There are three primary steps to planning a PPP program:
- Identifying PPPs through public investment planning
- Ensuring PPP projects are good public investments
- Building a PPP pipeline
Identifying PPPs through public investment planning
Sound public investment planning and management is crucial to the success of PPP projects. Public investment planning includes:
- developing sector or infrastructure strategies;
- assessing project options to meet objectives;
- conducting detailed feasibility and cost-benefit analyses; and
- project selection and prioritization in an overall public investment plan or fiscal envelope. (To ensure that the PPP addresses sector objectives, responsibility for project identification should rest with the relevant sector agency.)
Please note that in some cases PPP projects may also emerge from sources other than the standard public investment planning process, such as unsolicited proposals. While unsolicited proposals can be a way to capitalize on the ideas of the private sector, they can introduce the risk of the project not being well-integrated with broader sector and infrastructure plans and priorities. They should therefore be subject to the same analysis and screening as any proposed public investment and PPP.
Ensuring PPP projects are good public investments
PPPs should be seen as a means to implement public investment, not as an alternative. This means:
- PPP processes should be aligned with public investment management processes to ensure that PPPs are subject to the same scrutiny as regular public investment projects.
- Potential PPP projects should be subject to the same project feasibility and viability analysis as any other public investment, from initial needs and options assessment to analysis of expected project outcomes and fiscal affordability.
Building a PPP pipeline
There are several factors to consider when building a pipeline:
- Project readiness and stage of preparation.
- Responsiveness to the sector’s needs: for example, the project should be central to the development of the sector, as peripheral projects may turn out to be marginal and may distract from strategic priorities.
- High implementability: that is, prioritizing PPP projects with a high likelihood of success, that are considered most likely to attract private sector interest, and for which there is a precedent in the local or regional market.
- Affordability: a clear understanding of the likely sources of project revenues, and, in principle, agreement and ability to fund the government obligations.