• Body of Knowledge:
    Appraising PPP Projects
    6.4 The Financial Structure of the Project Company
    A considerable cost associated with the project is the cost of capital or the costs of obtaining the financial resources to implement the project. To correctly estimate these costs, the financial model must accommodate a fundamental problem in project finance[14]: where the required money for the...
  • Body of Knowledge:
    PPP Introduction and Overview
    2.1. Infrastructure Procurement Options that are Not Regarded as PPPs
    Traditional procurement of infrastructure: public finance and public management. Build and Design, and Build contracts. Public works and public infrastructure are traditionally financed by the government. The source of funds for such traditional procurement is the public budget[11]. The public...
  • Body of Knowledge:
    Structuring and Drafting the Tender and Contract
    9.4 Compensation Events and Rebalancing
    When a compensation event occurs, the private partner has the right to claim compensation to offset the loss suffered or that will be suffered, or part of the loss suffered in shared risk events. The loss may include forgone revenues (for example, revenue lost due to a delay in construction, where...
  • Body of Knowledge:
    Appraising PPP Projects
    8.1 Measuring Commercial Feasibility
    The commercial feasibility must be assessed from two different points of view: lenders (the debt providers) and investors (the equity providers). 8.1.1 The Lenders’ Perspective (bankability) The key aspect of the lenders’ concerns is the capacity of the project company to repay its debt on the...
  • Body of Knowledge:
    Structuring and Drafting the Tender and Contract
    9.3 Contract Breaches, Penalty System, and Events of Default
    Section 9.2 has shown how payments are linked to service performance through availability payment mechanisms, so that deductions or abatements are made from the payments commensurate with any failure to meet set service standards or target levels of service. The price paid is therefore adjusted to...
  • Body of Knowledge:
    Structuring and Drafting the Tender and Contract
    8.2 Evaluation Criteria and Evaluation Process Regulations
    Evaluation criteria Broadly speaking, there are two main types of processes in terms of evaluation criteria. Processes based only on price (also referred to as least cost selection) in which the technical factors are evaluated on a pass/fail basis. This is sometimes called an auction; however it...
  • Body of Knowledge:
    Project Identification and PPP Screening
    8. Economic Soundness. Introduction to Cost-Benefit Analysis
    This section introduces[16] the concepts of Cost-Benefit Analysis and economic analysis. FIGURE 3.3: Sequence of the CBA Analysis   Note: CBA= cost-benefit analysis; eIRR= economic Internal Rate of Return; eNPV= economic Net Present Value. The most refined form of economic analysis is the Cost-...