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Governance

Government must be held to the highest governance standards for the design, implementation and outcomes of PPPs. Done well, this results in bettter outcomes, alignment of programs with policy needs and greater legitimacy of PPP programs. There are various ways to achieve this.

  • Disclosing information on PPP projects and programs
  • Providing an appropriate role for legislative bodies
  • Strengthening auditing institutions
  • Engaging citizens

Disclosing information on PPP projects and programs

Transparency in and of itself is an important principle of governance—timely access to information is at the core of well-functioning accountability mechanisms. Recognizing this, there is increasing trend towards increased transparency in government contracting, with governments disclosing information on PPP projects and contracts. Many governments post this information in the public domain to make it freely accessible to anyone who is interested. This is known as proactive disclosure. Techniques include creating an online project database with key pieces of contract information, or an online library of PPP contracts, often with accompanying project summaries. Other countries provide reactive disclosure—that is, make information available only in response to a specific request by a member of the public. When contracts are disclosed, some countries redact information regarded as commercially sensitive.

Disclosing PPP contracts may not be enough for the public to understand them given they are long and complex documents—some additional information on the projects, and a plain-language description of the main contract provisions, is useful.

Some governments release information on the status of a project during preparation, so that both potential investors and stakeholders are aware of its progress.

Some governments have started the use of e-procurement portals for procurement of PPPs, so that key procurement and bid process documents are in the public domain.

There are a few studies that show whether increased transparency has an effect on project performance, and whether the direct involvement of civil society is a more effective oversight mechanism than a routine technical audit.

Providing an appropriate role for legislative bodies

The legislative branch of government often defines the PPP framework, by passing PPP legislation. In some cases, the legislature may be directly involved in the PPP process, approving PPP projects. More commonly, it exercises ex-post oversight, scrutinizing reports on the government’s PPP commitments.

The legislative branch of government engages in the PPP process by:

  • Defining the PPP framework: the PPP Framework is often established in specific PPP legislation. A PPP law enables the legislative branch of government to set rules for how PPPs will be developed and implemented, against which those responsible can be held accountable.
  • Defining limits on PPP commitments: the legislature may limit total PPP commitments, or the amount taken on in a year, or otherwise govern the risk and equity issues that PPPs can create.
  • Approving PPP projects: PPP projects may require parliamentary approval. This requirement can be limited to PPP projects above a certain size.
  • Receiving and reviewing reports on the PPP program: many governments include information on the PPP program in budget documents and other financial reports. This gives Parliament the opportunity to scrutinize the government’s commitments to PPPs, and hold the decision-makers responsible after the event. Parliaments may also commission and receive auditors’ reports on the PPP program.

Strengthening auditing institutions

Supreme audit entities form an important link in the chain of accountability for public expenditure decisions by providing independent reviews of PPP programs

The mandate of supreme audit entities varies by jurisdiction, but typically includes:

  • Regular audits, which includes checking compliance, for example, that the requirements of the relevant regulations were observed and that the appropriate approvals were sought and granted and checking financial report including that commitments to PPPs have been accounted for appropriately and reported.
  • Performance, or value for money audits—reviewing the government's effectiveness and efficiency, either for individual projects or the program as a whole.
  • Also, in some jurisdictions, audit entities must sign off on PPP contracts.

Audit entities that do not have familiarity with or expertise in PPPs may however introduce delays or saddle PPP programs with requirements that are not appropriate for the specific needs of PPP. Guidance to assist them in discharging their tasks has been developed by the International Organization of Supreme Audit Institutions.

One particular issue that often arises is audit entity access to the private parties’ information.  The remits of supreme audit entities typically extend only to government agencies or entities wholly or majority owned by government. Supreme audit entities therefore do not have the right or responsibility to audit PPP companies. Nonetheless, the private company often holds a lot of relevant information. The access of the audit entity to information held by the private party has the potential to create conflict.

Engaging citizens

PPPs are meant to provide value to the public. The public can directly participate in PPP project design, through consultation processes, and in monitoring service quality by providing channels for feedback. Transparency of the PPP process as a whole, and an active media, can inform public opinion and—if the issues are serious enough—influence elections.

During the PPP project development stages, stakeholder consultation is an important part of the PPP development process, allowing the concerns of potential service users and others affected by the project to be taken into consideration when structuring and implementing PPPs.

Once the PPP is in place, user feedback can be an important aspect of PPP performance monitoring. Firstly, some projects involve user feedback as an efficient, decentralized mechanism for collecting contract monitoring information. Second, an effective mechanism for resolving grievances may itself be an important aspect of project design. Ultimately, the purpose of the PPP is to provide services to users—in this respect, user satisfaction, or whether services meet users’ expectations, can be an important (albeit subjective) measure of PPP project performance alongside more technical or functional attributes.

