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Translating Risk Allocation into Contract Structure
Much of the PPP literature focuses on risk allocation. Some of it can give the impression that, once a preferred risk allocation has been settled, this can somehow translate smoothly into a detailed…
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Allocating Risks
Allocating risk, in the context of a PPP, means deciding which party to the PPP contract will bear the cost (or reap the benefit) of a change in project outcomes arising from each risk factor.…
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Identifying Risks
The first step toward structuring the PPP is often to put together a comprehensive list of all the risks associated with the project. Such a list is known as a risk register. In this context, a risk…
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Assessing the Ability to Manage the Project
A less common but still highly relevant component of project assessment focuses on the ability of the procuring authority to manage the delivery of the project, i.e. project preparation, tendering,…
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Assessing Fiscal Implications
A proposed PPP project may be feasible and economically viable, and value for money analysis may show that the PPP is the best option to procure it. Nonetheless, the government also needs to decide…
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Assessing Value for Money of the PPP
A key objective of governments in implementing PPPs in infrastructure is to achieve value for money (VFM). Value for money means achieving the optimal combination of benefits and costs in delivering…
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Assessing Commercial Viability
Once a project is established as viable, the next step is to determine whether it would be attractive to the market if structured as a PPP. Generally speaking, private parties will find a project…
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Environmental and Social Studies and Standards
Potential damage to the environment and the impact on populations are key issues when planning infrastructure projects. Besides the cost-benefit analysis that determines whether the expected benefits…
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Assessing Project Feasibility and Economic Viability
Implementing a project as a PPP only makes sense if the project itself is sound. Most governments therefore subject proposed PPP projects to the same technical and economic appraisal as any other…
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Building an Initial PPP Pipeline
In countries with relatively new PPP programs, project selection often means sifting through the project concepts generated by sector agencies and screening them for PPP potential using the approach…
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Screening for PPP Potential
At some point in the process of identifying priority public investments, or sector reform options, projects may be screened for their potential to be implemented as a PPP. The objective of this…
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Identifying Priority Public Investment Projects
The starting point—or precursor—to identifying a potential PPP is identifying a priority public investment project. Many governments have well-defined processes and methodologies for public…
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Role of Independent Regulators
PPPs and sector regulationPPPs often supply essential services in monopoly (or near-monopoly) conditions, for example, in the water, electricity, gas, telecommunications, airports or highways sectors…
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Role of Legislative Bodies
The legislative branch of government—that is, the elected, law-making parliament or assembly—may engage in the PPP process in several ways. These include:Defining the PPP framework—the PPP Framework…
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Role of Supreme Auditing Institutions
Supreme audit entities, such as courts of accounts and top audit offices, are an important link in the chain of accountability for public expenditure decisions. They provide independent reviews of…
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Disclosure of PPP Project and Program Information
Transparency and timely access to information are important to the principles of accountability and governance. Many governments, therefore, proactively disclose information about PPP projects or…
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Stakeholder Communication and Engagement
Stakeholder engagement is an inexpensive and efficient way of creating a better operational environment for a project. The consultation process reduces risks and increases its chance of success. Most…
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Fiscal Accounting and Reporting for PPPs
Governments need to account for and report on their financial commitments, including those under PPP contracts—an additional reason for the Ministry of Finance to keep a centralized register of…
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Budgeting for Government Commitments to PPPs
Budgeting for PPPs involves making sure money is appropriated and available to pay for whatever cost the government has agreed to bear under its PPP projects. Because such cost may be contingent or…
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Controlling Aggregate Exposure to PPPs
As well as considering fiscal exposure project-by-project, some governments introduce targets or rules limiting aggregate exposure. A challenge is defining which types of fiscal commitments should be…
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Assessing Fiscal Implications of a PPP Project
Good practice consists of subjecting public investment projects to appraisal and approval processes to determine whether it is a good project. Close integration with the budget process is essential…
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Dedicated PPP Units
Government teams concentrating skills in PPPs with the public administration are often called PPP Units. The functions of these PPP Units vary widely, as do their location within government and team…
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Institutional Responsibilities: Review and Approval
A PPP project is a specific type of public investment. Most governments have systems and standard procedures for reviewing and approving capital investment projects: to ensure all projects are…
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Institutional Responsibilities: Implementation
Implementing a PPP project successfully requires commitment and a range of skills and expertise. Government agencies and individuals responsible for implementing projects need a sound understanding…
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PPP Process
Many governments set out a process that must be followed to develop and implement every PPP project. Standardizing the PPP process helps ensure that all PPPs are developed in a way that is consistent…