Most PPP programs don’t get into trouble because of corruption.
Or bad engineers.
Or lazy civil servants.

Or big-mouthful politicians.

They fail because people think risk is a philosophy.

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Not a number.

And this has been a constant in my last PPP project in NZ.

Everyone talked about risk.

This is too risky, they said... but without numbers.

You see... we ended with the highway operator not changing barriers because it was too risky...

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Anyway... another country that learnt about risk the hard way was Chile.

Late 90s and early 2000s.
The country was the golden boy of Latin America.

I still remember my bosses at ACS so excited with their trips in first class to Santiago.
Growing fast.
New airports.

New motorways.

New confidence.

And then… something called the traffic forecasts struck.
The famous bloody traffic forecasts...

Every project “proved” demand would grow forever.
Every model looked perfect.
Every bank believed it.
Every minister signed the deal with a smile.

Until reality arrived.
Kinder than Colombia, harsher than Excel.

Traffic didn’t grow.
In some corridors, it fell.
Commercial risk was real.

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And suddenly the concessionaires, the same ones who smiled, started knocking on the government’s door...

Renegotiations.
Extensions.
Guaranteed minimum revenue.
Shadow guarantees.
Compensation mechanisms for “unexpected” events that were only unexpected for people who never did a real sensitivity analysis.

Chile paid.
Not because it wanted to.
But because the contracts were weak.
Risk allocation was fantasy.
And a country that thought it was too smart to fail became a masterclass in what not to do.

The result?
Reform.

Big reform.
Chile rewrote the PPP rulebook.
Harder feasibility studies.
Better demand forecasts.
Independent panels.
Transparent renegotiation rules.
Far less dancing with demand risk unless absolutely necessary.

But they got amazing infrastructure... at least, that worked.

Well... the lessons nobody wants to hear.

PPP brings innovation.
Efficiency.
And even partnership.

But the absolute element that holds the castle in the air is risk.

Who owns what.
Who pays when things go wrong.
Who takes the punch.

If you misprice risk, like Chile did, you’ll pay for it for a decade, or two... or three.
If you allocate risk to the wrong party, like Chile did, you’ll renegotiate until taxpayers bleed.
If you think PPP is a budget trick, like many countries still do, you’ll fail exactly the same way.

Chile survived.

Their PPP programme too.
Most countries won’t.

Most programmes won't.

And that is the point nobody wants to read in a glossy ADB report.

For mor PPP stories, click below.

​The top 15 Lessons of a successful project​

​The top 15 lessons of a nightmare project​

​Don't be embarrassed. ​

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