A public-private partnership is defined as:
"… a contractual agreement formed between public and private sector partners, which allows more private sector participation than is traditional. The agreements usually involve a government agency contracting with a private company to renovate, construct, operate, maintain, and/or manage a facility or system. While the public sector usually retains ownership in the facility or system, the private party will be given additional decision rights in determining how the project or task will be completed." 2
PPP projects can involve a wide range of responsibilities and risks for the public and private sector partners. The nature and extent of private sector involvement in PPP projects can range from Management-Support Contracts to outright Asset Sales, with the private sector taking increasing responsibility for various functions comprising the infrastructure asset life-cycle: Manage - Design - Build - Operate - Maintain - Finance - Own. What distinguishes PPPs from traditional contract approaches to infrastructure development (such as Design-Bid-Build (DBB) project delivery and Pay-As-You-Go public sector financing) is the greater responsibility and risk taken by the private sector partners in return for an adequate return on their investment in the project or coverage of their costs. Several types of PPP projects involve the use of private financing. Others involve the private sector partners assuming greater responsibilities and risks for project/service delivery.
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2 Report to Congress on Public-Private Partnerships. United States Department of Transportation, Federal Highway Administration, Washington, D.C. December 2004.