Yes, if …

No, if …

Risk Allocation

The project involves risks which the private sector is prepared to take at a value for money price.

The project involves many significant risks which are most efficiently managed collectively (i.e. by government embracing and sharing the risks with the designer, the constructor and/or the operator/maintainer), rather than by allocating them to a particular party.

An 'equity buffer' is attractive due to risk of contractor insolvency or default for which the contractor's liability is limited.

Low risk of contractor insolvency, or default for which the contractor's liability is limited.

Scope

It involves the provision of infrastructure and services which are likely to be required, without substantial change, for the duration of the contract.

The project involves the provision of infrastructure or services which are likely to require change during the term of the contract, and nature and timing of the change can't be predicted and priced upfront.

The cost of the project is sufficient to justify the transaction costs associated with a PPP (e.g. the capital cost exceeds $100 million).

The cost of the project is not sufficient to justify the additional transaction costs of the PPP.

Certainty/ Flexibility

The government wants a high level of certainty regarding the total cost of the project at the time it contractually commits to the project.

The government wants maximum flexibility in relation to the development of the project, as it progresses.

Complexity and Public Interest

The project is complex or unique, and therefore likely to benefit from the additional due diligence which private sector investors and financiers will perform.

The project involves public interest issues, which are best managed by traditional procurement approaches that allow government greater control.