Emerging countries are increasingly using Public-Private Partnerships (PPPs) to fund infrastructure projects, but there are several challenges with using such systems which could be rectified by a strong framework for preparing PPPs.
The Boston Consulting Group has released a report on the rising prominence of PPPs as emerging countries look to the private sector to fund development. Constrained by tight budgets, governments today are increasingly looking for private-sector support in financing and delivering new bridges, airports, and electricity grids, which are critical drivers of a country’s economic prospects and social well-being.
Although there are many advantages of using such partnerships, many projects are failing or struggling to get off the ground as a result of ill-suited preparations, which is something the report is looking to render. Four best-practice areas have been put under scrutiny in addressing the most commonly raised issues with PPPs: managing a rigorous project-preparation process; conducting a bankable feasibility study; structuring a balanced risk allocation and regulation; and creating a conducive enabling environment.
For each of these areas there are six specific success factors that have been identified in the report, covering topics from political leadership buy-in to project preparation funding. Getting it right certainly isn’t a simple endeavour and can also incur significant costs. However, as the report notes: “You end up paying even more if you don’t do it properly. Under Preparation is going to cause delays, cost overruns, or renegotiations further down the line.”
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