There are a number of inherent difficulties in setting up PPPs, which need to be addressed more broadly:
- They may require committing significant resources at the preparation and bidding stage and often involve important transaction costs.
- They require a set of specific skills within the public sector, involving the preparation, conclusion and management of contracts. The range of complex financial arrangements required for PPPs and the relative lack of expertise in such matters may limit the capacity of the public sector to deliver good PPPs. Training and assistance are therefore necessary to accumulate the necessary knowledge for the sound preparation of PPP projects.
- In cases involving Community funding, in the short term Member States may view PPPs unfavourably compared to grant funding for projects procured and implemented through traditional means. The long-term benefits of potentially greater efficiency from private sector participation tend to be forgotten when seen against the more urgent need to meet the requirements of EU procedures. Moreover, a level playing field between public and private management of public infrastructure and services in the allocation of EU funding to investment projects should be guaranteed. To this end, rules and practices should be reviewed in order to ensure that there is no discrimination in the allocation of funds for investments projects in which the private sector participates.
- PPPs require long-term governmental commitment and political will to sharing investment in major projects with the private sector. In particular, the possibility of future changes in policy in various regulatory domains (environment, local authorities' autonomy, fiscal policy, economic policy) may introduce uncertainty into the procurement process and can increase costs.
- Successful PPPs need to be designed to allow private partners the potential to generate a return proportionate to the risks they undertake. Since risks are shared with public partners, returns should also be shared. Bidding processes must be competitive and require an appropriate regulatory and financial framework at national level. Public entities should have flexibility in the types of agreements they can conclude, and retain the possibility to award contracts according to value for money, provided for by the best mix of private and public risk allocation.