Better infrastructure procurement for public private partnerships: An Australian perspective

Public private partnerships (PPP) are a method for the delivery of social and economic infrastructure services in over 80 countries worldwide. PPPs are a contractual arrangement between public and private entities through which the skills, assets and/or financial resources of both sectors are allocated in such a manner that provides optimal service delivery and good value to society. Central to the operation of public private partnerships is the systematic evaluation of the procurement options available to government, an output specification to encourage private design, risk transfer, construction and operational innovation, the detailed analysis of projects over their operational lifecycle, a rigorous and competitive bid process, and the selection of proposals that deliver value for money. Unlike traditional procurement, which is predominantly based on lowest cost to government, value for money (VFM) is a measure that takes into account both the quantitative and qualitative outcomes over the term of a contract. This paper is based on a larger study for the Asia Development Bank (ADB) which contained an international survey prepared by the authors. The ADB report reviewed PPP policy and using six case studies as a basis for comparison. Each study considered experience of policy and institutional frameworks, value for money evaluations and infrastructure projects delivered. The Australian case study is included in the paper as an example of good procurement practice.