User feedback mechanisms can be structured in various ways; some projects provide a web portal for continuous user-based input, others conduct regular user surveys. A specific mechanism may also be needed for user grievances.

Learn More

    • 2014
    • Asian Development Bank (ADB), World Bank Group (WBG), Inter-American Development Bank (IDB), PPIAF

    PPP Governance

    PPP Reference Guide Version 2.0

    Section 2.5 of the PPP Reference Guide discusses the broader PPP program governance including the role of the different government bodies as well as the public in the process. The PPP Reference Guide presents a global overview of the diversity of approaches and experiences in the implementation of PPPs, providing an entry point to the substantial body of knowledge on PPPs that has been built up by practitioners in governments, the private sector, international institutions, and academics. It seeks to provide advice on what PPP practitioners should know, rather than provide advice on what to do. 

    • 2007
    • International Organization of Supreme Audit Institutions

    Guidelines on Best Practice for the Audit of Public/Private Finance and Concessions

    ISAAI 5220

    This document aims to cover all the issues potentially involved in public-private finance and concession deals. This approach typically involves public sector clients specifying goods and services they wish to purchase and, through competition, selecting private sector suppliers to provide them. The guidelines are based on the results of the Working Group on the Audit of Privatisation firstly published in 2001 and provide an update to the version in light of experience and new developments particularly in auditing the operational phase of contracts.

    • 2006
    • Government of Australia

    Auditor-General's Report Performance Audit: The Cross City Tunnel Project, Sydney

    The Cross City Tunnel has been marked by controversy since its opening. About 30,000 cars a day are usign the tunnel so far, about one-third of the expected traffic volume. The road changes have resulted in slow, tangled traffic. There has also been substantial public concern since the CCT opened over whether: road closures and changes were necessary; the toll is too high; the contract was awarded to CrossCity Motorway Pty Ltd fairly. This audit is one of several reviews and inquiries into the CCT with each review addressing various aspects of the project.

    • 2011
    • National Audit Office, United Kingdom

    Lessons from PFI and Other Projects (United Kingdom)

    This report draws out lessons from recent project experience that the public sector needs to address to achieve the best commercial outcomes in the current economic environment of spending constraints.

    • 2008
    • Gerd Schwartz, Ana Corbacho, and Katja Funke
    • International Monetary Fund (IMF)

    Public Investment and Public-Private Partnerships: Addressing Infrastructure Challenges and Managing Fiscal Risks

    This book grew out of a seminar on "Strengthening Public Investment and Managing Fiscal Risks from Public-Private Partnerships" that took place in Budapest during March 7-8, 2007. The seminar was jointly organized and sponsored by the International Monetary Fund, the Hungarian Ministry of Finance, and the International Center for Economic Growth, European Center (ICEG-EC). The idea for this book resulted from several factors: a significantly oversubscribed event that forced us to decline a large number of applicants owing to capacity constraints, the high quality of the contributions by the various presenters, and, finally, the excellent discussions that took place.

    • Government of Australia

    National PPP Guidelines: Practitioners’ Guide, Australia

    The website portal for PPPs in Austrailia.

    • 2013
    • World Bank Group (WBG)

    Disclosure of Project and Contract Information in Public-Private Partnerships

    This report presents a review of current practices on the disclosure of information on PPP projects and contracts from 11 jurisdictions at the national and sub-national level representing 8 countries. The objective of this review is to present emerging practices on the disclosure of information on PPP projects and contracts and to distill from thesesuggestionsto government agencies on how they can provide more information to their public on their PPP projects.

    • 2015
    • World Bank Group (WBG)

    Disclosure in Public-Private Partnerships: Jurisdictional Studies

    This volume contains detailed studies on the disclosure policy and practice of public-private partnerships (PPPs) in 13 jurisdictions. The jurisdictions were studied as part of the research and analysis carried out under the Disclosure in PPP Project jointly implemented by the World Bank Group Public-Private Partnerships Cross-Cutting Solution Area (WBG PPP CCSA), the Governance Global Practice (GGP), Construction Sector Transparency Initiative (COST), and Public-Private Infrastructure Advisory Facility (PPIAF), and jointly funded by the WBG PPP CCSA and the PPIAF. The WBG PPP CCSA commissioned Cambridge Economic Policy Associates to research and compile the jurisdictional studies.

    • 2014
    • Asian Development Bank (ADB), World Bank Group (WBG), Inter-American Development Bank (IDB), PPIAF

    Gobernanza

    Asociationes Publico-Privadas: Guia de Referencia Version 2.0

For legal and regulatory resources go to PPPIRC

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