3.1  PPP Models

A PPP is a service contract between the public and private sectors where the Government pays the private sector (typically a consortium) to deliver infrastructure and related services over the long term. The private provider will build the facility and operate or maintain it to specified standards over a long period. The private provider usually finances the project.

PPPs typically make the private sector parties who build public infrastructure financially responsible for its condition and performance throughout the asset's lifetime.

In a typical PPP project, the Government -

•  prepares an output-based specification rather than a prescriptive specification;

•  engages a provider to deliver services over a long term, e.g. 20 to 35 years or more;

•  requires the provider to design, finance, construct, maintain and operate the facility. The private party provides ancillary services including cleaning, security, facilities management, catering etc. (or some combination) and takes the risk for those functions;

•  makes no payments to the provider before the facility is commissioned;

•  provides payments over the term of the contract based on services delivered against the achievement of key performance indicators, ensuring the infrastructure is maintained over its lifetime; and

•  eventually takes back ownership of the asset at a specified handover quality/standard.

The government is typically seeking the whole-of-life innovation and efficiencies that the private sector can deliver in the design, construction and operating phases of the project.