Appraising a project means answering a fundamental set of questions about the project;

The Appraising or Appraisal Phase, presented in this chapter, begins once the project has been clearly identified, screened as a PPP, and preliminarily defined (in terms of the scope of the proposed contract). It should end with the green light decision to procure the project through a PPP or to reject the project as such.

PPP projects demand a very sound preparation if they are to deliver timely, effective, and cost-efficient infrastructure. A significant part of this preparation is done in the Appraisal Phase. Appraising a PPP project means conducting a series of feasibility exercises that inform a decision to approve, cancel, or revisit the project before the structuring of the contract consumes scarce public resources.

High value transactions attract the risk of corruption. Private players may attempt to improperly influence transactions and public officials may attempt to extract private profit from public office. Corruption in PPPs can be minimized using the mechanisms outlined above clear processes and criteria, clear assignment of responsibilities, oversight of the legislature and Supreme Audit Bodies, and transparency of information and public involvement.

PPPs are meant to provide value to the public. Getting the right level of public involvement in the PPP process and program can make or break the legitimacy of a PPP program, and directly contribute to good governance. Direct public participation at various points in the PPP process can improve project design. Equally important, making PPP projects and processes transparent enables PPP performance to be a factor in the public policy debate and public opinion on regarding government’s overall performance.

Audit entities are an important link in the chain of accountability for public expenditure decisions, providing independent reviews of government finances and performance to parliaments and to the public. The International Organization of Supreme Audit Institutions (INTOSAI) provides an online list of its member audit entities.[160]

The legislative branch of government, that is, the elected, law-making parliament or assembly may control the PPP process in several ways.

PPP projects are usually implemented by the Executive branch of government. The processes and responsibilities described in section 1.7 aim to create checks and balances within the executive branch as to how those decisions are made. This section describes the broader governance of the PPP program how other entities and the general public participate in the PPP process, and how they hold the executive accountable for its decisions and actions. Box 2.23 provides an example of how this is undertaken for the UK’s PFI.

In addition to considering fiscal exposure on a project-by-project basis, some governments introduce targets or rules limiting aggregate exposure. Given the difficulties in deciding whether a particular PPP commitment is affordable, limits on aggregate exposure can be a helpful way to ensure the government’s total exposure to PPP costs and risks remain within manageable limits. Examples of PPP fiscal limits are presented in box 2.22.

Governments need to account for and report on their financial commitments, including those under PPP contracts. Fiscal reporting on PPPs needs to be consistent with fiscal reporting generally. There are three main types of fiscal reporting.