Presentation on theme: "Structure of Project in PPP- (2) John Plumb. Agenda Following on from the Strategy and business case to develop the ideas Structure of PPP arrangements."— Presentation transcript:
Structure of Arrangements Conventional/Traditional Public Private Partnership Benefit of PPP if Value for Money can be demonstrated Effective Risk Transfer
Structure of Packages Vehicles Infrastructure – Performance based Operations – Franchise Partnerships, –competition, –value for money, and –fixed prices Risk management/transfer
Project Structure Traditional front end funding by Government of public works public funding through Grant and Credit Finance detailed specification requirement separate publicly controlled operations management Minimise the operating cost subsidy allowed
PPP a long term service contract between a public sector body and a private sector operator no upfront public funding of capital investment transfer of construction risk and other risks to the private sector availability and performance payments to cover debt burden, operations and maintenance costs, by affordable annual payments farebox or demand risk taken by the concessionaire, more recently variants have included guaranteed levels and formula based compensation according to the fare price control regime an off balance sheet treatment so that investment does not count against borrowing consents
Design, Build, Operate and Maintain (DBOM) procurement of the infrastructure payments are made for availability of the network and facilities with perhaps little or no performance related payments additional amounts may be payable to reflect increased volume usage and the burden on maintenance costs
Design Build Finance & Operate DBFO procurement of the infrastructure by Design Build Finance and Operate receive payments for availability with performance related element
Franchising output specified operating services are becoming time- limited under changing EU regulations offers scope for agreeing ridership and usage incentive levels in early period of the franchise and allow real investment returns for the operator within the timeframe of the contract typical franchise period is likely to be 5-10 years
Leasing particularly applicable to the vehicles where sources such as Railway Rolling Stock companies exist. historically the capital cost of equipment provided under lease arrangements counted against PSBR, under operational leases off balance sheet deals have been created.
PLANNING/ BUSINESS CASE Powers DESIGN/SPECIFY/ PROCURE CONSTRUCT/ BUILD OPERATE & MAINTAIN FRANCHISE / OPERATE BUILDDESIGN/ SPECIFY PLAN TRANSFER/ MAINTAIN Scheme development & Operation Procure Advisers, Partners and Operators to
What do we need to know? Our Business Case –Benefits and Risks, –Constraints and interfaces What we need –Finance, skills and resources What they manage better –Risks, in construction, operations, maintenance? What do you think the private sector want from this opportunity?