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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.
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.
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."
"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, email@example.com Published: 24.04.2006