2.1.14 Key to ensuring value for money benefits in DBFO projects is an optimal sharing of responsibilities and risks between the public and private sectors. This does not mean all responsibilities and risks should be transferred to the private sector. Indeed, if the private sector is asked to be responsible for activities and risks that it has no control over, it would increase the contract costs to Government, resulting in poorer value for value for both the Government and the private sector.
2.1.15 In a PPP deal, the public and private sectors bring different skill-sets and add value to different business processes. Responsibilities for the various parts of the value-chain must be allocated to the party that can add the most value and continually bring about improvement in the business process. For example, promoting and marketing the use of the facilities, commercialization of the assets, design and construction, may be allocated to the private provider, who generally can perform this part of the value chain more effectively.
2.1.16 Similarly, the guiding principle adopted in identifying and allocating risks is that the party best able to manage a risk should be responsible for that risk and receive the rewards or losses associated with it. The allocation of responsibilities and risks in PPP projects vary depending on the nature and objectives of the project. Please refer to Section 3.7 for more details on risk allocation and management.