ON QUANTITATIVE RISK ASSESSMENT OF INFRASTRUCTURAL PROJECTS WITH STATE PARTICIPATION

Igor Belyakov

doi:10.17323/1999-5431-2022-0-4-30-60

Igor Belyakov Ph.D. (in Physics and Mathematics), Master of Economics, Head of the Financial Markets Department of the Economic Expert Group; Senior Research Fellow, Center for Budget Analysis and Forecasting, Research Financial Institute, 3/2 Nastasyinsky Lane, 127006 Moscow, Russia.

DOI: https://doi.org/10.17323/1999-5431-2022-0-4-30-60

Keywords: project management, PPP, probabilistic (Monte-Carlo) risk analysis, project cost overrun, infrastructure investment, cost estimation, quantitative risk analysis

Abstract

International experience shows that creating large infrastructure objects (as a rule, with state participation) is often accompanied by significant cost overruns. Importance of this issue is especially high due to responsibility for the use of public resources. The article reviews most recognized methods of the project risks evaluation that play a key role in assessing the total cost of large and long-term projects. Approaches of international organizations, official documents of selected developed countries and requirements for Russian infrastructure projects with state funding are compared. Particular attention is paid to a comprehensive quantitative risk evaluation, which is not sufficiently represented in the Russian official methodology, based on Monte-Carlo simulation modelling. The study considers some practical aspects of applying this method for conditional cost estimation. As an illustration, a model calculation of the impact of risks on the indicators of one of the latest PPP infrastructure projects (CRR-1) is given.

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