A PPP framework is best understood as the established procedures, rules and institutional responsibilities that determine how the government selects, implements and manages PPP projects. By setting procedures and rules, good PPP practice can be established within the government. This has the effect of limiting and managing government risk and ensuring consistency. By defining institutional responsibilities, a PPP framework makes institutions accountable for their role in the PPP process. A good PPP framework lets the market know how PPP projects will be developed, and how bids will be assessed. This can lead to more competitive procurement and better value for the public.
PPPs can be implemented on a one-off basis without any specific PPP framework. However, PPPs are technically complex, involving numerous stakeholders, each with conflicting objectives. PPP frameworks are important in ensuring that the objectives of the public and private sector are aligned. They establish rules that avoid impropriety and promote the public interest in getting quality projects done efficiently.
This chapter explains how to create a new PPP framework or, where an existing framework is in place, what to look for to ensure that it is effective. The learning objectives are outlined in box 2.1.
BOX 2.1: Learning Objectives
After studying this chapter, the reader will understand the following: -
Summary of Contents
Section 1.1 summarizes the advantages of having a well-developed PPP framework. Section 1.2 then sets out the elements that typically comprise such a framework.
Every jurisdiction’s PPP framework is unique. Its design needs to take into account what the government is trying to achieve and the jurisdiction’s legal and administrative traditions. Sections 1.3 and 1.4 set out the need to identify the objectives and scope for the framework. Section 1.5 addresses how legal and administrative traditions will influence how the framework is constructed.
Every PPP needs to be developed through a number of steps, including identification of the project, structuring as a PPP, contracting, operation of the project, contract management, and hand-back. Section 1.6 summarizes a typical PPP process, procedures, and decision criteria that a good framework would typically require for each step in the process.
Section 4.6 then sets out how to allocate institutional responsibilities for developing and procuring PPPs. Section 1.8 deals with managing fiscal commitments in PPPs. Finally, section 1.9 describes the desirability of effective oversight of a PPP program and options to achieve this.