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PPP Introduction and Overview

15.7. Conclusions: Dos and Don'ts

Box 1.20 provides a summary of the main recommendations regarding PPPs as potential options to procure public Infrastructure.

BOX 1.20: Dos and Don’ts

Do

Don’t

EMDEs, LDCs: Adapt the PPP strategy to your political, social and economic context under principles of realism and prudence.

EMDEs, LDCs: Do not plan and announce ambitious PPP programs which may be beyond your potential (in terms of affordability and access to international investment and finance). Don’t define/select unrealistic projects, and in particular do not specify the use of unreliable or untested technology.

Select appropriate projects.

Do not use PPP for small projects (as a general rule). Try to bundle/group small projects (for example, a group of Wastewater Treatment Plants (WWTPs) rather than procuring them in separate processes.

Select appropriate PPP candidates. Look for the inherent efficiencies of PPPs, maximize and protect them.

Do not use PPP simply because it is not accounted for as public debt.

 

Do not use PPP as an option unless the project is suitable to be a PPP, that is, it is likely to capture the expected efficiencies (chapter 3 provides information on how to screen a project as a suitable PPP candidate).

 

Use PPP delivery when the project provides VfM, and the PPP option reinforces VfM (see chapter 4 for more information on VfM analysis).

Acknowledge the highly demanding resource requirements of the PPP tool and PPP procurement process, and be ready in terms of capabilities.

 

PPPs require significant amounts of government participation during all stages of their life cycle.

Do not embark on a PPP process unless you know or recognize the special/specific capabilities and resources needed and the higher complexity of the process.

 

In many countries, institutions tasked with the development of PPPs face enormous restrictions and have large shortcomings. However, they are expected to produce programs and projects that demand a level of specialization and effort that is beyond their capabilities.

Assess/appraise projects in detail to ensure feasibility.

Do not launch a PPP project unless you are sure of its overall feasibility and PPP feasibility specifics, that is, the project is prepared and satisfactorily assessed in economic, financial, commercial, affordability and technical terms (chapter 4 deals in its entirety with project appraisal needs and scope).

Dedicate resources to properly structure the tender and the contract, and to manage the process.

Do not believe that appraisal is everything. Inherent VfM may be lost through inadequate structuring and unclear design/drafting.

 

The tender process should procure the maximum effective competition within the qualification requirements (chapter 5 deals with the need for structuring and proper design of the tender process and contract).

Allow enough time for the procurement (preparation, appraisal, structuring, and tender).

Do not rush. Do not set overly ambitious timelines; the private sector is less willing to bid for projects if they are not confident of the government’s ability to meet its timetable.

Dedicate attention and resources to manage the contract beyond procurement.

Do not assume that the government has finished its job once the contract is signed. The government needs to proactively manage the contract throughout its life (chapters 7 and 8 explain the contract management function).

Organize the government, institutional and policy frameworks to deal with the PPP tool in a programmatic way. Control the fiscal implications and evaluate projects and programs for permanent improvement.

Do not apply for PPPs as a policy strategy (at a programmatic level) unless you are prepared and ready (section 9 introduces and discusses the role of PPP frameworks, and chapter 2 explains what constitutes a proper PPP framework and the main features of PPP programs and frameworks).

 

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