A new classification model will need to focus on the most important issues in PPP projects: existing business risks, construction obligations, the need to arrange private financing, to whom the services are delivered and source of the project revenue stream; while avoiding the sometimes popular, but less important, issues. By focusing on these key issues, the classification model permits a comparison of projects across regions and sectors by identifying their key characteristics and classifying them accordingly. It allows the communication of these key issues in a coordinated manner, facilitating analysis, and comparing and contrasting different PPP models. The name given to a project thereby communicates a wealth of key information. This represents a significant change from the current terminology which, by using a limited number of terms interchangeably, creates confusion.
The classification model (Figure 2) has been kept as simple as possible to facilitate its use. While not exhaustive, it identifies the key PPP issues, providing a platform for more in-depth analysis and in particular comparison of similar structures in different sectors or regions where terminology might otherwise hinder such assessment.
Figure 2: The Classification Model
Business | Construction Obligations | Private Funding | Service Delivery | Source of Revenues |
The classification model addresses five key parameters that may or may not be relevant to any given PPP project. These parameters identify the most fundamental characteristics of a PPP project. These issues are discussed in more detail in sections 2-6 below.