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The term of a public-private partnership (PPP) contract can exceed 20 or even 30 years. At the end of the term, the relevant private partner is often obligated to hand back the public asset in question (whether it be a road, an airport or a hospital) in a condition that meets the government procuring authority’s expectations.

How can governments deliver quality infrastructure outcomes?

Public-private partnership (PPP) contracts are long-term and they may have a duration of 20 to 30 years or more. Today, where technologies and social priorities (such as views on climate change and sustainability) are changing at an accelerated pace, it perhaps comes as no surprise that changes to PPP contracts through renegotiations are common.

By their very nature as long-term large infrastructure projects, public-private partnership (PPP) projects involve a vast array of interconnecting relationships. Core to any PPP project is the long-term contractual relationship between the government’s procuring authority and the private party (the project company). This is one of many relationships that will affect the success of a PPP.

While the infrastructure financing gap is huge, one of the main constraints to infrastructure development is not a lack of finance, but instead, a lack of well-prepared, bankable infrastructure projects.

Investors need certainty of the division of responsibilities between the various parties involved in the project, as well as a clear commitment of payment from the parties, before becoming involved in the project themselves. This requires countries to have reached a clear and durable commitment to their respective responsibilities.

Tackling the global infrastructure gap remains a priority for governments to drive inclusive growth and deliver quality infrastructure projects for their citizens.

The circular economy is now core policy for a growing number of countries with leadership from Finland, the European Union and Canada, but it is also taking a strong hold in Asia as Japan and China implement circular economic policies to transition them to a sustainable inclusive future.

Transferring risk to the private sector in a PPP contract is frequently referred to as a key part of a PPP arrangement, as well as a key reason why governments use such an approach to procure infrastructure.

Disputes in public-private partnerships (PPPs) globally involving key performance indicators (KPIs) represent 20 per cent of all disputes, as highlighted in our data using a representative sample of projects from around the world.

With a growing global focus on attracting private sector investment into infrastructure and utilising the public-private partnership (PPP) model, it is crucial that governments focus on the entire duration of a PPP contract. Efforts need to extend beyond ‘achieving financial close’ and beginning construction or ‘cutting the ribbon’ for commencement of services.

Talk of trade tariffs and heightened geopolitical tensions are dominating news headlines recently. As developed economies consider escalating protectionist policies, it’s easy to forget about the situation many emerging markets face.

Early termination of a PPP contract can be an expensive process for all parties involved.

Contractual disagreements and disputes are common in PPPs during both construction and operational periods.

Private partner profit motives are frequently cited as a failure of the public-private partnership (PPP) approach. But those profit motives are also part of the fundamental make up of the PPP approach and why it has the potential to deliver better outcomes for the public.

The purpose of this blog series is to highlight some of the interesting aspects of the PPP Contract Management Tool to facilitate discussion around those issues. PPP approaches and practices are constantly evolving, and it is important to debate interesting topics to develop better practices and help governments deliver higher quality PPP projects.

Risks can be hard to define, manage and mitigate. In infrastructure projects that cross regional or national borders and involve multiple parties from both the public and private sector, these risks may be amplified.

As outlined earlier in this blog series, private investors are looking for reliable returns to justify the risks that they are taking. Financing and procurement of cross-border projects will often be more complex than national projects due to the scale of the project and compounded risks, and the financial returns may be more uncertain than for national projects.