OECD, 7th Meeting on Public-Private Partnerships - Peter LIVESEY
Public Private Partnerships - Where do
A Personal View
18 February 2014
Is PPP of any kind the right solution?
1. There must be a need for investment. A major
capital investment programme, requiring effective
management of risks associated with construction and
2. It needs to fit with a PPP approach. The service
needed is appropriate, allowing the public sector to
define its needs as service outputs that can be
adequately contracted for and where risk allocation
between public and private sectors can be clearly made
3. Can you price what you are buying? The nature of
the assets and services identified as part of the scheme,
as well as the associated risks, are capable of being
costed on a whole-of-life, long-term basis.
4. Is it large enough to make financial sense? The
value of the project is sufficiently large to ensure that
procurement costs are not disproportionate.
5. Do you understand what you are buying? The
technology and other aspects of the sector are stable,
and not susceptible to fast paced change.
6. Will it be needed for a long time? Service delivery
planning horizons are long-term with confidence that the
assets and services provided are intended to be used
over long periods into the future.
7. Can the private sector deliver? Does the private
sector has the expertise to deliver? Is there good
reason to think it will offer VfM and robust performance
incentives can be put in place.
1. Understand and examine all the models.
2. What is your appetite for risk and can you afford
3. Making a decision.
4. Will your chosen PPP approach deliver the
1. PPP – What are the models?
Degree of Private Sector Risk and Responsibility
5. Operations Concession
3. Management Contract
2. Service Contract
Degree of Private Sector Involvement
2. PFI, PPP or something else? – What is the trade
off between risk and cost?
Advantages and Disadvantages
Value for Money
Integrated whole life management
Risk transfer to private sector
Private Sector Capital
Banks capital at risk therefore risk
- Design Risk
Project finance discipline leading to
whole life costing
- Construction Risk
Bank step in on contractor default
- Financing Risk
- Technology & Obsolescence
- Operating and FM Risk
Focus on output specification
Cost associated with risk transfer
Opportunities for innovation in service
Price must include profit margin
Long term certainty
Private sector capital
May be off Government Balance Sheet