In the last twenty years a number of developed and developing countries around the world have used public-private partnerships in a variety of sectors, ranging from transport and utility infrastructures (e.g. bridges, roads), to social infrastructures (e.g. schools, hospitals and prisons).
A public-private partnership (PPP) involves a long-term contract between a public body and a private party for the provision of a public service, or for the development of an infrastructure, where the private party assumes substantial financial, technical and operational risk in the project. Hence public-private partnerships are very different from traditional public-private procurement because they involve not just the provision of an infrastructure, but also its operation, and they lead to some form of sharing of the demand risk between the public procurer and the private provider.
Usually public-private partnerships are undertaken to exploit synergies between the various stages of the provision process, to provide incentives to the private partners to internalise operational and maintenance costs in their investment decisions, and to benefit from private partners’ managerial capabilities and technical and sectoral know-how.
In June 2014, the OECD held a roundtable to examine the major benefits and drawbacks of these type of contracts, the conditions under which they are most effective in delivering value for money, how the award process can be organised to ensure an adequate level of participation by private parties and an effective selection process.
