Current Public Administration Magazine (October-2017) Different Types of Public Private Partnerships

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Public Private Partnerships

Different Types of Public Private Partnerships

Public private partnerships or P3s can best be described as the future of infrastructure projects. Viable alternatives for promoting better infrastructures using just a small amount of money from local governments were sought and studied during the construction crisis. Public private partnerships can provide a solution to problems of financing, job completion, and investing in large projects without sacrificing government finances.

There are several types of public private partnerships. They depend on the needs, the options available, and the size of the project being considered. Power generator projects and infrastructure projects appear to be options that are best suited to public private partnerships.

Operation and Maintenance P3s

The private component of the partnership operates and maintains installation of the project, while the public agency acts as the owner of the project.

Traditional P3s

The public component of the partnership acts as a contracting officer. It looks for funding and has overall control of the project and its assets.

Design-Build P3s

The private partner designs and builds the facility while the public partner provides the funds for the project. The public partner has control over possession of the project and assets generated.

Design-Build-Operate P3s

The private partner designs, builds, and operates the facility or project. The public partner acts as the owner of the installation and gets the funds for construction and operation.

Design-Build-Operate-Transfer P3s

The private partner designs, builds, and operates the project for a limited time, then the facility is transferred to the public partner.

Design-Build-Finance-Operate P3s

The private sector provides financing and design, then builds, possesses, and operates the project. The public partner only provides funding while the project is being used or is active.

Build-Transfer-Operate P3s

The private partner builds and transfers the project to the corresponding public partner. The public partner then leases operation of the facility to the private sector under a long-term lease agreement.

Build-Own-Operate-Transfer P3s

The public partner builds, possesses and operates the project for a limited time until the installation is transferred, free of charge and including ownership, to the public agency.

Build-Own-Operate P3s

The private sector must build, possess, and operate the facility and has control over profits and losses generated by the facility through time. This is similar to a privatization process.

Lease P3s

The public owner leases the facility to a private firm. The private company must operate and provide maintenance for the facility per specified terms, including additions or a remodeling process.

Concession P3s

The public agency partners with a private company, conceding all exclusive rights to operate and maintain the facility for a specific period of time under certain contract terms. The public partner has power over the ownership, but the private partner possesses owner rights over any addition incurred while it's being operated under its domain.

Divestiture P3s

The public partner makes a complete or partial transference of the installation to the private sector. The government might include specific clauses in the sales agreement requiring investment and modernizations of the facility and a continuation of the services being provided.

The World is Moving into P3

With limited funding and increasing constraints, many government agencies are looking into different models of P3s as a way of maintaining updated infrastructures without having to make large investments. These type of projects can be very useful, but their costs must be closely controlled to make them cost-effective solutions.

Source – The Balance

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