#Public-Private Partnership (PPP) Contract Models# By SN Panigrahi Essenpee Business Solutions SN Panigrahi Design-Build (DB) Operation & Maintenance Contract (O & M) Design-Build-Finance (DBF) Design-Build-Finance-Operate (DBFO) Design Build Finance Operate Manage (DBFOM) Design Build Operate (DBO) Build-Own-Operate (BOO) Build Operate Transfer (BOT) Build Own Operate Transfer (BOOT) Buy-Build-Operate (BBO) Build Lease Transfer(BLT) Build-Lease-Operate-Transfer (BLOT) Lease Renovate Operate Transfer (LROT) Design Construct Manage Finance (DCMF) Operation License Finance Only

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Public
PrivatePartnership
SN
Panigrahi

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SN Panigrahi is a Versatile Practitioner, Strategist, Energetic Coach, Learning Enabler & Public Speaker.
He is an International-Corporate Trainer, Mentor & Author
He has diverse experience and expertise in Project Management, Contract
Management, Supply Chain Management, Procurement, Strategic
Sourcing, Global Sourcing, Logistics, Exports & Imports, Indirect Taxes –
GST etc.
He had done more than 150 Workshops on above
Published more than 500 Articles; More than 60 Youtube Presentations
He is an Engineer + MBA +PGD ISO 9000 / TQM with around 29 Yrs of
Experience
He is a certified PMP® from PMI (USA) and become PMI India
Champion
Also a Certified Lean Six Sigma Green Belt from Exemplar Global
Trained in COD for 31/2 Yrs. on Strategy & Leadership
GST Certified – MSME – Tech. Dev. Centre (Govt of India)
ZED Consultant – Certified by QCI – MSME (Govt of India)
Member Board of Studies, IIMM
Co-Chairman, Indirect Tax Committee, FTAPCCI
Empanelled Faculty in NI MSME
He has shared his domain expertise in various forums as a speaker & presented a number of papers in various national and
international public forums and received a number of awards for his writings and contribution to business thoughts.
SN Panigrahi
9652571117
snpanigrahi1963@gmail.com
Hyderabad

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Public-Private Partnership (PPP) is a funding model for
a public infrastructure project such as a new
telecommunications system, airport / sea port or power
plant / Roads & Bridges or Infrastructure Projects.
The public partner is represented by the Government at
a Local, State and/or National Level.
The Private Partner can be a privately-owned business,
public corporation or consortium of businesses with a
specific area of expertise.

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Public Private Partnership means an arrangement between a
government / statutory entity / government owned entity on one
side and a private sector entity on the other, for the provision of
public assets and/or public services, through investments being
made and/or management being undertaken by the private sector
entity, for a specified period of time, where there is well defined
allocation of risk between the private sector and the public entity
and the private entity receives performance linked payments that
conform (or are benchmarked) to specified and pre-determined
performance standards, measurable by the public entity or its
representative.

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PPP is a broad term that can be applied to anything from a simple, short
term management contract (with or without investment requirements) to a
long-term contract that includes funding, planning, building, operation,
maintenance and divestiture.
PPP arrangements are useful for large projects that require highly-
skilled workers and a significant cash outlay to get started.
They are also useful in countries that require the state to legally own any
infrastructure that serves the public.
Different models of PPP funding are characterized by which partner is
responsible for owning and maintaining assets at different stages of
the project.

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Public Private Partnership means an arrangement between a
government/statutory entity/government owned entity on one
side and a private sector entity on the other.
It is often done for the provision of public assets or public
services, through investments being made and/or management
being undertaken by the private sector entity, for a specified
period of time.
There is well defined allocation of risk between the private sector
and the public entity.
The private entity who is chosen on the basis of open competitive
bidding, receives performance linked payments that conform (or
are benchmarked) to specified and pre-determined performance
standards, measurable by the public entity or its representative.

7. The public entity should have the enabling authority to transfer its responsibility
– enabling legislative & policy framework, administrative order – the instrument
of transfer is through a contract
There is usually a significant transfer of responsibility to the private entity – and
usually includes financial investment obligations
 The private sector is responsible for carrying out or operating the project and
takes on a substantial portion of the associated project risks
 During the operational life of the project the public sector’s role is to monitor
the performance of the private partner and enforce the terms of the contract
 The private sector’s costs may be recovered in whole or in part from charges
related to the use of the services provided by the project, and may be recovered
through payments from the public sector

