Public-private partnerships

Using private sector finance to deliver large, complex infrastructure projects.

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Public-Private Partnerships (PPP) use private sector finance to deliver large infrastructure  projects and other government facilities. Balfour Beatty Investments is a global leader in this important and growing procurement method that is allowing governments to more quickly and effectively develop critical community assets.

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What are PPPs?

PPPs are a long-term, performance-based approach for procuring public infrastructure such as highways, hospitals, schools and military housing. Through this approach, the infrastructure project is funded and operated through a partnership between a public sector agency (federal, state or local) and the private sector. They enable the public sector to use the services of private sector entities to share infrastructure development costs and risks from initial design and planning, to full lifecycle operations and maintenance.

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How do PPPs work?

PPPs assemble consortia including developers, investors, construction firms and facilities companies to finance, design, build and operate infrastructure assets through long-term contracts. Under this method, the private company consortium finances the project and assumes financial and technical responsibility for construction and subsequent operation and maintenance. The public entity or agency pays for the capital asset and management services over the extended lifecycle of the asset, typically 30 years.

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Why do PPPs work?

PPPs work because they leverage private sector innovation and expertise, as well as the discipline and incentives of capital markets, to deliver more efficient infrastructure assets. This approach allows both the public and private sectors to focus on what they do best, with the private sector financing, building, operating and maintaining the asset, and the government focusing on serving the needs of the community.

PPPs also effectively address the challenges governments often face in managing large, complex infrastructure projects, including:

  • Capacity and expertise needed to manage large, complex projects.
  • Consideration of total life-cycle costs and the important integration of design, construction, operation and maintenance processes.
  • Incentives and discipline created by the capital markets and the oversight of lenders and investors throughout the initial due diligence and project execution.

Compared to other project models, PPPs often deliver infrastructure projects more quickly and cost-effectively by employing the private sector’s increased flexibility and access to resources. The final result is innovative infrastructure that optimizes efficiency, total lifecycle costs and community value.

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