How is procurement managed differently for projects under a Public–Private Partnership or PPP?

Video | 6 April 2020

This video outlines some of the benefits of Public-Private Partnerships (PPP) and the typical roles and activities assigned to various sector participants.

Transcript

How is procurement managed differently for projects under a public–private partnership or PPP?

The selection of a private sector partner goes through a similar procurement process, but the criteria used to evaluate proposals may be different depending on the PPP arrangement.

Instead of getting paid for a product or service, the private sector partner is compensated for its performance, so the level of service output needs to be specified.

Like other ADB projects, procurement in a PPP is guided by the core principles of economy, efficiency, fairness, transparency, quality, and value for money.

How does ADB define a PPP?

A PPP represents a long-term arrangement between a public and a private sector entity who agree to allocate manpower, physical, or financial resources in the development, maintenance, or management of a physical asset.

It usually involves a revenue-sharing arrangement wherein the private  sector partner gets a portion of fees collected based on whether it meets the agreed performance and quality standards of the public service being provided.

What are the advantages of a PPP?

Roles and responsibilities are assigned in a PPP, which helps increase efficiency in project delivery and ensures that service quality is improved or maintained.

A public sector company can make up for its lack of financial resources, expertise, or capacity by undertaking a project through a PPP.

In most cases, the private sector partner is responsible for the design, construction, and management of the asset, with oversight provided by the public sector partner.

This Guidance Note applies to the selection of private sector partners for projects financed through ADB’s sovereign lending operations.