Benefit-Cost Ratio (BCR) - is an indicator, used in the formal discipline of cost-benefit analysis attempts to summarize the overall value for money of a project or proposal. A BCR is the ratio of the benefits of a project or proposal, expressed in monetary terms, relative to its costs, also expressed in monetary terms. All benefits and costs should be expressed in discounted present values
BOT Contractual Arrangements - refers to any of the following contractual arrangements or schemes, as well as other variations thereof, as may be approved by the President, by which infrastructure and/or development projects may be undertaken pursuant to the provisions of the Republic Act 7718 (The Philippine BOT Law) and its Implementing Rules and Regulations:
i. Build-and-Transfer (BT) scheme - a contractual arrangement whereby the project proponent undertakes the financing and construction of a given infrastructure or development facility and after its completion turns it over to the implementing agency (IA) or local government unit (LGU) concerned, which shall pay the proponent on an agreed schedule its total investments expended on the project, plus a reasonable rate of return thereon
ii. Build-Lease-and-Transfer (BLT) scheme - a contractual arrangement whereby the project proponent is authorized to finance and construct an infrastructure or development facility and upon its completion turns it over to the implementing agency (IA) or local government unit (LGU) concerned on a lease arrangement for a fixed period after which ownership of the facility is automatically transferred to the IA or LGU concerned
iii. Build-Operate-and-Transfer (BOT) scheme - a contractual arrangement whereby the project proponent undertakes the construction, including financing, of a given infrastructure facility (previously undertaken by the government) and its operation and maintenance. The project proponent operates the facility over a fixed term during which it is allowed to charge users appropriate tolls, fees rentals and other charges not exceeding those proposed in its bids or as negotiated and incorporated in the contract to enable it to recover its investment, and operating and maintenance expenses. At the end of the fixed term, the proponent transfers the facility to the government agency concerned.
iv. Build-Own-and-Operate (BOO) scheme - a contractual arrangement whereby the project proponent is authorized to finance, construct, own, operate and maintain an infrastructure or devel¬opment facility from which the proponent is allowed to recover its total investment, operating and maintenance costs plus a reasonable return thereon by collecting tolls, rentals or other charges from facility users
v. Build-Transfer-and-Operate (BTO) scheme - a contractual arrangement whereby public sector contracts out the building of an infra¬structure facility to a private entity such that the con¬tractor builds the facility on a turn-key basis, assuming cost overrun, delay and specified performance risks
vi. Contract-Add-and-Operate (CAO) scheme - a contractual arrangement whereby project proponent adds to an existing infrastructure facility which it is renting from the government; and Project proponent operates the expanded project over an agreed franchise period
vii. Develop-Operate-and-Transfer (DOT) scheme - a contractual arrangement whereby favorable conditions exter¬nal to a new infrastructure project which is to be built by a private project propo¬nent are integrated into the arrangement by giving that entity the right to develop adjoining property, and thus enjoy some of the benefits the investment creates such as higher property or rent values
viii. Rehabilitate-Operate-and-Transfer (ROT) scheme - a contractual arrangement whereby an existing facility is turned over to the private sector to refurbish, operate and maintain for a franchise pe¬riod, at the expiry of which the legal title to the facility is turned over to the government
ix. Rehabilitate-Own-and-Operate (ROO) scheme - a contractual arrangement whereby an existing facility is turned over to the private sector to refurbish and operate with no time limitation imposed on ownership
Cash Flow - a financial statement showing the cash generated and disbursed by a project. Net cash flow is reported profit plus (i) depreciation, (ii) depletion and capital expenditures, and (iii) amortization. This is a measure of the company's liquidity, and alternatively can be looked at as consisting of net income (earnings) plus noncash expenditures (such as depreciation charges)
Comparative Proposal - this refers to a proposal that is competitive or at par with the unsolicited proposal. A comparative proposal can challenge the project cost of the unsolicited proposal of the original proponent to ensure efficiency
Concession - an arrangement whereby a private entity (concessionaire) is made responsible not only for the management, operation and maintenance of asset of an implementing agency or local government unit, but also for further fixed investments
Debt Service Coverage Ratio (DSCR) - also known as "debt coverage ratio," is the ratio of cash available for debt servicing to interest, principal and lease payments. It is a popular benchmark used in the measurement of an entity's (person or corporation) ability to produce enough cash to cover its debt (including lease) payments. The higher this ratio is, the easier it is to obtain a loan
Demand for Social Services - the demand for social services is a special case of consumer demand where services have no market price, where needs are virtually unlimited, and where instead of consumer incomes, the limiting factor is government's ability to pay