8.  For a payment to the private entity – directly by users or by the public entity
such that - a significant portion of project revenues and/ or the payments, are
conditional on achieving pre-specified levels of performance
 Public sector payments are based on performance standards set out in the
contract
 Often the private sector will contribute the majority of the project’s capital costs,
although this is not always the case
The nature of the relationship is usually long-term

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 The Emergence of Public-Private Partnership (PPPs) is seen as a Sustainable Financing (Access
to private sector finance) and Institutional Mechanism with the Potential of Bridging the
Infrastructure Gap
 Apart from enabling Private Investment Flows, PPPs also deliver Efficiency gains and Enhanced
Impact of the Investments from using private sector skills and from transferring risk to the private
sector
 The Efficient use of Resources, availability of Modern Technology, better Project Design and
Implementation and Improved Operations Combine to deliver Efficiency and Effectiveness gains
which are not readily produced in a Public Sector Project
 Potentially Increased Transparency
 Enlargement of focus from only creating an asset to delivery of a service, including maintenance
of the infrastructure asset during its operating lifetime
 PPP Projects also lead to Faster Implementation, Reduced Lifecycle Costs & Operational Costs,
and Optimal Risk allocation
 Private Management also increase Accountability and Incenvizes Performance and maintenance of
Required Service Standards.
 PPPs Results in Improved delivery of Public Services and Promote Public Sector Reforms

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Design
Build, or
Rehabilitate
Finance Maintain Operate Transfer

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A central characteristic of a PPP contract is that it bundles together multiple project phases or functions.
Nonetheless, the functions for which the private party is responsible vary and depend on the type of asset
and service involved. Typical functions include:
•Design (also called engineering work)—involves developing the project from initial concept and output
requirements to construction-ready design specifications.
•Build, or Rehabilitate—when PPPs are used for new infrastructure assets, they typically require the private
party to construct the asset and install all equipment. Where PPPs involve existing assets, the private party
may be responsible for rehabilitating or extending the asset.
•Finance—when a PPP includes building or rehabilitating the asset, the private party is typically also required
to finance all or part of the necessary capital expenditure, as described further in How PPPs Are Financed.
•Maintain—PPPs assign responsibility to the private party for maintaining an infrastructure asset to a specified
standard over the life of the contract. This is a fundamental feature of PPP contracts.
•Operate—the operating responsibilities of the private party to a PPP can vary widely, depending on the
nature of the underlying asset and associated service. For example, the private party could be responsible for:
• Technical operation of an asset, and providing a bulk service to a government off-taker—for example, a
bulk water treatment plant
• Technical operation of an asset, and providing services directly to users—for example, a PPP for a
water distribution system
• Providing support services, with the government agency remaining responsible for delivering the public
service to users—for example, a PPP for a school building that includes janitorial service

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For the provision of these services, the private party typically
creates a PPP company, a Special Purpose Vehicle (SPV)
solely to serve a particular function, such as the facilitation of a
financial arrangement or creation of a financial instrument.
A dedicated SPV allows for the segregation of all assets and
liabilities linked to the private provision of services.
The concession period is determined primarily by the length of
time needed for the facility’s revenue stream to pay off the
company’s debt and provide a reasonable rate of return for its
effort and risk.

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The PPP Payment Mechanism
The private party can be paid by collecting fees from service users, by the
government, or by a combination of the two—with the common, defining
characteristic that payment is contingent on performance.
The payment mechanism should be structured in such a way that the net
remuneration of the private party is linked to performance. For the private
party to have the right incentives to deliver services at the performance levels
intended by the procuring authority,
Payment
collecting fees
from service
users
by the
Government
by a
combination
of the two

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Assets revert to the authority at the end of the concession period,
including assets purchased by the concessionaire. In a concession the
concessionaire typically obtains most of its revenues directly from the
consumer and so it has a direct relationship with the consumer. The
concessionaire will pay a concession fee to the authority.
A Concession gives a concessionaire the long term right to
use all utility assets conferred on the concessionaire,
including responsibility for operations and some investment.
Asset ownership remains with the authority and the authority
is typically responsible for replacement of larger assets.
private operator is responsible for operating and
maintaining the utility. In the case of a lease the
rental payment to the authority tends to be fixed
irrespective of the level of tariff collection that is
achieved and so the operator takes a risk on bill
collection and on receipts covering its operating
costs.
Contractual arrangement for the management of a part
or whole of a public facility or service by the private
sector. Capital investment is typically not the primary
focus in such arrangements.
Build-Operate-Transfer (BOT) Projects, and Design-
Build-Operate (DBO) Projects are types of public-
private partnerships that are output focused. BOT and
DBO projects typically involve significant design and
construction as well as long term operations, for new
build (greenfield) or projects involving significant
refurbishment and extension (brownfield).

