This document discusses a master's project on assessing the effectiveness of public-private partnerships (PPPs) in infrastructure development in Nigeria. It provides background on the need for infrastructure development in Nigeria and introduces PPPs as a method of infrastructure procurement that utilizes private sector resources in partnership with the government. The project aims to determine how PPPs enhance efficient public services and economic activities in Nigeria, identify suitable PPP types, examine challenges to PPPs, and measure their effectiveness. It establishes two hypotheses and discusses the significance of the study and its scope. Key terms related to PPPs are also defined.

1. UNIVERSITY OF LAGOS
MASTER IN PROJECT MANAGEMENT (MPM)
PROJECT TOPIC
EFFECTIVENESS OF PUBLIC PRIVATE PARTNERSHIP
(PPP) IN
INFRASTRUCTURE DEVELOPMENT IN NIGERIA
SUBMITTED
IN PARTIAL FULFILMENT OF THE AWARD OF THE MASTER
DEGREE IN PROJECT MANAGEMENT

2. 1.0 INTRODUCTION
1.1.1 NEED FOR INFRASTRUCTURE DEVELOPMENT
Over the last ten years, private sector financing through Public Private
Partnerships (PPP) has become popular as a way of procuring and
maintaining public sector infrastructure in Nigeria, in sectors such as
transportation (roads, bridges, tunnels, railways, airports), social
infrastructure (hospitals, schools, prisons, social housing) and other public
infrastructure utilities. Structuring PPP is complex because of the need to
reconcile the aims of the large number of parties involved. On the private
sector side there are investors, lenders and companies with construction and
operational services. On the public sector side there are public authorities
creating and implementing PPP policies and the general public who use the
facilities that a PPP provides. The involved parties need to have a basic
understanding of policy and finance issues, and how their part of the project
is linked to and affected by them.
Investments in infrastructure can directly contribute to improving human
welfare, economic growth and can therefore be used as a lever to reduce
poverty. Inequality not only declines with larger infrastructure stock, but
also with the improved quality of infrastructure services (Calderon and

3. Serven 2004). In a way, whether a nation is undeveloped, developing, or
mature, they all hold a common characteristic in today’s economy: the need
to construct, repair, refurbish, and modernize their infrastructure (Levy
1996). In developing nations like Nigeria there usually exists a legitimate
urge for development, due to its inhabitants lacking basic services with
regards to heavy infrastructure provision plans. If, on one hand, the
development of infrastructure comes to help; on the other hand, much
planning is required to enhance its goal and also to mitigate the possible
negative impacts. A massive infrastructure investment, if carried-out the
wrong way, can threaten the economic, social and environmental cohesion
of a particular area or region.
1.1.2 PUBLIC-PRIVATE PARTNERSHIP
A Public-Private Partnership (PPP) is a contractual agreement between a
public agency and a private sector entity. Through this agreement, the skills
and assets of each sector are shared in delivering a service or facility for the
use of the general public. Public-Private Partnerships are means of utilizing
private sector resources in a way that is a combination of outsourcing and
privatization with government partnership. Nations are increasingly relying
on creative financing and asset management to maintain and improve
infrastructure because PPP provides a more efficient and cost effective

4. means of providing the same or better level of service, at a savings to the
general public.
The successes of Public Private Partnership (PPP) in infrastructure projects
have made it a good alternative against bonding and other traditional
financial methods. PPP has the benefits of increasing innovation and
efficiency, as well as risk transfer, and as such making it a preference for
some government agencies in infrastructure projects. The initial motive for
implementing PPP was typically about financial breakthrough. There is a
need to combine both public and private expertise as neither sector is able to
deliver projects effectively and efficiently alone. The private sector has the
ability to incorporate skill, innovation, motivation, well assessed risks and
technology into infrastructure projects.
To eliminate doubts in the use of PPP as a procurement alternative, this
study points out the effectiveness of PPP as a procurement methodology.
The derived benefits, success and efficiency of the PPP method can fit in
with culture and practices of infrastructure projects. This research can serve
as a reference on determining the PPP needs in infrastructure projects.
1.1.3 HISTORY OF PUBLIC-PRIVATE PARTNERSHIP
Private sector involvement in the delivery of public services is not a new
concept; PPPs have been used for over two decades, starting in 1980s.

5. Initially focusing on economic infrastructure, PPPs have evolved to include
the procurement of social infrastructure assets and associated non-core
services. PPPs are used in housing, health, corrective facilities, energy,
water, and waste treatment projects. PPP policy has also evolved globally as
public sectors budgetary challenges limit potential options. One method of
tapping into alternative sources of capital is the public-private partnership.
Public-Private Partnership could also be defined as:
“Any medium to long-term relationship between the public and private
sectors, involving the sharing of risks and rewards of multi sector skills,
expertise and finance to deliver desired policy outcomes.” (Standard, Poor,
2005).
Some definitions make it seem as though most of the risks are transferred to
the private sector. In reality, there is a relatively equal amount of risk
transfer in a properly modeled PPP. Private participation in Nigeria
infrastructure is not a new phenomenon. The private sector was also
involved in the nineteenth century in the development of canals and
railroads. In the twentieth century, with the growing economy and the need
for new infrastructure, the state governments and the federal government
assumed the responsibility for providing infrastructure (Nirupuma, 2009).

