1. Developing a financially resilient public-private partnership framework
Proposal and Analysis of Crowdfunding in Public-Private Partnership Projects

2. Framework of a Typical PPP Project
Public Sector Authority
Public Agent’s Consultants
Advice
PPP Contract
Public Sector
Private Sector
Advice
SPV’s Consultants
Debt Provider
Construction Contractor
Payment
Construction Agreement
Consortium
(Special Purpose Vehicle)
Debt Finance
Construction Investor
Equity Finance
Facilities Management Contract
Investment
Residents/Users
Service
Facilities Management Operator
Facilities Management Investor
Investment Payback
Service Payment
3rd Party Equity Investor
Demand
Operation
Finance

3. A Major Financial Risk in PPP Projects
Unhealthy VfM (Value of Money) in project operating phase
Overestimate of demand evaluation
Over 50% of road projects have forecast error larger than 20%
90% rail projects are overestimated by 106%
Estimations do not become more accurate over time
Risk and loss allocation analysis and research

4. PPP Risk Sharing Principle
Each risk should be allocated to the party best able to manage it and at the least cost.
Risk of lack of demand?
Available Payment (Government bear risk)
Minimum Revenue Guarantee (Joined risk bearing)
Demand could be best managed by the service users and at the least cost.
So, how about using crowdfunding to transfer the demand risk?

5. Features of Crowdfunding
Pros
Fast
Low/Zero Interest
Individual Participations
Accurate & Low-Cost Market Forecast
Cons
Lack of Confidence in project delivery

6. Framework of a Crowdfunded PPP Project
Public Sector Authority
Public Agent’s Consultants
Advice
PPP Contract
Public Sector
Private Sector
SPV’s Consultants & Public Hearing
Advice
Debt Provider
Construction Contractor
Crowdfunding
Payment
Construction Agreement
Consortium
(Special Purpose Vehicle)
Debt Finance
Construction Investor
Equity Finance
Facilities Management Contract
Investment
Residents/Users
Service
Facilities Management Operator
Facilities Management Investor
Investment Payback
Service Payment
3rd Party Equity Investor
Demand
Operation
Finance

7. Advantages of Crowdfunded PPP Project
Healthier cash flow and less debt burden from capital markets
Practical and accurate demand evaluation before the project started
Less burden on risk sharing for all parties in case of insufficient demand
Fostering consumption habits before the project started
Government support for investor’s confidence on the project
Better guaranteed project delivery and operation than average crowdfunded projects

8. Framework of Crowdfunded PPP Projects
Project Planning & Financing
Gathering Crowdfund
Refine Project Details
Market Estimation
Analysis for Crowdfunding Proportion in all Funding Options
Project Construction
Publishing Project Progress
Project Operation
Payback for Crowdfunding investment
Payback Option Analysis

9. Analyzing Parameters and Methodology
Crowdfunding payback model
Stock based or Pre-payment based
Influence on project VfM
Analysis on proper proportion of crowdfunding
Influence on project risk resilience
Risk allocation based on proposed framework
Stochastic simulation modeling
Game theory modeling

10. Thank you!