• The fixed-price turnkey construction contracts used in PPPs appear to be more expensive ex-ante than standard quantities-based contracts - because not only are the contractual arrangements more complex but the contractor is pricing in the risk of cost overruns, and penalties for late completion. The question is whether the additional costs are compensated by savings later, so that the cost is lower ex-post than it would have been under traditional procurement.
• The additional skills and financial resources needed to set up a PPP may restrict the potential bidders, reducing competition and increasing prices.
• Using PPPs to accelerate a large-scale construction programme may, in some cases, create an increased demand for construction work which itself pushes up prices.
• The time taken to set up the contractual arrangements for a PPP, and to reach financial close, may increase the project implementation time.
On costs, the Promoters of two of the projects evaluated in-depth stated that there was no significant cost disadvantage from using the PPP route, and that there may have been cost savings. However, on one particular motorway project, the small number of eligible bidders almost certainly resulted in a bid price which was higher than necessary. Similarly, in one EU member stat, removing the public sector budgetary constraint appears to have led to a road-building boom which resulted in increasing prices.
Referring to a range of previous EIB evaluations, some fifty public infrastructure projects were identified which had used public procurement. On project delays, 60% of projects were more than one year late, which is poor in comparison to the PPPs included in this evaluation. This figure is similar to the finding of an analysis carried out by the National Audit Office of the UK.