Chapter Summary ◆ The efficiency gains in P3 procurements can come from up to four key sources. ◆ Performance-based contracts, which specify deliverables in terms of the outputs, can encourage innovation when contractors have discretion over how they deliver the outcomes. ◆ Most of the efficiency gains in a P3 procurement rest on a cost-effective allocation of risks between the public and private partners, if the private partner assumes the risks that it can manage at lower cost. ◆ A whole-life approach to the procurement of public infrastructure assets can also generate efficiency gains. ◆ Private financing in a P3 project is the glue that binds together the other efficiency drivers, notably the transfer of risks to private sector partners and performance-based contracts. |
This chapter reviews the four key sources of efficiency gains that can arise in P3 procurements, depending on whether the transactions are designed to incorporate the relevant provisions.