Introduction to Public Private Partnerships

Description

A Public-Private Partnership (PPP) may be characterized as a contractual arrangement between a public entity, such as a ministry or local authority, and a private sector entity to provide public infrastructure or service delivery in which the responsibilities are allocated on the basis of optimized performance and minimized risk as a means of achieving optimized value for money.  

Introduction to Public Private Partnerships provides a useful basis to think about appropriate criteria for the selection of PPPs as the best approach for the development of a particular project; both from the perspective of the Government as well as from the perspective of the private sector entity.   It provides a basis to identify the risks associated with either party undertaking the requisite elements of the project and in that way to formulate the most productive and least risky allocation of project responsibilities between the public and private sector entities.  The course also considers PPPs as a public procurement methodology, and the requirement for effective audit of PPPs.  The workshop also presents an overview of the conditions, constraints and opportunities for financing public-private partnerships.   Through the use of simple analytical frameworks and employing a pedagogical approach based upon the use of simple analogues participants gain insights into the sources of risk and the basis for assessing costs and remuneration.     The emphasis on an analytical framework approach provides the participant with relevant and effective tools to individually assess and understand a given country´s approach to PPPs rather than simply provide a menu of best practice options that may or may not be relevant in a given developing country.

The professional development workshop explores the underlying principles and objectives that guide the considerations for PPPs.   These may be outlined as follows:

• The specification of clear project objectives and quantifiable and measureable outputs that facilitate binding performance targets
• Value for money based upon the optimization of project performance and efficiency due to the appropriate allocation of project elements to the public and private sectors respectively;
• Risk allocation based upon the risks associated with project elements being undertaken by the respective partners – the public and private sectors;
• Competition in the selection of the private sector partner
• Ability to pay based upon the public entity’s budgetary allocation (and specifically fiscal space) over the entire period of the partnership arrangement;
• Safeguarding public interest and consumer rights
• Safeguarding the environment
• Clear lines of accountability in the execution and management of the project both within the special purpose vehicle set up to execute the partnership as well as with respect to the public institutions responsible for the management and oversight of the partnership relationship
• Full transparency in the selection of partner, the execution of the project and the operation of the service

The course reviews the key stakeholders that must coordinate their activities for a successful PPP implementation.  The public sector institutions that particpate in the implementation, management and oversight of the PPP.  These include:

• The Planning Institutions
• The Budget Division
• The Contracting Authority such as the Sector Ministry or Local Authority
• The Debt Management Office or Unit
• The Public Procurement Oversight Authority and or a PPP Oversight Committee
• The Office of the Auditor General
• Cabinet and Parliament

Other institutions, in the private sector, include:

• The financing institutions
• The Private Partner
• Contractors and sub contractors

Five types of PPP contract are explored in detail and criteria define for when each one is most suitably applied.  The course covers Service Contracts, Management Contracts, Leases, Greenfield Asset Development and Operation Contracts, and Brown Field Concessions.  The course further details alternate public private partnership approaches and reviews the allocation of risk and responsibility in each case.  These include Design-Build-Finance-Operate, Build-Operate-Transfer, Build-Transfer-Operate, Build –Operate-Transfer, Build-Own-Operate and Build-Own-Operate-Transfer.  Long Term Concession Development, Long Term Lease, Brownfield Asset Management.

Objective

The principal professional workshop objective is to provide participants with the introductory tools to effectively understand and discuss Public Private Partnerships.   In particular the course is designed:

• To understand the entry point of PPPs into the planning and budget cycle
• To introduce key elements of a PPP Plan
• To appreciate the distinguishing characteristic of PPP Contracts as Output Contracts as opposed to the Standard Procurement Contract s based upon inputs
• To understand the institutional arrangements required to manage a PPP
• To understand the pre-requisites for a successful PPP program
• To appreciate important elements of audit to consider in the scrutiny and oversight of PPPs
• To understand the role of Risk Assessment, mitigation and allocation studies

Further the objective of the workshops is to allow discussion and interaction with other participants who may represent other stakeholder interests – public sector, financial sector, developers, and contractors.

Audience

The target audience is Government officials, Loan Officers involved in Financing PPPs, Development advisors involved in sectors who adopt PPP methods, Developers and Contractors.

Pre-requisites

This course is designed for people with experience project cycle management.  Familiarity with basic financial management concepts and terminology would be helpful.  

Learning outcomes

By the end of the course participants should:

• Understand what characterizes a PPP and the rationale for undertaking a PPP.
• Appreciate the main objectives of  a PPP
• Have a basis to assess the risk sharing for a project between the public sector and private sector partners.
• Know what elements are important to the success of a PPP
• Be aware of the complex nature of Public Private Partnerships and the careful coordination of responsibilities necessary between a variety of stakeholders in the public sector – Cabinet, Parliament, Planning Ministry, Budget Office, Debt Management Office, Public Procurement Oversight Authority/PPP Commission, Office of the Auditor General, the Sector Ministry, and the Private Sector  – financial institutions, developers, and contractors.
• To understand the institutional arrangements that govern PPPs
• To understand the PPP as a public procurement method
• To understand the PPP as a liability instrument that must be managed as part of teh debt and guarantee portfolio

Learning methods

The learning methods will include the following

• Introduction to key concepts through the “teaching and discussion” methods
• The use of original source material of key writers/thinkers in this area  
• The use of extensive examples from many different countries with different experiences to illustrate the points put across
• The use of exercises (in particular short "buzz-group" sessions) to provoke and consolidate certain points raises

The use of major case studies –to illustrate in more detail some of the key points of the course.