Broadly speaking, Western governments are advanced in the design and delivery methods of PPP as a viable, alternative form of procurement, thought to be suitable for a range of large-scale infrastructure projects. Whilst advanced in the early phases of the project lifecycle, most Australian state governments (since PPPs tend to be secured at state, rather than at federal level in Australia), as with many other governments around the world, are still developing effective approaches to achieving VfM outcomes during the operational phase of PPPs. To date, this has proved difficult because of the long-term nature of these arrangements (typically lasting upwards of 20 years) and the fact that few contracts have yet reached maturity in terms of the original concession period.
To achieve VfM outcomes during operational phase, PPP contract oversight (governance) must be prudently managed by the public partner. Although it is the responsibility of the private partner to deliver agreed service(s), the public partner is ultimately responsible for ensuring that these services are actually carried out and that they (at least) meet minimum standards. As no contract will cover every eventuality of something going wrong, effective ongoing partnership relations between the public and private partners are important for dealing with unforeseen issues as and when they arise.
Other types of uncertainty are inherent in PPP. Uncertainty is associated with risk. For the public partner, one of the main benefits sought from PPP is risk transfer - or more explicit allocation of risks between the public and private partners; however, not all risks can be transferred during operations. Therefore, governments should accept and manage their risk positions. PPP are also expected to deliver real benefits to communities throughout their operational performance. The public partner should be pro-active in taking necessary and timely corrective action to encourage better operator (private partner) performance when necessary to ensure that planned social outcomes are achieved in practice. The active management of partnership, risk and performance by the public partner during the operational phase of PPPs is thus important.