Public-Private Partnerships

Public-private partnerships (PPP) are projects in which the contracting public authority does not detail what needs to be realised in a programme of specifications, but rather describes the intended final result (e.g. an energy-efficient office building or improved traffic circulation).

This affords private parties the necessary leeway to propose different solutions and organise their implementation according to their own insights. The contract partners are able to take maximum advantage of the private sector’s innovative capacity and expertise, resulting in shorter lead times and more effective solutions for today’s mobility, housing and sustainability issues.

DBFM and DBFMO contracts

The most far-reaching form of public-private partnership are the so-called DBFM and DBFMO contracts. These long-term contracts, which typically run for some 20 to 30 years, cover the following aspects of a project:

  • Design
  • Build
  • Finance
  • Maintenance
  • Facilities services for part of or the entire project (Operate)

Advantages

DBFM or DBFMO contracts offer many advantages such as:

  • Long-term certainty about the project costs
  • Lower overall costs thanks to the optimum coordination of the project’s design, construction, maintenance and facilities services throughout the entire contract term (lifecycle approach)
  • Increased efficiency and higher quality

PPP in light rail

Many regions today have to deal with congestion and are unable to satisfy national or European environmental requirements. Light rail connections can help to improve an urban environment in terms of accessibility and residential quality. This mode of transport is both cleaner than traditional road transport and saves space. Public-private partnerships in the field of light rail transport allow the contract partners to develop quicker, more efficient and more sustainable solutions for this urgent transportation issue.

When enter into a PPP?

PPPs can be of particular added value for public authorities that wish to retain full control of a public project, but at the same time minimise their own contribution to its realisation. PPPs can be set up for projects in any sector – be it a complex infrastructure development or a small-scale educational initiative. For example, a specific form of public-private partnership (the ESCo: Energy Service Company) has been successfully set up to raise the sustainability of nine municipal swimming pools in Rotterdam.