15. SN Panigrahi 15
Design-Build
(DB)
Operation &
Maintenance
Contract
(O & M)
Design-Build-
Finance (DBF)
Design-Build-
Finance-Operate
(DBFO)
Design Build
Finance Operate
Manage
(DBFOM)
Design Build
Operate
(DBO)
Build-Own-
Operate
(BOO)
Build Operate
Transfer
(BOT)
Build Own
Operate
Transfer
(BOOT)
Buy-Build-
Operate
(BBO)
Finance Only
Build Lease
Transfer(BLT)
Build-Lease-
Operate-
Transfer (BLOT)
Lease Renovate
Operate
Transfer
(LROT)
Design
Construct
Manage Finance
(DCMF)
Operation
License

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•Design-Build (DB): The private-sector partner designs and builds the infrastructure to meet the public-
sector partner's specifications, often for a fixed price. The private-sector partner assumes all risk.
•Operation & Maintenance Contract (O & M): The private-sector partner, under contract, operates a
publicly-owned asset for a specific period of time. The public partner retains ownership of the assets.
•Design-Build-Finance (DBF) : With the design-build-finance (DBF) procurement model, a single contract is
awarded for the design, construction, and full or partial financing of a facility. Responsibility for the long-term
maintenance and operation of the facility remains with the project sponsor, but could be included in a
separate agreement. This approach takes advantage of the efficiencies of the design-build (DB) approach
and also allows the project sponsor to defer financing either completely or partially during the construction
period.
•Design-Build-Finance-Operate (DBFO): The private-sector partner designs, finances and constructs a
new infrastructure component and operates/maintains it under a long-term lease. The private-sector partner
transfers the infrastructure component to the public-sector partner when the lease is up.
Design Build Finance Operate Manage (DBFOM)
•The responsibilities for designing, building, financing and operating are bundled together and transferred to
private sector partners. There is a great deal of variety in DBFOM arrangements, and especially the degree
to which financial responsibilities are actually transferred to the private sector.

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Design Build Operate (DBO): A design build operate (DBO) contract is a project delivery model in
which a single contractor is appointed to design and build a project and then to operate it for a
period of time, while the Sponsoring Authority finances the project and retains ownership
•Build-Own-Operate (BOO): The private-sector partner finances, builds, owns and operates the
infrastructure component in perpetuity. The public-sector partner's constraints are stated in the
original agreement and through on-going regulatory authority.
Build Operate Transfer (BOT) : The agreement commits the private company to build and operate
a facility - such as a power plant - for a period of time then transfer ownership to the government.
Build-Own-Operate-Transfer (BOOT): The private-sector partner is granted authorization to
finance, design, build and operate an infrastructure component (and to charge user fees) for a
specific period of time, after which ownership is transferred back to the public-sector partner.
•Buy-Build-Operate (BBO): This publicly-owned asset is legally transferred to a private-sector
partner for a designated period of time

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•Build Lease Transfer(BLT) Under BLT a private entity builds a complete project and leases it to
the government. On this way the control over the project is transferred from the project owner to a
lessee. In other words, the ownership remains by the shareholders but operation purposes are
leased. After the expiry of the leasing the ownership of the asset and the operational
responsibility are transferred to the government at a previously agreed price.
•Build-lease-operate-transfer (BLOT): The private-sector partner designs, finances and builds
a facility on leased public land. The private-sector partner operates the facility for the duration of
the land lease. When the lease expires, assets are transferred to the public-sector partner.
Lease Renovate Operate Transfer (LROT): In this type, the existing infrastructure is handed
over to a private facility for a particular time period. This is given to undergo renovation and its
operation for a specific time period. The operation is performed on the condition that the private
facility will recover the cost that is agreed in return as per the contractual agreement along with
the transferring of the entity back to the government.

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Design Construct Manage Finance (DCMF) : Some examples for the DCMF model are prisons
or public hospitals. A private entity is entrusted to design, construct, manage, and finance a
facility, based on the specifications of the government. Project cash flows result from the
government's payment for the rent of the facility. In the case of hospitals, the government has the
ownership over the facility and has the price and quality control. The same financial model could
be applied to other projects such as prisons. Therefore, this model could be interpreted as a
means to avoid new indebtedness of public finance
•Operation License: The private-sector partner is granted a license or other expression of legal
permission to operate a public service, usually for a specified term. (This model is often used in
IT projects.)
•Finance Only: The private-sector partner, usually a financial services company, funds the
infrastructure component and charges the public-sector partner interest for use of the funds.

