ANALYSIS OF PPP AND ITS PROCUREMENT IN INDIA

1. ANALYSIS AND REBUILDING OF PUBLIC
PRIVATE PARTNERSHIP AND ITS
PROCUREMENT IN INDIA
Surya C.D
M.E CEM
NIT, Coimbatore
Ms R Aarthi
Assistant Professor
NIT, Coimbatore
Project done by , Guided by ,

2. ABSTRACT
“India is a developing country and our country has a mixed economy.
Construction Industry is the second largest economic activity in India.
Infrastructure development is a major contribution to the country by the
construction industry. “
This paper mainly details,
the implementation of PPP in India
problems involved in this implementation
Risk & Delay Analysis
solutions to the problems, new procurement methods that can be adopted etc.
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3. INTRODUCTION
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 Traditional procurement method prevailing in India is Design-Build method
 The need of PPP arises especially when our government experiences a
financial deficit.
 So the government will find out a suitable private partner to share all the risks
involved in a project.
 this project aims to reveal PPP as a new procurement method..

4. OBJECTIVE
The major aim of this proposal is
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•To reveal the importance of PPP
•To reveal problems involved in procurement of various infrastructure in India
•To reveal the economic and living conditions in India
•To compare PPP in India and other developed countries.
•To analyze the PPP procurement methods in India in basis of Risk,
delay and Financial elements.
•To suggest new procurement methods that can be borrowed from other developed
countries

5. METHODOLOGY
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6. DATA COLLECTION
Survey of published literature in diverse area of construction management
Surveys are be made to find the extent and factors causing time overun in
PPP projects
Fifty companies were randomly selected to conduct survey
Date were gathered through a questionnaire
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PPP – IN A GLANCE
 First introduced in UK in 1997
“A Public-private partnership is a government service or
private business venture which is funded and operated
through a partnership of government and one or more
private sector companies”

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PPP IN INDIA
Phase 1 – 19th century and 20th century
Phase 2 – 1991-2006
Phase 3- After 2006

9. NEED OF PPP IN INDIA
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India – continues to remain an underdeveloped country
India’s Economic framework- A mixed Economy
The Union Finance Minister, in his Budget speech of 2015-16, has
emphasized the need for increasing public investment in infrastructure
he emphasized the need for a review of the PPP model of infrastructure
development, which harnesses private investment for providing public
assets and services.

10. CURRENT STATUS
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20.10%
6.60%
0.70%
2.20%
7.40%
1.10%
8%
0.50%
53.40%
0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00%
Urban development
Tourism
Airports
Education
Energy
Health care
Ports
Railways
Roads
PPP projects in India Sector Wise ( Total number of Projects = 758)
Fig.4.1.PPP Projects in India sector wise

11. CURRENT STATUS
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2.50%
5.20%
14.40%
77.90%
0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00%
INR 100 Cr.
INR 100 Cr. And 250 Cr.
INR 251 Cr. To 500 Cr.
More than 500 Cr.
PPP project percentage on basis of value ( Total cost INR 3,833 Billion )
Fig.4.2 PPP projects on basis of value

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PROCUREMENT METHODS IN INDIA
Procurement
Methods
BBO
BLT
BOOT
BOO
BTO
DBO
DBOF
DOT
ROO
ROT

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PROCUREMENT METHODS IN OTHER COUNTRIES
Procurement
Methods
PCF
PFI
DBFM
DBFMO

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RISK ANALYSIS OF PPP
ENGINEERS
60%Contractor
8%
YP
8%
MANAGERS
24%
RESPONDENTS CATEGORIES
Fig 6.1 Respondents Categories
In total, hundred questionnaires were distributed.
Fifty respondents completed the whole
questionnaire.
Many of the respondents were from organizations
that had rich experience, knowledge, and expertise in
PPPs as illustrated

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The private sector’s ability to manage risks was sought to be harnessed under
PPP projects
but one of the primary concerns in the current context is to review the allocation
of risks to reduce the threat of underperformance of PPP projects.
A risk analysis is done to find out major risks involved in PPP procurement.
The analysis is done by carrying out questionnaire survey.
50 companies where selected.
The respondents includes Engineers, Architects and Consultants in public and
private sector.
Contd…

