Optimizing the Financial Risk Management Strategies in Water Supply Projects in Sri Lanka

Abstract

Infrastructure construction projects are considered highly susceptible to risks and uncertainties due to their complicated designs, sizes, functions and structural complexities. Among the different types of risks, the financial risks and the ability to manage them will have great implications for the cost performance of the relevant infrastructure projects. Therefore, high attention is paid to the financial risk management aspect of public infrastructure projects. In that concern, water supply infrastructure projects share several characteristics in common with other infrastructure construction projects while holding several other characteristics unique to themselves. Although many studies have been conducted on financial risk management in building and infrastructure projects, observed scanty of studies that address the financial risk management aspects of water supply projects in the Sri Lankan context. Therefore, this study is meant to fill significant void in terms of developing a financial risk management framework to address financial risk factors in Sri Lankan water supply projects. In carrying out this study, a mixed methodology was followed under an exploratory sequential design. Accordingly, the risk factors and risk management strategies identified in the reference literature were screened and shortlisted for their applicability in designing water supply projects in Sri Lanka and were validated through findings achieved at interviews with experts capable of highlighting new risk financial factors and strategies unique to the water supply projects in Sri Lanka. Subsequently, the risk factors and strategies identified in this process are mapped to develop a financial risk management framework for implementation of water supply projects in Sri Lanka in the future.