The ppp method is making it happen

Public-Private Partnerships (PPPs) is a different procurement method that enables more efficient and predictable public projects.

"More public entities are considering the advantages of PPPs in order to get needed public projects done on time and on budget," explains Carsten Glenting, Head of Department, COWI Economics and Management.

There are many reasons: think about media coverage of public project delays and cost overruns. Such problems aggravate taxpayers and shake the credibility of public authorities.

Focus on operational efficiency

In traditional procurement, a public highway authority, for example, would design a motorway, tender out the construction, and maintain the motorway itself.

That is the method that has traditionally encountered problems due to politics, midcourse alterations, and budgeting changes.

In a comprehensive PPP, the private operator assumes the risk, generates the subcontractor contracts, and handles all the nuts and bolts.

Glenting explains that a PPP stands on a central contract that stipulates the quality of what is delivered, sets payment mechanisms, and indicates precisely what the public will pay and for what.

Can work particularly well

PPP can work particularly well because they can mobilize additional financial resources, and ensure project delivery on time and on budget. PPPs can do so because they allocate risks better than do traditional procurement projects.

PPPs also maintain a close focus on operational efficiency and incentive to optimize lifecycle costs, according to Glenting.

He stresses, however, that not all projects are suitable for the PPP approach and that "a bad project does not become better by becoming a PPP."

Financial modelling

"COWI structures PPP solutions, gauges market interest, conducts financial modelling, assesses value for money, develops pre-qualification and tender material, and evaluates and negotiates bids.

COWI is also designing ways for European Union grants to co-exist with PPPs, which is a key for recently admitted EU members not in the Monetary Union and the ascension countries, among others around the globe," Glenting points out.

By Scott Berman, cht@cowi.com
Published: 24.04.2006

A waste-to energy plant for Dublin

COWI, in a joint venture with RPS Consulting Engineers, Dublin, is serving as Client's Representative to Dublin City on several PPP projects and has been working on the waste-to-energy plant PPP since 2001. The companies are providing all consultancy services with the help of auditing and legal sub-contractors.

COWI and the rest of the consortium are developing a plant in Dublin's port area. It will turn as much as 550,000 tonnes of solid waste annually into electricity and district heating by utilizing thermal treatment, which reduces greenhouse gases as well as the amount of waste to be discarded in landfills.

The facility is slated to be completed in 2010. COWI and RPS are analysing the market for the best service and technological options for Dublin, negotiating the contracts, preparing tender material, implementing the project control process during the design phase, representing the city during commissioning and construction, and citing design costs and setting timelines.