TWG 3.1 - Public Private Partnerships

TWG 3.1 - Public Private Partnerships

Given the ever increasing constraints on government budgets and growing demand for better infrastructure, public-private partnerships (PPPs) have become a widespread method of infrastructure service provision throughout the world for the last couple of decades. On a global scale, the total investment commitment of infrastructure projects with private participation was more than 1.8 trillion US dollars between 1990 and 20111.

PPPs are long-term contractual agreements between public and private sector that relies on the notion of combining and utilising respective strengths, different functions and comparative advantages of the two sides and sharing the risks associated with a public sector project between the partners, in such a way that each party assumes the risks for which one is better in handling compared to the other.

While PPPs offer promising benefits and have development impact potential, they also include complex multi-disciplinary processes and stages as compared to conventional procurement methods. This makes them subject to a multiplicity of risks, mismanagement of which may jeopardize all envisaged benefits and result in sub-optimal resource use. PPPs also include many different stakeholders with considerably varying objectives and motives, all aiming to maximise their own welfare. In addition, the long-term nature of PPP contracts raises inter-generational equity issues. These factors necessitate careful evaluation of PPP projects and programs, ex-ante and ex-post, from different viewpoints in an interdisciplinary way so as to realize their development potential and to avoid sub-optimal resource use, now and in the future.

In contrast to their development potential, widespread use, interdisciplinary character and stakeholder variety, however, evaluation of PPP projects and programs have not been given its deserved attention so far, especially in developing countries. In such an environment, the lack of high quality ex-ante and ex-post evaluations of PPP projects and programs may result in recursive PPP arrangements, which are far from satisfying critical stakeholders’ objectives.

EES members interested in joining a TWG on PPPs should contact me and the secretariat ([email protected]). 

1 World Bank and PPIAF, PPI Project Database. (ppi.worldbank.org)