4.1  Key principles underpinning a successful PPP

PPP contracts are long-term and the relationship between all the parties is critical. Sustaining this relationship depends on the willingness of the parties to cooperate where appropriate to resolve matters. The partnership also depends on creating a genuine, sustainable business opportunity for the private party.

The key principles to be observed throughout the PPP process to create a successful project are:

•  planning and specification. How carefully the requirements of the project are developed before the project is put to the market directly relates to the efficiency of the bid process and the quality of the result. The focus should be on the outcomes that government is looking to achieve and specifying the outputs required to achieve them. This is very important, because how outputs are defined will affect the opportunities of private parties to be innovative in designing their inputs to achieve government service outcomes;

•  project resourcing. Appropriate resourcing is critical to a project's success.  This includes identification and selection of a project team that has the requisite skills and the appointment of specialist advisors where required.  A strong project team is required to ensure the process runs efficiently and without unnecessary cost, in line with the required timelines, to protect the government's interests and to deliver value for money outputs;

•  business opportunity. The commercial structure of the project must provide a viable business opportunity for private parties who are able and willing to manage the opportunities and the risks inherent in providing the required outputs;

•  probity. The process is to be managed according to well-developed probity principles and a probity plan (discussed in more detail in the Practitioners' Guide);

•  invest time in development of the process and tender documents. Sufficient time needs to be invested in developing a well-thought-through process and high-quality tender documents;

•  timeline management. The Tender Process must be carefully managed to ensure adherence as far as possible to agreed timelines. Failure to meet critical dates increases bid process risk and is inefficient for both government and the private sector;

•  certainty of process. The private sector must be provided with a precise description of what is required and the hurdles that need to be cleared if government is to proceed with the project;

•  clarity of communication.  The clarity and effectiveness of communication throughout the process is critical to ensuring a common understanding of the requirements and the maximisation of the opportunity to provide a value for money outcome;

•  maintaining competition in the tender process. The process needs to encourage strong competition between private parties to drive value for money outcomes for government;

•   achieving value for money. Achieving value for money is a key requirement of government and is a combination of the service outcome to be delivered by the private sector and the degree of risk transfer and financial implications for government; 

•  minimising bid costs where practicable. Governments are aware of the need to balance the requirement for a competitive bidding process for PPP projects with the costs of participating in that process. Governments aim to minimise these costs where practicable and the development of these Guidelines is one aspect of streamlining processes;

•  bid evaluation. The evaluation criteria need to clearly articulate the key issues for consideration and the submission requirements need efficiently to request the information that is needed to enable Government to evaluate proposals.  The focus needs to be balanced across all key elements of the project and the financial aspects;

•  recognition of the partnership. This encourages good faith and good will between government and the private party in all dealings; and

•  contract management. The process needs sound contract management arrangements, including early involvement of those responsible for administering the contract.