Public-private partnership

Success Problem

The characteristics of the public-private partnership projects.

Impact

The public-private partnership is distinguished as a short term cooperation for one project or a long term cooperation of the interested parties. Public-private partnership (PPP) is a cooperation angreement between the organizations from public and private sector.

Recommendation

This cooperation is usually related to the financing of the public work by the private entity (concessionnaire) so that: 1. the concessionnaire finances and realizes the construction, reconstruction and operation of some work and as a counter value offers services for payments either from the users (e.g. road fee, entry cards) or from the public partner (state or local government). The investments are so payed back with adequate profit through the incomes for provided services (the utilization of the highway, waste water treatment plant, hospital etc.). The public partner is free of the financing and management of the construction, reconstruction and operation of the work, 2. the public and civil partners share the public work construction and opera-tion risks according to how they can better tolerate the special risk (e.g. construction risk, or sale risk etc), 3. concerned are long term relations, typically 20 to 40 years, 4. after the expiry of the concession the work goes over to the public ownership, 5. the partners strive to solve the potential issues through the alternate dispute resolution. The private partner must be exposed to effective competition so in the procurement, as also in operation of the resulting work. Just then his profit does not result from higher prices, but from his higher productivity or from higher quality or from the extension of offered services. In order that the selected concessionnaire becomes not for the given period monopolistic contractor for the involved service, the concession contract must: 1. unambiguously define the requirements for quality and accessibility of offered services and the technique of the control of these requirements ob-servance, 2. unambiguously define the price fixing and actualization for the offered services and 3. to allow the public procuror to terminate a contract during the concession period, if the concessionnaire breaks any contract clause.

Category

• Organization & Structures & Processes