Traditional Model

AFP Model

The public sector makes progress payments throughout construction. The public sector incurs an opportunity cost for having paid earlier (payments through the construction period) than under AFP delivery.

Either the government makes one lump sum payment after construction or makes a series of regular unitary payments to pay for the project, starting at substantial completion and stretching over the post-construction term of the agreement. In either case the private party borrows at private financing rates to pay for the project costs until repaid by the public sector.