Allocating Risk in Public Infrastructure Project Provision via Private Finance Initiative (PFI)

The paper reviews the risk allocation in infrastructure project undertaking and investigates the potential allocating risk in public infrastructure project procured via Private Finance Initiative (PFI) in Malaysia. The discussion on the theoretical background of project procurement, PFI and risk management in construction project undertaken worldwide are used to assess the practical of PFI as a mode of project procurement for the provision of public infrastructure projects in Malaysia. The paper reveals that the adoption of PFI in Malaysia has failed to transparently outline the risk allocation to the best parties able to bear them. Nevertheless, as PFI in Malaysia is still infant, there are rooms in incorporating the risk allocation in PFI procurement in the provision of public infrastructure projects. The clear and fair risk allocation is foreseen as able to attract contractors, particularly Bumiputera to venture in the PFI procurement by pouring their capital into and eventually releasing the government's burden in solely funding public infrastructure projects in Malaysia.