UNIVERSITY OF PARBUBICE
FACUYLT OF ECONOMIC AND ADMINISTRATION
Public–Private Partnership (PPP)
Team project
Prepared by:
Pardubice
, Introduction
Over the last decade or so, private-sector financing through public-private partnerships
has become increasingly popular as a way of procuring and maintaining public-sector
infrastructure, in sectors such as transportation (roads, bridges, tunnels, railways, ports, air-
ports), social infrastructure (hospitals, schools, prisons, social housing), public utilities (water
supply, waste water treatment, waste disposal), government offices and another accommodation,
and other specialized services. The private sector has long provided goods and services to the
public sector. However, a trend seems to be developing in a number of countries, notably the
United Kingdom, towards increasing involvement of the private sector in the provision of goods
and services traditionally provided by, and seen as a function of, the public sector.
The key elements for PPP are:
• A long term contract between the public sector or the client and a private sector party for
the design, financing, construction, operation and maintenance of public capital assets
from the private sector;
• With payment over the life of the PPP contract to the private sector party for the
provision of services and use of the asset, made either by the public party or by the
general public as users of the asset; and
• With the asset reverting to public sector ownership at the end of the contract.
As PPP projects are getting so popular because of municipalities being short of funds in
this paper we will find out about the essence of the PPP, why it is so widely used nowadays and
what are advantages and disadvantages of using PPP, what type of agreements we could interact
with and our findings about the evaluation of NRTS project in United Kingdom.
Public-private partnership
A public–private partnership (PPP) is a government service or private business venture
which is funded and operated through a partnership of government and one or more private
sector companies. These schemes are sometimes referred to as PPP, P3 or P3.
, PPP involves a contract between a public sector authority and a private party, in which
the private party provides a public service or project and assumes substantial financial, technical
and operational risk in the project. In some types of PPP, the cost of using the service is borne
exclusively by the users of the service and not by the taxpayer.
In other types (notably the private finance initiative), capital investment is made by the
private sector on the basis of a contract with government to provide agreed services and the cost
of providing the service is borne wholly or in part by the government. Government contributions
to a PPP may also be in kind (notably the transfer of existing assets). In projects that are aimed at
creating public goods like in the infrastructure sector, the government may provide a capital
subsidy in the form of a one-time grant, so as to make it more attractive to the private investors.
In some other cases, the government may support the project by providing revenue subsidies,
including tax breaks or by removing guaranteed annual revenues for a fixed time period.
Definitions of PPP
There is no one clarified definition of PPP, many authors define PPP different:
• The World Bank: The term “PPP” refers to a number of elements including the
existence of a ‘partnership’ style approach to the provision of infrastructure as opposed to
an arm’s length ‘supplier’ relationship … Either each party takes responsibilities for an
element of the total enterprise and they work together; or both parties take joint
responsibility for each element… A PPP involves a sharing of risk, responsibility and
reward, and value.
• The European Commission: A partnership is an arrangement between two or more
parties who have agreed to work cooperatively toward shared and/or compatible
objectives and in which there is shared authority and responsibility; joint investment of
resources; shared liability or risk taking and ideally mutual benefits.
• Gerrard, 2001 cooperative business ventures built on long-term contracts in which
public services are delivered on the basis of clearly defined public needs.
• Carroll, Steane, 2000 an instrument of modernization and renewal for state intervention
allowing public enterprises to adopt new organizational forms in order to establish
different types of relationships with private sector organizations.
FACUYLT OF ECONOMIC AND ADMINISTRATION
Public–Private Partnership (PPP)
Team project
Prepared by:
Pardubice
, Introduction
Over the last decade or so, private-sector financing through public-private partnerships
has become increasingly popular as a way of procuring and maintaining public-sector
infrastructure, in sectors such as transportation (roads, bridges, tunnels, railways, ports, air-
ports), social infrastructure (hospitals, schools, prisons, social housing), public utilities (water
supply, waste water treatment, waste disposal), government offices and another accommodation,
and other specialized services. The private sector has long provided goods and services to the
public sector. However, a trend seems to be developing in a number of countries, notably the
United Kingdom, towards increasing involvement of the private sector in the provision of goods
and services traditionally provided by, and seen as a function of, the public sector.
The key elements for PPP are:
• A long term contract between the public sector or the client and a private sector party for
the design, financing, construction, operation and maintenance of public capital assets
from the private sector;
• With payment over the life of the PPP contract to the private sector party for the
provision of services and use of the asset, made either by the public party or by the
general public as users of the asset; and
• With the asset reverting to public sector ownership at the end of the contract.
As PPP projects are getting so popular because of municipalities being short of funds in
this paper we will find out about the essence of the PPP, why it is so widely used nowadays and
what are advantages and disadvantages of using PPP, what type of agreements we could interact
with and our findings about the evaluation of NRTS project in United Kingdom.
Public-private partnership
A public–private partnership (PPP) is a government service or private business venture
which is funded and operated through a partnership of government and one or more private
sector companies. These schemes are sometimes referred to as PPP, P3 or P3.
, PPP involves a contract between a public sector authority and a private party, in which
the private party provides a public service or project and assumes substantial financial, technical
and operational risk in the project. In some types of PPP, the cost of using the service is borne
exclusively by the users of the service and not by the taxpayer.
In other types (notably the private finance initiative), capital investment is made by the
private sector on the basis of a contract with government to provide agreed services and the cost
of providing the service is borne wholly or in part by the government. Government contributions
to a PPP may also be in kind (notably the transfer of existing assets). In projects that are aimed at
creating public goods like in the infrastructure sector, the government may provide a capital
subsidy in the form of a one-time grant, so as to make it more attractive to the private investors.
In some other cases, the government may support the project by providing revenue subsidies,
including tax breaks or by removing guaranteed annual revenues for a fixed time period.
Definitions of PPP
There is no one clarified definition of PPP, many authors define PPP different:
• The World Bank: The term “PPP” refers to a number of elements including the
existence of a ‘partnership’ style approach to the provision of infrastructure as opposed to
an arm’s length ‘supplier’ relationship … Either each party takes responsibilities for an
element of the total enterprise and they work together; or both parties take joint
responsibility for each element… A PPP involves a sharing of risk, responsibility and
reward, and value.
• The European Commission: A partnership is an arrangement between two or more
parties who have agreed to work cooperatively toward shared and/or compatible
objectives and in which there is shared authority and responsibility; joint investment of
resources; shared liability or risk taking and ideally mutual benefits.
• Gerrard, 2001 cooperative business ventures built on long-term contracts in which
public services are delivered on the basis of clearly defined public needs.
• Carroll, Steane, 2000 an instrument of modernization and renewal for state intervention
allowing public enterprises to adopt new organizational forms in order to establish
different types of relationships with private sector organizations.
