As with any construction project, there are risks that are inherent to the project. In a privatized construction project, where a public entity seeks to construct, finance, and operate the project with private funds, there are additional risks. These risks become particularly prominent when the project is to be located in a foreign country.

A project sponsor who bids for a concession for a privatized construction project may lose its entire investment if the project is not awarded or does not go forward. These are called development risks. The cost of preparing and reviewing a request for proposals may be significant. The development risks generally fall on the project sponsor and the investors.

A project sponsor may encounter design and construction risks. One major construction risk is cost overruns. Cost overruns occur when the overall cost of the project exceeds the estimate for the project. Cost overruns may occur as a result of inclement weather, physical damage to property, personal injuries, increased cost of raw materials and supplies, and increased labor costs. Cost overruns may also occur as a result of changes in a host country's laws or site conditions that are different than expected. Other design and construction risks include delays in the completion of the project, a failure to commence operations on time, or performance or quality problems with the project.

A project sponsor or a project company who is responsible for operating and maintaining the project may encounter operating risks such as cost overruns or performance problems. The cost of operating and maintaining the project may exceed the expected revenues. The cost of operating and maintaining the project may have been underestimated as a result of increased fuel or transportation costs. The cost of operating and maintaining the project may be affected by a decrease in the demand for the services that are generated by the project.

If the project is an international project, there may be political risks that are involved in the project. The host country may not have a stable government. The host country may change its laws after the project has been completed and operation of the project has commenced. There may be currency problems, such as a severe fluctuation in the currency. There may also be a risk that the project could be confiscated or nationalized by the host country. There may further be a risk of political violence or war.