In September 2001, the Queensland Government released its policy on public private partnerships, joining governments throughout the nation and around the world in exploring smarter ways to develop and maintain assets which serve the community.
From major transport links to educational facilities, there are constant demands on government to deliver infrastructure which meets the needs of a 21st Century community, focussed on the development of knowledge and wealth through learning, interaction and exchange.
A partnership approach creates the opportunity to apply the respective skills of the public and private sectors to deliver effective infrastructure services in a timely manner, extracting the best possible value for money on behalf of taxpayers.
This guidance material describes the tasks involved in implementing Queensland's public private partnership policy. It sets out a comprehensive framework for analysing and delivering all major infrastructure projects that support the government's strategic objectives. The framework provides for rigorous analysis of the best available infrastructure delivery options through either the public or private sector. It proposes a fair process for applying competitive forces to drive innovation and cost effectiveness.
By applying the approaches within the guidance material, the government can ensure that all opportunities for private sector involvement are appropriately examined. Why should the private sector get involved in public infrastructure? A critical issue in the delivery of infrastructure is the broad range of risks and exposures that government confronts.
Through design, development and a lifetime of operation of infrastructure services, there are a range of 'risk' events that could occur which may add to cost or impede the delivery of public services. The perennial issue for government is how best to prevent these sorts of 'risks' from happening, or if they do happen, how best to manage that eventuality.
If the private sector is better able to manage risks involved in a project, it makes sense for government to utilise those skills. But experience has shown that some risks continue to be best managed by government. By constructing a public private partnership, risks can be allocated to those best able to manage them, rather than expecting the private or public sectors to carry the full exposure by themselves.
The public private partnership approach can thereby help government to contain costs, and help to ensure that the infrastructure underpinning important community services continues to serve its purpose throughout its planned effective life. It enables government to harness the capabilities of the private sector, while maintaining an ongoing control over the performance of infrastructure in meeting community needs.
Public private partnerships encompass a broad spectrum of project delivery options. This policy applies to projects involving design, build and operate; design, build, finance and operate; and equity sharing arrangements. Further, there are numerous variations on these concepts, including build, own, operate and build, own, operate, transfer structures. Queensland's public private partnership policy encompasses the full spectrum of these options.
While this guidance material is applicable to the full range of public private partnership delivery options, it is principally focussed on the privately financed public private partnership model that entails equity risk transfer. This option incorporates the options termed 'design, build, finance and operate' and 'project finance initiative' (named after the UK approach) type transaction. The privately financed public private partnership delivery model represents what is likely to be the most variant from traditional procurement. Some of the principles and positions presented will not be applicable to all public private partnership delivery options and only those that are relevant to the specific option being proposed should be utilised.
After identifying the service requirements of the project, this guidance material focuses on exploring the range of delivery options to determine which mechanism or combination of mechanisms will deliver value for money for government. This analysis will range from the traditional options available to government (agency delivery and management, through D&C or government owned corporation delivery) through the range of public private partnership delivery options that are available.
Many of the project structures within this spectrum are not new to Queensland. This guidance material builds upon that history to present a coherent process for engaging the private sector in infrastructure delivery, the application of which will be consistent across government.
In dealing with large and costly infrastructure services, responsible government requires careful assessment of the delivery options which can offer the best value for money - meeting the service requirement in the most cost effective way. A public private partnership may not always be the answer, so it is important to closely investigate the technical and policy issues, the costs and the risks involved before choosing a delivery approach.
This guidance material aims to guide government and private sector personnel on the process and issues they are likely to confront in analysing and developing major infrastructure proposals, and where appropriate, delivering public private partnerships. It is not a 'how to' manual. Circumstances differ widely between each infrastructure proposal, and specialist expertise is required to ensure the analysis is comprehensive. Rather, the purpose of this guidance material is to give people a working knowledge of the methods and issues that arise in infrastructure analysis, so they are better placed to interpret and analyse technical and specialist advice.