1 ppp presentation


Presentation Description

There is no one widely receive definition of public-private partnerships (PPP). The PPP Knowledge Lab defines a PPP as "a long-term contract between a private party and a government organisation, for providing a public strenth or service, in which the private party bears significant risk and management responsibility, and remuneration is linked to performance"


Presentation Transcript

Public Private Partnerships:

Public Private Partnerships

Public Private Partnerships (PPP’s):

Public Private Partnerships (PPP’s) Definition Characteristics Reasons Types Good Practices Benefits Pitfalls Recap

What are Public Private Partnerships (PPP’s):

What are Public Private Partnerships (PPP’s) Definitions: PPP is an arrangement where private parties participate in or provide support for the provision of infrastructure. PPP describes a government service or private business venture which is funded and operated through a partnership of government and one or more private sector company. PPP is Not the procurement of an asset but the payment of a stream of services under specified terms and conditions.

Key Characteristics of PPP’s:

Key Characteristics of PPP’s Participants Relationship Resourcing Sharing Continuity Focus on services Whole-of-life cycle costing Innovation Risk allocation

Frameworks for PPP’s:

Frameworks for PPP’s Project level Project level PPP deals with the design and operation of infrastructure assets on behalf of the public sector. Policy level Policy level PPP deals with specialized decision making on behalf of the public sector Example : Determining the best policies to effectively curb crime within a specified jurisdiction Improving the quality of education within schools eg. Curriculum content, teaching methods, learning environments etc.

Why Public Private Partnerships? :

Why Public Private Partnerships? Traditional Procurement Inefficient Unreliable with Poor fiscal Management Other factors Short political tenures – government rush Rent seeking behavior - interest groups Putting on a good spin – moral hazards

Why Public Private Partnerships? :

Why Public Private Partnerships? Mott MacDonald Report - Optimism Bias Inadequacy of the business case (58%) Environmental impact (19%) Disputes and claims incurred (16%) Economic influences (13%) Late contractor involvement in design (12%) Complexity of contract structure (11%) Legislative and regulatory changes (7%) Degree of innovation (7%) Poor contractor capabilities (6%) Project management team (4%) Poor project intelligence (4%)

Why Public Private Partnerships? :

Why Public Private Partnerships? Financial need - budget deficit, large debt Aging or deteriorating infrastructure Growing demand on public sector services Search for greater efficiency and creativity Strides to introduce competition Lack of domestic experience or skills Need to educate local contractors while remaining competitive Bandwagon effect

Varying Models of PPP’s:

Varying Models of PPP’s Model 1 The Public entity transfer land, property or facility to private sector. Private sector builds or renovates facility Public sector sets standard of service Private sector provide service for set term Private sector transfer ownership at end of term Model 2 Public sector defines service over long-term No payments made until asset is delivered as promised Private sector assumes risks associated with design & performance Private sector provides no funding during construction Private sector allowed to own and run facility for profit

One Type of PPP :

One Type of PPP BOT – Build Operate Transfer The Private Sector: Source Financing Carries out all designs Builds the infrastructure Operates the facility and, Hands over ownership to public sector.

BOT – Build Operate Transfer:

BOT – Build Operate Transfer The Dartford Crossing over the Thames River in London is an example of a BOT. The negotiated term of operation before transfer was 20 yrs.

BOT – Build Operate Transfer:

BOT – Build Operate Transfer The Sydney Harbour Tunnel is 2.3 Km long with dual carriage way.

Types of PPP’s:

Types of PPP’s BOT – Build Operate Transfer BOO – Build Own Operate BOOT – Build Own Operate Transfer DBF – Design Build Finance DBFO – Design Build Finance Operate DBO – Design Build Operate BLT – Build Lease Transfer BTO - Build Transfer Operate DBFOM – Design Build Finance Operate Manage Leasing Joint Ventures Operations or Management Contracts Cooperative Arrangements LROT – Lease Renovate Operate Transfer DCMF – Design Construct Manage Finance BOOR - Build Own Operate Remove

Suitable Candidates for PPP’s:

Suitable Candidates for PPP’s Transport (road, rail, ports, airports) Fixed links (bridges, tunnels) Water resources (filtration plants, irrigation, sewage treatment, pipelines) Tourism (facility development) Health (hospitals and specialized health services) Specialized accommodation facilities (courts, police stations) Educational facilities (schools, museums, libraries) Correctional services (prisons, remand and detention centres ) Arts, sport and recreational facilities Convention centres Government office accommodation Social housing Grimsey and Lewis, 2004, pp 92-93, - List is based on experience:

Suitable Conditions for PPP’s:

Suitable Conditions for PPP’s Accommodating Political framework Right Legal framework Public acceptance Quality practitioners Availability of finance

Good Practice, using PPP’s:

Good Practice, using PPP’s Ensure that: Private sector partner has the required capacity Ensure public sector interests are factored in Taxpayers are guaranteed value for money Private sector partner/s has proper motivation Establish a PPP Unit for Government

Benefits of PPP’s:

Benefits of PPP’s Mitigates and properly allocates risks Provide incentives for lowering costs Ensures value for money Attract the right skills and management expertise Promotes innovation Reduces corruption and waste Reduce burden on taxpayers

Pitfalls of PPP’s:

Pitfalls of PPP’s Depends on EGAP principle (Everything Goes According to Plan) The process of creating a PPP is much more demanding than a traditional procurement process. This is normally underestimated.

The End Have a Productive Discussion:

The End Have a Productive Discussion

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