Pryke (2016); Andersen (2014), the emerging regulatory trends are likely to have significant effects for banking institutions risk management portfolios. The first impact entails the optimization, especially in the confines of the regulatory structure.…”

Identification and prioritization of construction projects investment risks using a hybrid fuzzy approach

“…(Venus & Goudarzi, ). Also Badi and Pryke () classify construction projects risks into two groups, project‐related risk and innovation‐related risk. By literature, they argue that these risks are interconnected and continue that project‐related risks include a wide range of categories all concerned with the possible events that could put in danger the planned course or objectives of the project.…”

“…There are, also, other definitions of risk management (Kerzner, ). Project risk management refers to all the processes related to identification, analysis, and accountability on any uncertainty including maximising the results of desirable events and minimising the results of undesirable ones (Badi & Pryke, ; Famiyeh et al, ; Zandin, ). Olsson () proposes a methodology to manage portfolio risk.…”

“…A proper risk‐management plan with appropriate risk‐management strategies can mitigate costly and stressful issues and reduce the damage claims (Niakan, ). Badi and Pryke () by literature note that the strategies to identify, allocate, and manage those risks to a great extent depend on the type of project, the procurement route adopted, and the contractual arrangements between project participants.…”

Risk Assessment of PPP Model Based on Fault Tree Model for Urban Underground Utility Tunnel

“…Throughout the whole process of the project, including the pre-project, implementation and postproject risks and foreseeable and unforeseen risks to the project stakeholders and projects, Risk management lays a good foundation for the previous period, and further promotes the PPP model to be applied to the standardized and orderly development of utility tunnel projects. Zhao Dan and Zhao Yanchao used the entropy method to evaluate the financing risk of the actual project from the perspective of social capital and verified the rationality of the evaluation method [8]. From the perspective of investors' risk management, Guo Qi uses the combination of RBS and investment work breakdown structure to systematically analyze the investment risk factors that may be faced in each stage of hydropower BOT projects and construct a risk identification matrix [9].…”