What is PPP?

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.

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What is the PPP concept?

  • A procurement method to stretch public dollars with private investment to create or rebuild infrastructure
  • Involves a long-term contractual partnership among:
    • Government entities
    • Private investors
    • Construction firms
    • Asset & Operations managers
  • Requires a long-term repayment stream
    • User fee (tolls)
    • Annual “availability” payment from the government client
  • Transfer of major projects risks from public to private sector
  • Asset reverts to public sector at end of concession at zero cost
    • Typical concession length is 25-50 years

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How do PPPs work?

How-PPP-works Special Purpose Company Supplier Operator Lenders Customer/User Concession Public Entity

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What kind of infrastructure does Skanska ID develop, finance, build, operate and maintain?

  • Airports
  • Hospitals
  • Schools
  • Government buildings
  • Street Lighting
  • Wind farms
  • Highways
  • Bridges
  • Tunnels
  • Railways
  • Power plants
  • Wastewater plants

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What are the compensation models for PPP?

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Is the only benefit of a PPP the private financing?

While private financing can be an advantage, there are many other benefits to PPPs that are often overlooked. PPPs can:

  • Infuse needed capital into the infrastructure system
  • Spur economic growth by generating new projects
  • Reduce need for tax hikes
  • Transfer project risks to the private sector
  • Minimize lifecycle costs through efficient design, construction, operations and maintenance
  • Complete projects on time, on budget with any overages borne by the private partners
  • Ensure high environmental and safety performance

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Aren’t PPPs really privatizations?

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.

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