There are four key steps or stages that need to be considered when structuring any potential PPP agreement.
1 Structuring the development model
Unlike traditional projects, successful PPPs typically involve a greater time in the initial planning and procurement stages. The success of any project will require a clear understanding of the respective roles and responsibilities of each of the multiple parties.
2 Identify specific opportunities
A critical phase for any PPP project requires significant investment of time in opportunity identification and deal structuring. The opportunity identification requires alignment of the strategic objectives of the government (promoting tourism, housing, generating employment, etc.) and the private sector partners (whose objectives are likely to be more commercial in nature).
Once suitable opportunities are identified, the implementation plan needs to be prepared in advance. This will include understanding the commercial terms for the public and private sector, key risks and how to distribute them, as well as project tenure.
3 Select competent partners
PPPs require the selection of partners best suited for the identified opportunity. Competitive bidding and a transparent procurement process are optimal practices to ensure the selection of the best partner for the public sector.
4 Maintain transparent oversight
It is essential for all parties to effectively monitor progress with the project after the signing of the actual agreement. This may require concrete and enforceable clauses to ensure timely delivery of projects. One way of doing this could be through contractual incentives (bonuses) for superior performance or early delivery and corresponding penalties for delays.