The engagement of the private sector is perceived as an essential strategy for accelerating and implementing infrastructure projects� At the same time, a strong leverage of the private sector can be only achieved by the implementation of a favorable, transparent and long-term sustainable PPP framework and management process� The setup of the right PPP framework varies accordingly to the unique political and institutional capacity of every separate country, but generalized guidelines can be provided for drawing a sustainable implementation route�
These recommendations are:
• Policy framework� Setting up a clear policy framework is paramount to explain the core rationale and the implementation process of PPPs, both for the public and the private sector� The latter expects to operate counting on a PPP policy framework that can set out essential principles such as (The World Bank, 2011):
1� PPP proclamation and detailed guidelines that will be used by the public sector to select, prepare, and procure PPP projects�
2� Assigning key roles, obligations and core management responsibilities through the entire PPP value chain, from project selection and preparation to procurement and contract monitoring
3� Process of handling and resolving disputes�
• Legal and regulatory framework
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The engagement of the private sector and the likelihood of successful PPPs rely on the governments´ capacity of implementing an effective legal,Figure 3: Fundamental phases of PPP project process (The World Bank, 2011).
a precondition of participation in PPP and expect to understand from an early stage the risks will be asked to assume and share” (The World Bank, 2011)�
regulatory, institutional and contractual framework, which will be able to ensure and support long term PPP contracts� The right legislation setup may range from allowing the public sector to contract with private bodies for the delivery of typically public infrastructure services (such as electricity or water) to the establishment of a transparent implementation process, driven by a sturdy independent regulator� Private investors will also look for financial viable contracts as well as for transparent mechanisms to monitor the project and clear out liabilities and potential disputes, which may rise during the lifetime of the project (The World Bank, 2011)�
• Investment framework� Governments should undertake realistic and coherent investment plans and project pipelines to demonstrate how and in which extent the PPPs will play a credible role in the development of specific programs� It is also crucial both for the public and the private sector, that PPPs are envisaged as project-pipelines in specific sectors, rather than an isolated project-event� Establishing bankable PPP pipelines is fundamental to enhance the likelihood of receiving more bids from high-quality investors and the replicability in terms of costs and quality of the PPP process (The World Bank, 2011)�
• Implementation framework� PPPs programs are generally successful only if the strong government commitment is backed up by the choice of a successful PPP DG or “champion”
appointed to drive the PPP agenda (World Bank Group, 2014)� PPPs programs indeed tend to have significant differences from traditional public forms of procurements and quite often governments fail to identify or properly perform the new required processes and functions�
“When governments are unable to undertake these functions efficiently, for instance due to the lack of expertise or other constraints, various institutional solutions exist to implement these tasks such as a coordinating agency, PPP DG, external consultants, etc�” (The World Bank, 2011)� As highlighted by (Sanghi et al�, 2007), “if a specialized PPP DG is created, it must be able to perform these functions effectively� That means it needs to be given the necessary executive authority rather than simply act as an advisory body”�
PPP DDGs - International experiences and lessons learned
The qualitative assessment of eight PPP DDGs in various developing and developed countries points to some lessons with regard to the appropriate design and use of PPP DDGs and some reasons for the positive correlation between successful PPP programs and the use of PPP DDGs�
• Less effective governments tend to have less effective PPP DDGs� Lack of political commitment to advance a PPP program or lack of transparency and coordination within government agencies will reduce the chances of success for a PPP DDG� Even with a good design, a PPP DDG is unlikely to be effective in such an environment�
• Without high-level political support for the PPP program, a PPP DDG most likely will fail�
• Relatively successful PPP DDGs directly target specific government failures� A clear focus on responding to particular government failures is essential to ensuring the success of the institutional solution selected�
• The authority of a PPP DDG must match what it is expected to achieve�
If a PPP unit is expected to provide quality control or assurance, it needs the authority to stop or alter a PPP that it perceives to be poorly designed�
However, this executive power must be coupled with a mandate to promote good PPPs, or the unit may simply wield a veto without adding value�
• A PPP DDG’s location in the government is among the most important design features, because of the importance of interagency coordination and political support for a PPP DDG’s objectives� In a parliamentary system, a PPP DDG is most likely to be effective if located in a strong ministry of finance or treasury� In non-parliamentary systems, such as the presidential system of the Philippines and many Latin American countries, the best location for a PPP DDG is less clear� In a country with a strong planning or economic policy coordination agency, that agency might make a natural home for a PPP DDG�
Sources: (Sanghi et al., 2007), (The World Bank, 2011).