There is a great variety of definitions for PPP available worldwide. The contents
and objectives may vary according to the country specific background and
the specific interests of the individual author. Some academic and industrial
practitioners still regard the definition of PPP as being very ambiguous. In
some cases, the term public-private partnership describes a wide range of arrangements
whereby government responsibilities are outsourced to commercial
partners, and risk is shared between the public and private sectors to
bring about desired outcomes in areas associated with public policy.
As one example, the official definition of PPP by the “Federal Report on PPP in
Public Real Estate, Part I: Guideline”, commissioned by the German Federal
Department of Transportation, Construction and Real Estate (BMVBW) in 2003,
is as follows:
“The term PPP refers to a long-term, contractually regulated cooperation
between the public and private sector for the efficient fulfilment
of public tasks in combining the necessary resources (e.g. knowhow,
operational funds, capital, personnel) of the partners and distributing
existing project risks appropriately according to the risk management
competence of the project partners”.
There is a long tradition of the involvement of the private sector in the development,
maintenance and funding of public facilities and services. PPPs, however, go beyond traditional contracting of private sector organisations. Typically a PPP scheme allows the private sector to gain and retain control over a facility for a long, pre-specified period of time and is made responsible for its operation before it is handed over to the public sector at the expiry of the contracting period. And that period should be sufficient to enable the private sector to recover construction and maintenance costs and achieve the required rate of return on its investment, through either user fees like tolls, water tariffs, ticketing or down payments like availability payments made by the principal. The private sector assumes substantial risk that would otherwise be held by the public sector, in exchange for compensation and the public sector ceding substantial control over the delivery of infrastructure services.
In addition, there are four main characteristics of PPP:
- Efficiency gains through appropriate sharing of risks and responsibilitiesthe public sector retains mainly sovereign tasks and the private bears those for implementation
- Lifecycle and private investment as crucial elements of PPP’s incentive structures
- Long term contractual relationship
- Innovation, in particular through output specification, service levels and payment mechanisms, as a new way of describing the services to be supplied.
One of the major objectives of PPP is to transfer tasks and responsibility for the provision of infrastructure to the private sector, in order to gain efficiency, cost reliability and financial security. The traditional procurement of public infrastructure and its related services has given way to the private sector assuming responsibility for design, construction, operation, management, maintenance and finance, with the public sector as the customer or, sometimes, as the direct user, paying for the provision of a service. The public sector, nevertheless, should not lose its sovereign task such as assessing and determining infrastructure needs, monitoring and supervising of an efficient and competitive procurement system, and assuring all required environmental and safety standards in the service delivery.
The principal aim of PPP here is to involve the private sector in the provision of public services, shifting the role of the public sector from the owner and provider to purchaser and guardian of the interests of the public. It is driven by the belief that the public sector should focus on its core functions, leaving the private sector to perform those functions which it can often do more cost-effectively and efficiently. One of the key political drivers behind the PPP is the desire to improve the nation’s infrastructure and supporting public services without placing undue strain on scarce public funds and without having to increase taxation.
Remember, no problem has a quick fix solution. Thus, always ensure to consult highly knowledgeable group of professionals whom would provide you with a collective advice, never individual advice. This group advice and approach is unique with CWIIL Group and is based on the overall Management Philosophy of all CWIIL Group Companies.
Consulting CWIIL Group of Companies, for any / all matters relating to Public-Private Partnerships, (PPP), ensures advise based on highest level of knowledge which are given to you by a team of select research-oriented experts whom each will do their own assessment of your matter, and also assess it together, thus ensuring that in case a mistake has been made by one, it will be noticed and corrected even before it is being passed on to you. Receiving incorrect and un-knowledgeable business advise can be disastrous and thus should be avoided.
CWIIL Group of Companies is a global group of multi-specialized units with diversified interests and activities, wherein each company is a separate legal entity registered under prevailing laws in different parts of the world. CWIIL Group of Companies Products, Services, Project and Solutions are in a multitude of Verticals including, but not limited to, Infrastructure, Power, Oil & Gas, Legal, Media, Technology, ITES, HR, Shipping, Aviation, Real Estate, Hospitals, Health and Medicine, Education, Funding & Investment, Business and Legal Consultancy, and Public Private Partnerships, and other CWIIL Group Units, worldwide, to name a few.
For Further Queries or to Request a Personal Quote Feel Free to Contact :
Mr. Gregor Novak,
Deputy Global Director, No. 11,
Operations Research & Implementation Division,
Email : deputy.gd.11@cwiilgroup.eu
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