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There are Different PPP models.
Each model has its own pros and cons and can be suitable to
achieve some of the objectives of private participation. Special
characteristics of some sectors and their technological development,
legal and regulatory regimes, and public and political perception
about the services in a sector may also be factors in deciding the
suitability of a particular form of private participation. For example,
management contracts are common for existing assets in the water
and transport sectors, affermage / lease is common in the transport
sector, concessions are common in the transport and
telecommunication sectors, and turnkey and private ownership of
assets are common in the power sector.

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Design-Build (DB)
Operation & Maintenance Contract (O & M):
Build & Finance
Design-Build-Finance-Operate (DBFO)
Build-Own-Operate (BOO)
Build-Own-Operate-Transfer (BOOT)
Privatization
Buy-Build-Operate (BBO)
Build-lease-operate-transfer (BLOT)
Operation License
Govt. Service / Management Contracts

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Examples of PPP projects of the combination type include The Shanghai Container Terminal
Company Limited (between the Port Authority and Hutchinson Whampoa in Shanghai, China),
International Container Terminal Services, Inc. (in Manila, Philippines), and Delhi International Airport
Limited (under an Operation-Maintenance-Development Agreement between GMR-Fraport
Consortium and Airports Authority of India in New Delhi, India). These long-term lease/concession
combination contracts involve operation and management and significant investments in existing
public assets.
The Port Klang Container terminal deal in Malaysia is also an example of the combination type of
PPP that involved leasing of existing infrastructure facilities at the port and Build-Rehabilitate-
Operate-Transfer (BROT) for further infrastructure development. The terminal facility was located on
land that could not be legally sold to any private company. In order to circumvent this problem, the
Port Authority leased the land to the private company for 21 years for the express purpose of
operating a container terminal.

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SECOND VIVEKANANDA BRIDGE (now Sister Nivedita Bridge) in Kolkota:
This bridge is one the first BOT projects, undertaken in 1995. The concession agreement was signed in
September;2002. The consortium members are from USA, UK, Mauritius and India. Though the financial close
was delayed by one year, the construction thereafter was almost on time and the bridge was commissioned on
July4, 2007. This bridge also won award for excellence for the year 2007 under the Foreign Bridge Project
Category from the American Segmental Bridge Institute. Total project cost of INR 640 (USD 128 millions). The
concession period of the project is 30 years.
MUMBAI METRO:
First MRTS project in India being implemented on Public Private Partnership (PPP) format. DMRC (Delhi
Metro Rail Corporation) prepared the master plan for Mumbai Metro. The Private party involved was- Reliance
Energy Ltd.
Total Project cost- Rs. 2356 Crores
First phase- 2006-1011
Commencement of Operations- 2009-2012
mass transit corridor from Andheri to Ghatkopar

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DND – LINK ROAD:
The 4 lane 1.5 km long road will intersect the Delhi Noida link road at the intersection of the proposed Mayur
Vihar District Centre. This link has been proposed to provide better access and the shortest connectivity from the
existing DND flyway to the Trans Yamuna East Delhi area. The work involved detailed geometric design and
structure design of the flyover over DND Flyway and another bridge. Estimated civil work cost of the project is
Rs. 30 crores. The concession period of the project is 30 years.
UNDERGROUND CAR PARKING SYSTEM CITY- Kolkata, West Bengal
Year of execution- April 2007. Parking in central Kolkata, the heart of this mega city, has always been a hassle is
the case with most of the inner city areas. In an attempt to address the situation, the Kolkata Municipal
Corporation (KMC) decided to utilize the rights to underground space and undertake the parking project as a
Public Private Partnership project on a Build-Own-Operate-Transfer (BOOT) basis for 20 years. The Private
parties involved were- KMC and Simplex
UG Level 1: Commercial Development
UG Level 2: Parking lot

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List of all PPP Projects - Data collated since 2006
https://www.pppinindia.gov.in/infrastructureindia/project-
list?id=1&searchType=Government%20Infrastructure%20Projects
%20(PPP)
www.infrastructureindia.gov.in is a repository of information on
infrastructure projects being implemented in India by various
Government Departments and Private Sector companies. This
database has been developed by PPP Cell, Infrastructure Division,
Department of Economic Affairs, Ministry of Finance, Government of
India.

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https://www.youtube.com/channel/UCVZ
ScNa_leR8XbYINEwTFwQ/videos
SN Panigrahi

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28. Contact Details:
SN Panigrahi
9652571117
snpanigrahi1963@gmail.com 28