According to the Infrastructure Australia bid costs review, the most significant barrier to increased participation in the Australian PPP market is not bid costs but the stop/start nature of the project pipeline and existing and potential market participants' inability to undertake an informed assessment of likely PPP projects. Participants are then reluctant to expand their teams to meet surges in demand for PPP bids because they might not be able to continue to carry the cost of an expanded team. |
| "Overcoming the infrastructure funding challenge is the key to unlocking an improved PPP Pipeline." |
Australian politicians would love to announce an extensive pipeline of projects. However, funding capacity is the constraining factor, as most Australian governments will only commit to a project following the allocation of its full capital costs within the relevant government's budgetary cycle. Accordingly, overcoming the infrastructure funding challenge is the key to unlocking an improved PPP pipeline.
Within the overall pipeline of projects that governments can afford, the PPP pipeline could be improved by ensuring, when the procurement method decision occurs, that the PPP model is adopted for those projects that are best suited to the PPP model.
There is, however, no case for giving preference to PPPs over alternative delivery models. The determination of the optimal delivery model should be unbiased.