Business Cases and Appraisal Methods for Infrastructure Projects
Demand Drivers, Business Cases and Appraisal Methods for Infrastructure Projects
Sectoral risks are those risks idiosyncratic to individual infrastructure sector. Drawing on relevant academic theories and independent research, critically evaluate sectoral risks in a comparative institutional context. Develop a case study of your chosen infrastructure sector and compare the regulations, demand drivers and business model of your chosen sector in two countries located in two different regions that are at similar stage of economic development.
Format structure Your academic paper should contain two parts (A & B).
Part A includes an introduction and a critical review of the literature and independent research in the context of sectoral risks. The approximate weight for the number of words in this part should not exceed 1,250 words.
Part B is a case study which you can develop from the following five infrastructure sectors, although other sectors are negotiable upon mutual agreement: • Solid waste • Renewable energy • Transport • ICT • Water Compare regulations, demand drivers and business models of your chosen infrastructure sector in two countries located in two different regions that are at similar stage of economic development.
Part A: Introduction and Critical Review of Literature on Sectoral Risks in Infrastructure Projects
Infrastructure projects, critical for economic development and societal progress, often face a myriad of risks, including sectoral risks that are specific to the industry in question. These risks vary across sectors and are influenced by a multitude of factors, such as regulatory frameworks, demand drivers, and business models. The understanding and analysis of these sectoral risks are pivotal for successful implementation and sustainability of infrastructure projects.
In a comparative institutional context, the assessment of sectoral risks necessitates a deep dive into academic theories and independent research. One approach involves an evaluation of various infrastructure sectors, considering their distinct regulatory environments, demand drivers, and business models across different countries at similar stages of economic development.
Numerous academic theories contribute to the understanding of sectoral risks. For instance, Institutional Theory emphasizes how regulatory frameworks and institutional structures impact the behavior of organizations within an industry. Institutional voids, as discussed in institutional economics, highlight the gaps in regulatory and institutional frameworks that might lead to higher risks in certain sectors. Moreover, the Resource-Based View (RBV) theory accentuates the significance of unique capabilities and resources within organizations that can mitigate sectoral risks.
Independent research further underscores the significance of sectoral risks in infrastructure projects. For instance, studies comparing the regulatory frameworks and their impact on investment in renewable energy across different countries reveal how variations in policies influence project viability and risk profiles. Similarly, the examination of business models in transportation infrastructure projects in different regions offers insights into risk allocation, revenue streams, and long-term sustainability.
Part B: Case Study on Comparative Analysis of Infrastructure Sectors in Different Countries
For the case study, I choose the Renewable Energy sector and focus on solar energy projects in India and Brazil, both emerging economies at a similar stage of economic development.
Regulations: India has implemented various incentives and policies, such as the National Solar Mission, offering subsidies and tax benefits to promote solar energy. Brazil, on the other hand, has established net metering regulations and auction systems to encourage solar development.
Demand Drivers: In India, the increasing energy demand coupled with environmental concerns has driven the demand for solar energy. Brazil, with a focus on diversifying its energy mix and reducing reliance on hydroelectric power, has witnessed growing demand for solar energy.
Business Models: The business models in India primarily revolve around Power Purchase Agreements (PPAs) and government tenders, while in Brazil, the focus is on distributed generation and private investments, with a rise in corporate power purchase agreements.
This comparative analysis of India and Brazil’s solar energy sectors showcases how distinct regulations, demand drivers, and business models contribute to sectoral risks in infrastructure projects despite similar economic development stages.
In conclusion, sectoral risks in infrastructure projects are significantly influenced by the interplay of regulations, demand drivers, and business models. Understanding these risks in a comparative institutional context is pivotal for effective risk management and successful project execution.