A Public Private Partnership is a partnership between a public authority and a private entity. PPP’s are a viable option for delivering critical infrastructure - with minimal risk to the Client - that would otherwise be unfunded.
As part of a PPP, the private entity is responsible for developing, funding, designing, constructing, operating and maintaining some form of public infrastructure through a performance contract for a set period of time, normally 30 – 50 years.
The PPP model can be applied to new highways, bridges, data centers, power plants, schools, and hospitals. As payment, the private entity receives either user fees (such as tolls) or a regular availability payment from the public authority.
While private financing can be an advantage, there are many other benefits to PPPs that are often overlooked. PPPs can:
PPP is not privatization. The client plays a central role in PPPs during every step of the project lifecycle. A concession agreement always provides a strict performance regime for provided services, so the public sector never forfeits control. If metrics are not met, the public authority can react and adjust scope and services. The private partner has every reason to outperform in delivering a quality project over the long-term. If the project somehow fails, it’s the private partner who has the most to lose.