Public-Private Partnership Models

… a core concept used in Implementation and Delivery and Atlas107

Click for Council site

Concept description

Leslie Pal (reference below) describes the types of public-private partnerships (P3s or PPPs).

Pal writes (pages 255-256):

“A specific variant of the more generic notion of partnering is public–private partnerships (P3s or PPPs). The Canadian Council for Public-Private Partnerships defines such partnerships in this way:

“A cooperative venture between the public and private sectors, built on the expertise of each partner, that best meets clearly defined public needs through the appropriate allocation of resources, risks and rewards” (2012)

“There are various models of public-private partnerships that combine risk and resources in different ways.

Design-Build (DB): The private sector designs and builds infrastructure to meet public sector performance specifications, often for a fixed price, so the risk of cost overruns is transferred to the private sector. (Many do not consider DB’s to be within the spectrum of PPP’s).

Finance Only: A private entity, usually a financial services company, funds a project directly or uses various mechanisms such as a long-term lease or bond issue.

Operation & Maintenance Contract (O & M): A private operator, under contract, operates a publicly owned asset for a specified term. Ownership of the asset remains with the public entity. Build-Finance: The private sector constructs an asset and finances the capital cost only during the construction period.

Design-Build-Finance-Maintain (DBFM): The private sector designs, builds, and finances an asset and provides hard facility management (hard fm) or maintenance services under a long-term agreement.

Design-Build-Finance-Maintain-Operate (DBFMO): The private sector designs, builds, and finances an asset, provides hard and/or soft facility management services as well as operations under a long-term agreement.

Build-Own-Operate (BOO): The private sector finances, builds, owns, and operates a facility or service in perpetuity. The public constraints are stated in the original agreement and through ongoing regulatory authority.

Concession: A private sector concessionaire undertakes investments and operates the facility for a fixed period of time after which the ownership reverts back to the public sector.

Pal writes (p. 256) that:

“As of February 2012, there were 162 private-public partnerships across Canada, prominent examples being Confederation Bridge, Highway 407 Electronic Toll Route, Moncton Water Treatment Plant, St. Lawrence Seaway Commercialization, Kelowna Skyreach Place, and the Bruce Nuclear Power Plant lease. As well, there were more than 50 P3 hospitals in operation or development.”

See also: Kernaghan’s Classification of Partnerships; Partnerships and Horizontal Management.

Atlas topic, subject, and course

Implementing through Partners and Networks (core topic) in Implementation and Delivery and Atlas107.

Sources

Leslie Pal (2014), Beyond Policy Analysis – Public Issue Management in Turbulent Times, Fifth Edition, Nelson Education, Toronto. See Beyond Policy Analysis – Book Highlights.

Canadian Council for Public-Private Partnerships. (2012). Definitions. Note that the definitions on the website http://www.pppcouncil.ca/web/Knowledge_Centre/What_are_P3s_/Definitions_Models/web/P3_Knowledge_Centre/About_P3s/Definitions_Models.aspx are slightly different from those above:

“The following terms are commonly used to describe partnership agreements in Canada, although this should not be considered a definitive or complete listing:

  • Operation & Maintenance Contract (O & M): A private operator, under contract, operates a publicly-owned asset (e.g. water/wastewater treatment plant) for a specified term. Ownership of the asset remains with the public entity.
  • Build-Finance: The private sector constructs an asset and finances the capital cost only during the construction period.
  • Design-Build-Finance-Maintain (DBFM): The private sector designs, builds and finances an asset and provides hard facility management (hard fm) or maintenance services under a long-term agreement.
  • Design-Build-Finance-Maintain-Operate (DBFMO): The private sector designs, builds, finances and provides hard fm or maintenance services under a long-term agreement. Operation of the asset is also included in projects such as bridges, roads and water treatment plants
  • Concession: A private sector concessionaire undertakes investments and operates the facility for a fixed period of time after which the ownership reverts back to the public sector.

Page created by: Ian Clark, last modified 12 April 2017.

Image: University Press of Kansas, Pursuing Horizontal Management – The Politics of Public Sector Coordination, B. Guy Peters (2015), at https://kansaspress.ku.edu/978-0-7006-2093-7.html, accessed 6 April 2017.