#PublicPrivatePartnerships (#PPPs) enjoy a good reputation in Australia for delivering projects on time, within budget and to promised service levels. Much hype continues to surround the model. For instance, many of the benefits attributed to the PPP model are not unique to it. PPPs do, however, have some unique benefits, most particularly those arising from the use of private sector finance which brings addition rigour to project risk assessments and provides governments with a buffer against certain risks. There are of course some disadvantages associated with PPPs. Some are more perceived than real, but the loss of flexibility, and high transaction and financing costs, are real issues with the PPP model. Ultimately, the rationale for PPPs should be based on value for money. For the PPP model to survive, it must deliver better value for money for government than the alternatives. This can only occur when the PPP model is used on the right projects, and avoided on the wrong ones. Finally, the PPP model must continually evolve in response to lessons learned and market conditions. This report identifies many steps that governments and industry can take to improve the outcomes of PPP projects. The future of the PPP model looks bright.
God knows they need to improve. So few of the work to our community advantage. David Bentham OAM
Richard Patterson. Couldn't agree more. Your paper inspired me to set an exam question for my PPP law students at Melbourne University back in 2018 that asked the student to outline the amendments that ought to be made to the NEC4 DBO contract to turn it into a PPP contract that is consistent with the risk allocation contemplated by the Commercial Principles for Social Infrastructure contained in Australia's National Public Private Partnership Guidelines. I'll post the question and the model answer in a separate an article on LinkedIn (to overcome the word count constraint that applies to this comment)
Owen Hayford thanks. I have direct experience of those high transaction costs and, as you know, specialise in NEC contracts. A couple of years back we wrote a paper (prize winning, don't you know!!) on how the principle of DFBO could be effected using industry standard NEC contracts - super flexible, written in English and stimulating good project management. (link to the paper on NEC website is hanging off my LinkedIn profile) The premise was that DBFO is basically a D&B phase with payment of nil, followed by an O&M phase... with some fancy finance and a whacky payment mechanism. The paper showed how 90% of the words in a PPP project agreement are about those two phases. And that its criminal to let lawyers loose with a blank sheet of paper for the contract! Let tham work on the truly project specific issues. And since the paper NEC has published its NEC4 contract for DBO, making it easier. I realise this would be radical... even in UK or Hong Kong, where NEC is standard. And in Australia.....?! ?? Thoughts anyone? Richard
Contractor/Consultant
4 年Hi Owen. I do agree with your posting and certainly the point that PPP's are very good in the right projects and circumstances. I have also found that like all contracts establishing the appropriate responsibilities and accountabilities across all parties is one of the major issues to establish with a PPP. All the best and congratulations. Barry Lovat.