Economic Analysis - this analysis provides a methodological framework for estimating economic benefits and costs
Economic Internal Rate of Return (EIRR) - the rate at which the present value of the net economic benefits from a project over a specific period of operation equals the economic project costs. The project's EIRR is generally compared with a hurdle rate as a consideration to continue developing and/or implementing the project
Environmental risks - actual or potential threat of adverse effects on living organisms and environment by effluents, emissions, wastes, resource depletion, etc., arising out of an organization's activities
Feasibility Study - a comprehensive approach to establish a project's viability as a PPP undertaking; under a full FS structure, LGUs would have to thoroughly review six functional areas of analysis, namely: market (demand-and-supply), technical, financial, economic, operational/institutional, and environmental and social assessment
Financial Analysis - this analysis focuses on determining whether a project is financially viable and attractive to investors. It determines a project's financial sustainability and overall success
Financial Internal Rate of Return - the rate at which the net cash inflows of a project are discounted so that their total net present value is equal to the total project cost. A project's FIRR is generally compared with a hurdle rate, sometimes determined as the long term cost of capital, as a consideration to continue pursuing the project
Force Majeure - These are risks that are widely varied but can either be man-made (i.e. civil wars, revolutions, etc.) or naturally occurring (i.e. natural calamities such as earthquakes, climactic events, etc.) which cannot be reasonably covered by insurance mechanisms. These risks disrupt, delay or may render the PPP project impracticable
Gender-Responsiveness Analysis - describes the effect of the project to women and men and assess if the project confers high priority on gender equality goals
Gender-sensitive - gender sensitivity is the act of being sensitive to the ways people think about gender, so that people rely less on assumptions about traditional and outdated views on the roles of men and women. In language and the humanities, gender sensitivity often gets expressed through people's language choice. People can choose more inclusive language that doesn't define gender, and many new words that are gender neutral have entered languages like English to substitute for more gender specific terms
Implementing Rules and Regulations - shall mean the Implementing Rules and Regulations of Republic Act No. 6957, as amended by Republic Act No. 7718
Investment Coordination Committee (ICC) - an inter-agency committee of the NEDA Board tasked to: a) review the fiscal, monetary and BOP implications of major capital projects (MCPs) and recommend to the President the timetable of the implementation of these projects and programs on a regular basis; b) submit to the President a status of the fiscal (budgetary), monetary (credit and BOP) implications of MCPs; and c) review/evaluate specific MCPs with respect to technical, financial, economic, social, and institutional development, feasibility, viability as well as from the context of sectoral plans and geographical strategies, and submit to the NEDA Board (NB) for confirmation of ICC action
Joint Venture (JV) - a contractual arrangement whereby a private sector entity or a group of private sector entities on one hand, and a government entity or a group of government ent¬ities on the other hand, contribute money/capital, services, assets (including equipment, land or intel-lectual property), or a com¬bination of any or all of the foregoing
Lease or Affermage - an arrangement which does not require private proponent or operator to make any large investment in the operation and maintenance of an infrastructure, facility or services
Local Development Council - a council in the LGU who is tasked to a) review the acceptability of proposed LGU PPP projects and provide comments for the enhancement of the project proposal; b) approve the project proposal and endorses it to the Sanggunian; c) review existing policies affecting implementation of PPP projects and proposes amendments to the Sangguian if needed; and d) propose new policies to the Sanggunian which support PPP implementation
Local Sanggunian - a council in the LGU which is tasked to: a) approves the proposed LGU PPP project; and b) authorize the LCE to enter into agreement with the private investor
Management or Operation and Maintenance (O&M) Contract - a contractual agreement whereby private sector manages, for a fee, a part or whole of a public enterprise
Market/Demand Analysis - this analysis deals with the demand and markets for the project's outputs, their current and expected prices, and the impact of any government policies on these outputs
Negotiated Contract - a contract based either on direct negotiation (based on the process for solicited proposals) or the unsolicited proposal itself
Net Present Value - the difference between the net cost inflows of a project discounted at a given rate less the cost of the project. The decision rate for the NPV criterion is to accept projects with NPV greater than or equal to zero
Organization/Institutional Analysis - this analysis is undertaken to ascertain whether a project's proponents have the required mandate and human resources with sufficient ability and experience to implement the planned project
Original Project Proponent - the bidder that submitted a complete proposal which is not included in the list of priority projects but with a potential to introduce new concept and/or technology that contributes to the achievement of the development agenda of the LGU concerned
