Partnerships SA opens up a range of options for delivering infrastructure and has some advantages over traditional procurement methods depending upon the particular project. However, it does not suit all needs and other options should be properly considered before a preferred delivery mechanism is recommended.
Consideration of a public private partnership solution will depend principally upon two preconditions, which are:
■ the extent to which outputs may be clearly specified in a service contract and whether there is sufficient operational content in the project to support ongoing provision of services by the private sector; and
■ the extent to which project risks can be efficiently transferred to the private sector, a key element of the options appraisal.
The allocation of risks between the public and private sector will form the backbone of any eventual service contract, so it is crucial that the project team has a clear view of the project's risks as early as possible in the procurement process.
The financial model should provide a summary of the cost of each option expressed as present values. In the majority of cases, the public sector option is a suitable reference point for developing the Public Sector Comparator if a public private partnership is the preferred option.
The effect of the project on forward capital and recurrent expenditure should also be provided as a test of the affordability of the project against current forward expenditure estimates as approved by Cabinet.