6. In the early 1990s private participation in public sector projects emerged,
specifically in the increasingly developing southern and Northern States.
The private sector over the years has become progressively innovative in
several developed countries, which has added substantial value to public
procurement. The Nigeria Government has been a recent initiator of the
current private sector involvement with infrastructure projects.
1.1 BACKGROUND OF THE STUDY
Over the past years, there has been an increased focus on the provision of
infrastructure in Nigeria. The emergence of infrastructure as a separate asset
class with stable returns over a number of years has resulted in a large
number of investment funds being set up. This increased interest on the part
of the financial investor and other private entities, is almost evenly matched
by the demand for new infrastructure by developed countries as well as
developing countries (Griffith-Jones, 2009).
Developing countries like Nigeria are in increasing need for new and
improved infrastructure to support their increasingly growing rates
(Universities UK, 2010). The private sector has however been working
alongside to fill these gaps in funding. In spite of these recent economic
downturns, there are significant interests for infrastructure projects. With the

7. current global economy crisis, government agencies are increasingly
focusing on policies that will provide adequate infrastructure with long term
benefits to the general public.
1.2 STATEMENT OF THE PROBLEM
There is a growing demand in Nigeria for the acceleration of infrastructure
development and the improvement of service delivery in order to meet the
ever-growing needs of its populace.
A large part of the national infrastructure in informal settlements remains
undeveloped and inaccessible. The dwindling national resources, increasing
demand for infrastructure development, capacity constraints and high
maintenance costs further aggravate the problem.
The most highly developed infrastructure and services are mainly found in
major urban areas and intercity links.
1.3 AIM AND OBJECTIVES OF THE STUDY
The statement of problem above necessitates the need to examine public-
private partnership and efficient public services delivery with a view to:
i. To determine the extent to which public-private partnership enhances
efficient public services delivery and economic activities in Nigeria
ii. To identify the type of public-private partnership suitable for service
delivery in Nigeria

8. iii. To examine the difficulties of the PPP in infrastructural development
iv. Measure the effectiveness of PPP in Nigeria
v. To recommend ways of improving on the gains of PPP in
infrastructural development in Nigeria.
vi. To highlight the problems influencing effective implementation of
public-private partnership in Nigeria
1.4 RESEARCH HYPOTHESIS
In order to guide the investigation and to gather evidence about the
effectiveness of Public private partnership in Infrastructure development in
Nigeria, the research was conducted using the following hypotheses.
I. Effective public service delivery does not significantly enhance
economic activities in Nigeria
II. Public-private partnership does not significantly enhance the efficient
delivery of public services in Nigeria

9. 1.5 SIGNIFICANT OF THE STUDY
The findings of the study are likely to result in an enhanced understanding of
the issues associated with PPP projects in Nigeria, which in turn could result
in the following:
• Increased implementation of PPP projects;
• Enhanced capacity for service delivery;
• Increased efficiency in the management of PPP projects;
• Provision of improved social services;
• Improvement in the quality of infrastructure services;
• Development of clear guidelines for PPPs;
• Increased funding / finance from the private sector
1.6 Scope and Limitation of the Study
The scope of this study is limited to how PPP method is effective in
infrastructure projects in Nigeria. This research focuses on factors necessary to
ensure a successful and effective project, as well as the benefits, disadvantages
and challenges of PPP projects.

10. 1.7 DEFINITION OF TERMS
Accountability: This is the ability of the public to hold to account those
responsible for managing the use of public funds in the delivery of services.
Bidder: A bidder is one who submits a bid in response to a project brief or to a
request for an expression of interest.
Build Own and Operate (BOO): This is when a developer is responsible for
the design, funding, construction, operation and maintenance of the facility,
during the concession period, with no provision for transfer of ownership to the
government.
Build Own Operate Transfer (BOOT): This is an arrangement whereby a
facility is designed, financed, operated and maintained by a concession
company. The concessionaire retains ownership until the end of the concession
period, after which ownership and operating rights are transferred back to the
government.
Built Operate Transfer (BOT): This is an agreement where a facility is
designed, operated and maintained by the concessionaire, for the period of the
concession. Thereafter, legal ownership of the facility may or may not rest with
the concession company.
Bundling: This refers to the integration in a PPP of functions such as design,
construction, financing, operations and maintenance of the facility.

11. Business case: The business case provides an overview of a partnership
approach. This is where the project is fully scoped, risks and costs are
identified to develop a cost-benefit analysis and test the net benefit of the
proposal.
Concession: Concession-based approaches are the oldest form of Public
Private Partnership, and a variety of arrangements are based on the concept of a
fixed-term concession, using various combinations of private sector resources
to design, construct, finance, renovate, operate and maintain facilities.
Ownership of the facility may remain with the government, or may be
transferred to the government on completion, or at the end of the concession
period.
Contracting out: This is an outsourcing arrangement in which a public agency
contracts with an external supplier for the provision of goods and / or services.
Conventional procurement: This is a public procurement approach in which a
public agency secures the finance directly and pays the contractor as work
progresses.
Core activities: These consist of operational elements involving the making of
key decisions and / or the delivery of services, which may remain with
government.

12. Default: The failure of a party to perform a contractual requirement or
obligation, including failures to meet deadlines, to perform to a specified
standard, to meet a loan repayment or to meet its obligations in relation to an
established agreement.
Design Build Finance (DBF): A form of PPP that involves the procurement of
asset using private finance, without private sector operations and provision of
the associated services.