Pre-Feasibility Study - a simplified version of the full-scale feasibility analysis. The contents of a pre-F/S are the following: market (demand-and-supply), technical, financial, economic, and environmental and social assessment. Should the pre-F/S indicate significant bearing on the project, a full-scale feasibility study (F/S) is undertaken by the LGU
Prequalification, Bids and Awards Committee (PBAC) - as per the RA 6957, as amended by RA 7718 - IRR, a committee which is responsible for all aspects of the pre-bidding and bidding process in the case of solicited proposals, and for the comparative bidding process in the case of unsolicited proposals
Project Appraisal -is a generic term that refers to the process of assessing, in a structured way, the case for proceeding with a project or proposal. In short, project appraisal is the effort of calculating a project's viability[1]. It often involves comparing various options, using economic appraisal or some other decision analysis technique
Project Economics - this pertains to project-specific risks primarily affecting profitability, such as the ability of the income stream, including tariffs, to cover costs and a reasonable return. Profitability is measured by the Financial Internal Rate of Return (FIRR)
Project Proponent - refers to the private sector entity with contracted responsibility for the project and which has an adequate base to implement said project consisting of equity and firm commitments from reputable financial institutions to provide, upon award, sufficient credit lines to cover the total estimated project cost
Public-Private Partnership - a contractual agreement between a government and a private firm, towards financing, designing, implementing and operating infrastructure facilities and services traditionally provided by the public sector
Republic Act 6957 - an act authorizing the financing, construction, operation and maintenance of infrastructure projects by the private sector and for other purposes
Republic Act of 7718 - an act amending certain sections of Republic Act 6957, entitled "an act authorizing the financing, construction, operation and maintenance of infrastructure projects by the private sector, and for other purposes
Results Framework - a diagram showing the casual relationships of the different hierarchies of objectives; it is a planning, management, monitoring and communication tool for the project
Risk - this refers to the "quantifiable likelihood of loss or less than expected returns" in investment
Risk Allocation or Risk Mitigation - this is the process of mitigating risks embedded in PPP projects by formulating strategic policies or making policy adjustments for the benefit of the private sector partners in the PPP engagement. The aim of risk allocation or mitigation is to alleviate high project risks on the side of the private sector partners, which would otherwise be 'passed on' to service users through high costs
Social Impact Assessment - this analysis identifies a project's impact on different project participants and attempts to improve project design and effectiveness through an analysis of the project's social impact on targeted beneficiaries
Solicited Proposals - these are projects identified in the (Regional Development Investment Plan (RDIP)/ Provincial Development Investment Plan (PDIP)/ Local Development Investment Plan (LDIP) for regional, provincial, and local projects. These entail public or competitive bidding as the default mechanism of the local government to enter into a working collaboration with the private sector in implementing major infrastructure and development projects at the local level
Swiss Challenge - of public procurement in some (usually lesser developed) jurisdictions which requires a public authority (usually an agency of government) which has received an unsolicited bid for a public project (such as a port, road or railway) or services to be provided to government, to publish the bid and invite third parties to match or exceed it. It's an offer made by the original proponent to the government ensuring his process to be best by his initiative (as a result of his own innovative approach) or on the demand of the government to perform certain task
Technical Note - provides a detailed yet simple and comprehensive yet straightforward discussion on the different aspects of feasibility and viability. The intention is to enable the local government personnel who are involved in project development to understand these different areas for feasibility analysis and apply them to justify their project ideas or proposals
Terms of Reference (TOR) - terms of reference show how the scope will be defined, developed, and verified. They should also provide a documented basis for making future decisions and for confirming or developing a common understanding of the scope among stakeholders
Unsolicited Proposal - refer to project proposals submitted by the private sector, not in response to a formal solicitation or request issued by the LGU, to undertake infrastructure or development projects. This type of proposal is the perspective of the private sector and how its addresses a development gap or prevailing issue in the LGU Rate of Return - rate of return (ROR), also known as return on investment (ROI), rate of profit or sometimes just return, is the ratio of money gained or lost (whether realized or unrealized) on an investment relative to the amount of money invested
Weighted Average Cost of Capital - a benchmark used to evaluate the profitability of the proposed investment against alternative investment opportunities