PPP Advantages and Disadvantages

The basic elements determining PPP projects success are projects suitability to PPPs proper evaluation and selection of correct PPP form on case-by-case basis. Prior to engaging in PPPs, public authority needs to assess and with relief of economic calculations to justify the benefit, efficiency and possible treats of foreseeable PPP form.

PPP advantages:

  • Ensure the necessary investments into public sector and more effective  public resources management;
  • Ensure higher quality and timely provision of public services;
  • Mostly investment projects are implemented in due terms and do not impose unforeseen public sectors extra expenditures;
  • A private entity is granted the opportunity to obtain a long-term remuneration;
  • Private sector expertise and experience are utilized in PPP projects implementation;
  • Appropriate PPP project risks allocation enables to reduce the risk management expenditures;
  • In many cases assets designed under PPP agreements could be classified off the public sector balance sheet.

PPP disadvantages:

  • Infrastructure or services delivered could be more expensive;
  • PPP project public sector payments obligations postponed for the later periods can negatively reflect future public sector fiscal indicators;
  • PPP service procurement procedure is longer and more costly in comparison with traditional public procurement;
  • PPP project agreements are long-term, complicated and comparatively inflexible because of impossibility to envisage and evaluate all particular events that could influence the future activity.
Last updated: 31-07-2015