Ppp Models

PPP Models

The PPP models vary from short-term simple management contracts (with or without investment requirements) to long-term and very complex BOT form, to divestiture. These models vary mainly by: − − − − Ownership of capital assets Responsibility for investment Assumption of risks, and Duration of contract.

The PPP models can be classified into four broad categories in order of generally (but not always) increased involvement and assumption of risks by the private sector. The four broad categorisations of participation are: − − − − − Supply and management contracts Turnkey projects Lease Concessions Private ownership of assets.

Management Contracts : A management contract is a contractual arrangement for the management of a part or whole of a public enterprise by the private sector. Management contracts allow private sector skills to be brought into service design and delivery, operational control, labour management and equipment procurement. However, the public sector retains the ownership of facility and equipment. The private sector is provided specified responsibilities concerning a service and is generally not asked to assume commercial risk. The private contractor is paid a fee to manage and operate services. Normally, payment of such fees is performance-based. Usually, the contract period is short, typically two to five years. But longer period may be used for large and complex operational facilities such as a port or airport. There are several variants under the management contract including: − − − Supply or service contract Maintenance management Operational management

Supply or service contract : Supply of equipment, raw materials, energy and power, and labour are typical examples of supply or service contract. A private concessionaire can itself enter into a number of supply or service contracts with other entities/ providers for the supply of equipment, materials, power and energy, and labour. Non-core activities of an organization...