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2013 | Buch

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Infrastructure Public-Private Partnerships

Decision, Management and Development

verfasst von: Carlos Oliveira Cruz, Rui Cunha Marques

Verlag: Springer Berlin Heidelberg

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

Economic development and social welfare depend on the existence of effective and efficient infrastructure systems, particularly in health, energy, transportation and water, many of which are developed and managed through Public-Private Partnerships (PPPs). However, empirical evidence suggests some pitfalls in the use of these PPP arrangements.

This book addresses these issues, focusing on mostly three key questions: How to improve the robustness of the decision-making process leading to the option of PPP? How to improve contract management as the longest phase of the process? How can contracts be improved to accommodate uncertainty and avoid harmful renegotiations? The authors explore the concept of flexible contracts, the uncertainty modeling for improving the robustness of the decision-making process, and develop an overall framework for effective contract management, along with a comprehensive analysis of current renegotiation patterns. The ultimate goal is to improve the contractual performance, as well as the overall infrastructure management and social welfare.

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Inhaltsverzeichnis

Frontmatter

1. Introduction

Abstract

Public-private partnership (PPP) arrangements have emerged all around the world as a response to infrastructure deficits and the need to refurbish existing infrastructure. There is no unique and clear definition of PPP, but it is possible to summarize it as a procurement model for the provision of infrastructure and/or public services. The public and private sectors engage in a contractual, or institutional, relation to ensure that a certain infrastructure and/or service is available to citizens.

Carlos Oliveira Cruz, Rui Cunha Marques

2. Public Sector Comparator

Abstract

Several academic and empirical studies have been devoted to studying the main benefits and pitfalls of PPP models. They have been identified in Chap. 1, and regardless of the extraordinary contributions made toward understanding the consequences of using this procurement model, it is of the utmost relevance to develop a “bird’s eye” perspective and look at the first moment when a PPP model was considered. Many problems with PPP utilization are related to the fact that some projects should not be developed under this model in the first place. This chapter will look into the definitions of the PSC and value for money tests and provide an overview on when and how the PSC is used and calculated. It also expands current PSC calculation models in order to accommodate the uncertainty.

Carlos Oliveira Cruz, Rui Cunha Marques

3. Contractual Flexibility

Abstract

Infrastructure PPPs suffer from a major paradox. On the one hand, they are built to last several decades. During this time, several unplanned events take place, some related to the project themselves and others result from the global context in which these projects operate. On the other hand, these PPPs are, most of the time, supported by contractual arrangements that both agents intend to be as exhaustive as possible to foresee any possible contingency and to design the adequate mechanisms to address these contingencies. In fact, many of the contracts have an underlying OBC (generally included in the annexes), where it is possible to find all cash-flow projections, supported on macro-economic estimations (interest rates, inflation rates, economic growth, etc.).

Carlos Oliveira Cruz, Rui Cunha Marques

4. Contract Management

Abstract

Contract management might be defined as the set of obligations defined in a contract that both sides (parties) should comply with. It is also the means to achieve their aspirations and expectations with regard to the full fulfillment of the objectives of the supply/provision of the infrastructure/building or service. The contract management phase is of great importance because it is mainly at this stage of execution of the contract (e.g., provision of infrastructure) that there is interaction with the user or customer and when everything that has previously been planned and designed gains shape. It is at this stage that the project is completed.

Carlos Oliveira Cruz, Rui Cunha Marques

5. Renegotiation

Abstract

Among the main advantages of concessions (contractual PPPs) over other PPP models is the idea that the existence of a contract between the parties allows them to understand the “rules of the game”, thus avoiding discretionary behavior by regulators and preventing opportunistic behavior by either the concessionaires or governments. However, empirical evidence shows that concessions often suffer from a major shortcoming: renegotiations. A renegotiation happens when the contract fails to address present circumstances. Either the assumptions made initially are no longer accurate (traffic or consumption forecasts, cost estimates, interest rates, etc.) or one of the parties engages in unilateral contractual changes, making the original contract difficult to comply with for both parties.

Carlos Oliveira Cruz, Rui Cunha Marques

6. Conclusions

Abstract

Large-scale infrastructure has some particular features that require special attention from project managers. It has a public interest status, strong externalities, characteristics of natural monopolies and a high vulnerability to uncertainty. This vulnerability arises from the large sunk investments required and from the difficulty in accurately forecasting the demand/consumption in the long run. This raises several challenges regarding the involvement of the private sector in the provision and management of infrastructure and also helps justify why the full privatization process has raised suspicion for most countries’ governments.

Carlos Oliveira Cruz, Rui Cunha Marques

Backmatter

Titel: Infrastructure Public-Private Partnerships
verfasst von: Carlos Oliveira Cruz
Rui Cunha Marques
Copyright-Jahr: 2013
Verlag: Springer Berlin Heidelberg
Electronic ISBN: 978-3-642-36910-0
Print ISBN: 978-3-642-36909-4
DOI: https://doi.org/10.1007/978-3-642-36910-0

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