Re-evaluating risk management frameworks for smart city projects in public–private partnerships (PPPs)

Purpose This paper aims to explore the complexities of risk management and value-for-money (VFM) frameworks in the context of smart city projects developed through public–private partnerships (PPPs). The research aims to address the challenges associated with pricing dynamic risks in smart infrastructure while proposing an adaptive framework that integrates both financial and non-financial performance metrics. Design/methodology/approach This theoretical study develops a risk costing framework for smart city PPPs by applying financial models such as options pricing theory, capital asset pricing model and portfolio theory. It uses mathematical modeling techniques, including expected value analysis, utility functions and discount rate calculations, to conceptualize risk as a tradable asset and simulate optimal risk allocation scenarios without collecting empirical data. Findings The research reveals that traditional PPP risk management models are insufficient for smart city projects due to rapid technological change, cybersecurity risks and multi-stakeholder coordination challenges. An adaptive risk management approach, incorporating mid-project adjustments and continuous evaluation, is essential to achieving project success. The findings also underscore the importance of expanding VFM frameworks beyond financial efficiency to include social, environmental and technological outcomes. Practical implications The paper offers actionable recommendations for policymakers and private sector stakeholders, including adaptive contract clauses, governance structures for risk monitoring and mechanisms to promote innovation while mitigating vendor lock-in risks. It emphasizes the need to align risk-sharing strategies with long-term sustainability goals. Originality/value This study bridges theoretical and practical gaps between theoretical financial frameworks and the operational realities of smart city PPP projects by integrating advanced financial models with real-world smart city experiences. It contributes to the emerging discourse on smart city development by proposing a dynamic framework that balances risks, returns and sustainability objectives within PPPs.