You are on page 1of 7

1st CHAPTER

Definition of PPP
A PPP is a government service or private business venture which is functioned and operated
through a partnership of government and one or more private sector companies.
Or,
Public Private Partnership is a contractual agreement between public and private sectors partners
covering a variety of activities.
Importance of PPP
1.
2.
3.
4.
5.
6.

The implementation of high priority projects can be accelerated.


Through PPP projects the private sectors can provide specialized management capacity.
Enabling the delivery of new technology.
PPP allows the reduction in the size of public agency.
Costs savings
Substitution of private resources and personnel for constrained public resources.

Benefits:
Public sector benefits:
1. Maintaining economic stability.
2. Gains from private sector innovation and expertise.
3. Achieving desired growth rate.
Private sector benefits:
1. Expansion of business
2. Innovation
Public/User benefits:
1. Accountability
2. More responsive government
3. Guarantee of safety
Why government promotes PPP?
1.
2.
3.
4.

To attract private capital investment.


To increase efficiency and use available resources more effectively.
To reform sectors through reallocation of roles, incentives and accountability.
Improved asset maintenance.

Types of PPP

1.
2.
3.
4.
5.
6.
7.
8.
9.

Built operate transfer (BOT)


Built own operate transfer (BOOT)
Buy built operate
Contract services
Design built
Design built operate
Lease/Purchase
Lease develop operate
Concession agreement
END OF 1 ST CHAPTER

2nd CHAPTER
Sectors of PPP in Bangladesh
1.
2.
3.
4.
5.
6.

Health sector
Education
Infrastructure
ICT
Industry
Tourism

Public sector partner


1. National government
2. District administration
3. Municipal authorities
4. Local government bodies
5. State universities and research organization
Private sector partner
1.
2.
3.
4.
5.
6.
7.

Commercial profit enterprise


NGO
Community based organization
Religious organization
Professional organization
Trade union
Households

Judging effective partnership


1. Universality
2. Equity

3. Efficiency
4. Accountability
Spectrum of relationship in PPP
1.
2.
3.
4.
5.

Parallel activities
Competitive activities
Complementary activities
Contractual services
Cooperation and collaboration

Six critical components for any successful PPP project


1.
2.
3.
4.
5.
6.

Political leadership
Public sector involvement
Well thought out plan
A dedicated income string
Communication with stakeholders
Selecting the right partner

For ensuring successful PPP project in Bangladesh


Political commitment:
1.
2.
3.
4.
5.

Policy statement
PPP unit
Presence of focal ministry
Development of a PPP program
Integrate with planning

Regulatory reforms:
1. Sectoral policy
Limitation of PPP
1.
2.
3.
4.
5.
6.
7.

Corruption
Politicization
Environmental hazards
Accountability transparency
Higher price
Overlapping
Contractual policy

Principles of managing PPP


1. The commitment principle
2. The success principle

3.
4.
5.
6.
7.

The strategy principle


The management principle
The single point responsibility principle
The cultural environment principle
The triad of principle

Developing a check list to match opportunity with PPP option


Politics

Law & Institution

1. Ownership
2. Potential political
deal breakers

Economic & Finance

1. Laws &
Regulations
2. Document &
methodology
3. Internal
organization
4. Transparency &
accountability

1. Business case
2. Fiscal issues
3. Financing

Execution
1. Internal &
external
capability for
implementation
2. Procurement
3. Contract
management

END OF 2ndCHAPTER
3rd CHAPTER
Procurement process
Definition of Procurement:
Procurement is the act of delivering goods or services from external sources to others.
Three types of procurement:
1st method: Direct negotiation:
Direct negotiation is an exclusive negotiation between a public agency and private agency which
is committed by a direct source, single individual or not a competitive way.
2nd method: Competitive negotiation
In a competitive negotiation, at first approximately a number of ten bidders are selected, then
invitation paper is sent to them for the negotiation.
Process of competitive negotiation
1. Request proposal

2. Review the proposal


3. Negotiates contact terms & conditions
4. Select a bidder
Advantages of competitive negotiation
1. Bidders are creative and innovative
2. Reduce the incentives for bidders
Disadvantages of competitive negotiation
1. Difficult to compare
2. Competition is less transparent
3rd Method: Competitive bidding
Competitive bidding is the most useful and attractive method of selecting bidders in the
procurement process.
Process of Competitive bidding
1.
2.
3.
4.
5.

Public notification of tender


Contracting or marketing to potential bidder
Pre-selection
Tendering
Transition

Request for proposal (RFP)


Public organizations give finances and other organizations will implement the projects.
Request for quotation (RFQ)
Public organizations implement the projects and other organizations will give finances.
END OF 3rd CHAPTER

4th CHAPTER
Risk management in PPP
Definition of Risk:
Risk is the probability of loss. It is the size of the possible damage.
Definition of Risk management

Risk management is the process of identifying, analyzing and addressing significant risk on an
ongoing basis.
Risk analysis:
Risks should have been identified and analyzed at the pre-feasibility stage using the suitability
filter. The risk analysis should include an assessment of which party, public or private, is best
able to bear the risk.
Risk allocation:
Risks are typically allocated to the party that can most efficiently manage them at the lower cost.
In PPP arrangements, the public sector transfers risks to the private sector for more efficient
management.
Types of risk:
1. Retain risk- the risk that will be retained by the public sponsor
2. Transferable risk- the risk that will be transferred to the private partners
3. Shared risk- the risk that will be borne by both parties
Risk identification/ sequential steps
1.
2.
3.
4.
5.
6.
7.

Establish the context


Identifying the risk
Analyzing the risk
Evaluating the risk
Developing the risk mitigation strategy
Monitoring and implementation of the risk mitigation strategy
Consulting and communicating the risk with management

Risk register
A risk register is a written log which helps the project team to understand the nature of the risks
involved in a particular project.
Financing of PPP
Sources of Private finance initiative
1.
2.
3.
4.
5.
6.
7.

Commercial bank
Capital market / Bondholders
Equity fund
Collateral
Compensation of project company
Buying a service not an asset
Performance related rewards

Sources of public financing


1. Government support
2. Development finance institution (DFI)
3. Multilateral Development Bank
4. World bank
5. African development bank
6. Asian development bank
7. The European bank for reconstruction and

development
8. The inter American development bank
End of 4th chapter

You might also like