Nine thoughts on differences between Public Procurement and PPPs N0 5

Another difference between Public Procurement and PPPs is that in PPP projects, the private party is not paid by government for work done based on milestones  achieved. This  is often the case with public procurement. In a PPP, the private party at its own expense, using both equity and borrowed funds  undertake construction, maintenance and or operation to provide a given service and earn returns on his investments, either directly as user fees or as unitary payments by government, if government is the one collecting user fees or decides not to collect user fees. Paschal Egwims thoughtful posts moments ago also captures  this fifth difference


2 thoughts on “Nine thoughts on differences between Public Procurement and PPPs N0 5

  1. Though in procurement payments are based on milestones attained.Such milestones normally have timelines.In PPP as well,even though payment arrangements,whether by user fees system or unitary payments,i know there are timelines as well.e.g. in BOT,there is always a time frame to Build,Operate and transfer.So,despite variances,each payment mechanism is time regulated.Please,can you shed more light on this.


  2. Yes. You are right on point. With Public procurement contracts, each milestone typically will have an estimated or in some cases mandatory timeline. Also in PPPs there are timelines for achievement of the different development stages. There may be timelines for achieving financial closure, timeline for achieving construction milestones or outputs, and timelines for commencement of the concession period, this supports specificity in the concession period as determined by many other factors. The difference addressed here is that whilst eg each construction milestone in a typical Public Procurement (PP) contract will attract payment, payment in a PPP arrangement typically comes with provision of service or attainment of specified service standards. However there are a few exceptions eg if to reduce end user fees government has agreed during solicitation to cover part of the cost of construction, such payments may be tied to achievement of specified construction milestones, or upon commencement of provision of service or achievement of other milestones in the form of level or standards of availability of service etc


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