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RISK ANALYSIS
Q no Constraints Severity
Q1 Private sector possess better resource mobility Extremely Important
Q2 Private sector has ability to raise funds for project Important
Q3 Enhances technology transfer to the local enterprise Extremely Important
Q4 Allows for shared risk Important
Q5 Reduces public sector administration cost Important
Q6 Facilitate creative and innovative approaches Important
Q7 Reduces the total project cost Important
Q8 Saves time in delivering public project Important
Q9 Offers benefit to local economic development Important
Q10
Improves public infrastructure management and
maintenance Important
Q11 Enhances government integrated solution capacity Important
Q12 Increases access to the public sector market Extremely Important
Q13 Reduces the problem of public sector budget constraint Important
Q14 Provides tax exemptions and reduction Important
Q15 Reduces public money tied up in capital investment Important
Q16 Provides incentives to new market penetration Important
Q17 Provides government assistance in financing Extremely Important
Contd…

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Corruption
Govt’s Intervention
Expropriation and nationalization
Govt’s reliability
Third party reliability
Public/political opposition
Immature juristic system
Change in law
Interest rate
Foreign exchange and convertibility
Inflation
Poor political decision making
Land acquisition
Approval and permit delay
Financial risk
Technology risk
Demand change
MAJOR RISKS IDENTIFIED

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RISK MITIGATION
Bear risk in its normal course of its business
Assessment - relative ease and efficiency of managing risks
Cost effectiveness of managing the risks needs to be evaluated
Sophisticated modeling techniques
Robust concession agreement

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DELAY ANALYSIS
Delays and cost overruns have become common facts in industry
Researches used many techniques to assess project delays
Delays become hallmark of infrastructure projects
Delays give rise to disruption of work and loss of productivity, late completion
of project, increased time related costs
Delays occur

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DELAYANALYSIS
Q NO CONSTRAINTS SEVERITY
Q1 Type of contracts Extremely Important
Q2 Availability & quality of local contractors Important
Q3 Labour cost/Productivity Important
Q4 Availability of construction materials Extremely Important
Q5 Availability of skilled & Unskilled labour Extremely Important
Q6 Taxes & Non-tax incentives in construction industry Important
Q7 Bidding Process Extremely Important
Q8 Technology protection system Important
Q9 Political risk Important
Q10 Construction cost Important
Q11 Delays in Construction Important
Q12 Increases access to the public sector market Important
Q13 Medium & Long term financing for construction projects Important
Q14 Choice of technology Extremely Important
Q15 Market suitability for advanced technology Important
Q16 Site Conditions Important
Q17 Weather Conditions Important

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CONCLUSION
to minimize the knowledge gap between public authority and private entities in
PPP project has been made.
Risk Analysis and Delay Analysis shows the importance of PPP in infrastructure
development.
The risks and their mitigation measures in PPP projects were identified through
literature review, case study and interviews.
The possible risks including their causes and financial consequences in PPP
projects were explored.
 Major drawbacks and the suggested mitigation measures in the evaluation and
implementation process of PPP projects in India were discussed.

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REFERENCES
Benedict Amade (2012), ‘An Evaluation of Factors Constraining the Implementation of Public Private
Partnerships (PPPs) in Construction Infrastructure Projects in Nigeria’, International Journal of Science and
Engineering Investigations, vol. 1, issue 9.
Darrin Grimsey and Mervyn Lewis (2007),’ Public Private Partnerships and Public Procurement’, Agenda,
Volume 14, pp 171-188
Darrin Grimsey and Mervyn K Lewis (2000),’Evaluating the risks of Public-Private Partnerships for Infrastructure
Projects’,International Journal for Project Management,Vol 20, pp 107-118
Esther Malini (2014),’Financial Structuring of Public-Private Partnerships for Road Infrastructure Projects in India’,
Volume 1 Issue
Karunendra Pratap Singh (2011),’Issues And Prospects Of Public Private Partnership In India’,Vol 1.
Paul Posner, Shin Kue Ryu and Ann Tkachenko (2009),’‘Public-Private Partnerships:The Relevance of Budgeting’,
OECDJournal on Budgeting,Vol 2009/1
Rajkumari and AnandaKumar (2013),’A Study on Critical Factors Influencing The Infrastructure
Development Projects Under Public Private Partnership’, International Journal of Emerging Technology and Advanced
Engineering, Vol 3,issue 12
Roine Leiringer (2003), ‘Technological innovation in PPPs: incentives, opportunities and actions’, Construction
Management and Economics Journal’,Vol. 24(3), 301-308
Sathana Priya and and P.Jesintha (2011) , ‘Public Private Partnership In India, | Journal of Management and Science’,
Vol.1, No.1
Siddesh K Pai and Raj Bharath (2013),’Analysis Of Critical Causes Of Delays In Indian Infrastructure Projects’,Vol 2.
Tilak Ch Das and Sujit Sikidar (2014), ‘Public Private Participation (PPPP) In India-Its Operational Mechanism And
Challenges Ahead’, Vol 3, Issue 4

23. THANK YOU
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