A systematic framework for infrastructure development through public private partnerships

Public–private partnerships (PPPs) play an important role in bringing private sector competition to public monopolies in infrastructure development and service provision and in merging the resources of both public and private sectors to better serve the public needs. However, in worldwide practices, there are mixed results, substantial controversy, criticism and conflict over PPPs. This paper proposes a systematic framework for the delivery of public works and services through PPPs in general. Justified by public procurement principles, aimed at a public–private win–win solution, and based on worldwide best industrial practices and lessons from unsuccessful projects, this framework integrates the four broadly divided stages that repeat over time: (1) design of a workable concession, (2) competitive concessionaire selection, (3) financial regulation, and (4) periodic reconcession and rebidding. The four-stage framework takes into account the requirements of public services, realignment of responsibility and reward among multiple participants in PPPs, the monopolistic rights of the concessionaire, and the wide range of risks and uncertainties in the long concession period. Varying competition elements are incorporated in each of the four stages for continuous performance improvement in the delivery of public works and services. The design of the right concession forms the base on which other stages are implemented in addition to planning the project and allocating risks for enhanced efficiency. The financial regulation allows the government to address changing conditions and to regulate the concession for efficient operation with due discretion, whereas the competitive concessionaire selection and periodic reconcession and rebidding play critical roles in achieving innovation, efficiency and cost effectiveness through direct competition rather than government discretionary intervention.

► We develop a PPP framework for the delivery of public works and services. ► Concession design is the basis for project planning and risk allocation. ► Economic regulation addresses changing conditions for efficient operation. ► Competitive concessionaire selection enhances innovation and efficiency.