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The Exceptive Scrutiny of Public-Private Partnership Models for

Colossal Infrastructure Projects


Piyush Sharma1, Sakshi Gupta2
(Post Graduate Student, Department of Civil Engineering, Amity University, Haryana, India)
2
(Assistant Professor, Department of Civil Engineering, Amity University, Haryana, India)
1
E-mail: piyushsharma1015@gmail.com 1Phone: +91-9711037497

Abstract
A public-private partnership (PPP) is a government undertaking that is funded by an assistance of
two organizations, which usually entail a cathedral contract between a government authority and
a private company, in which the private company indulge a public serviceability of project and
also susceptive for financial, technical and operational risk involved with the project. Publicprivate partnership models are globally accepted and used in more than 90 countries. This paper
scrutinizes the structure, reliability, risks and uncertainty associated with PPP mega projects. The
work presents comprehensive contracting process and execution structure in implementing PPP
models in developing countries. This research is aimed to evaluate the current trends and
practices in PPP models.
Keywords: Contracting, Execution, Infrastructure, Megaprojects, PPP.
1. Introduction
Colossal projects are defined as million dollar mega infrastructure projects, normally deputized
by state or central government and handed over by private firm; and characterized as ambiguous,
convoluted, politically-tense projects involving large number of groups [1]. Prevalence of many
colossal projects engulfs on costs, decline behind schedule and abort to deliver on time, which is
in divergence to the scope of the project. One of the major causes of such overruns is a lack of
plausibility in fundamental cost estimates. The duration and cost of delays are undervalued;
exigencies are set too low [1, 2]. Projects can be chaotic in terms of cost and time due to exacting
design or composite social system [2, 3].
Robustness of a project contributes to the lifespan and effectiveness of a technical design and its
implementation. The more efficient a project is (in terms of feasibility and monetary gains); less
will be the chances of cost and time overruns. As robustness is often accompanied by a selfassured process of design, so, project managers should always follow the standards of robust
engineering [2].
Since 1990s, the PPP advent has been massively utilized in U.K and U.S.A [4]. Moreover,
private companies have been actively muddled in facilities development, including design,
finance, execution, insurance, operation and maintenance of a public sector utility. On the other

hand, in China Republic, international firms rather than domestic firms have been involved in
PPP projects [3].
Also, in Maharashtra (India), more than 50% of large-scale infrastructure projects are executed
on the PPP model. In the early 2000s, other states such, Uttar Pradesh, Karnataka, Gujarat, and
Tamil Nadu also endorsed this model.
Meticulous PPP is characterized by a model as shown in the shown in the fig. 1 below.

Ownership
Procurement
Contract
Contractual
PPP
Concession
Contract
PPP

Institutional
PPP

Joint Venture

Public Works
Contract
Public Service
Contract
Work
Concession
Contract
Service
Concession
Contract
Partnership
Acquisition
Contract
License
Contract

Figure 1: Detailed PPP model of construction industry

2. Research Methodology
An online survey was designed as a part of qualitative analysis for collecting information
regarding PPPs as a construction practice. The survey was then conveyed to different companies
and institutions in the country via Gmail and LinkedIn.
The survey was designed as a short survey as long surveys dont get quick responses, thus it was
divided into 10 questions in order to generate data regarding the awareness and knowledge of
PPP in construction industry.
The data was collected from professionals, after composing the data, results are shown.
Evaluations of the results were made, and conclusions and recommendations are presented.

3. Contracting Process in Public-Private Partnerships


A contract is defined as an autonomous arrangement between two or more parties that is
executable at law as a mandatory legal agreement [6]. Contract management is basically the
management of legal contracts made with contractors, merchants, business partners or
employees. Contract management includes conferring the terms and conditions of contracts and
ensuring amenability with the terms and conditions so as to follow uninterrupted execution. It
can be epitomize as the process of methodically managing contract formulation, execution and
analysis for the purpose of improving financial and operational performance and minimizing
risk.
Two different types of PPP are there: concession model and alliance model [8]
In the concession model, the private company is essentially responsible for design, construction
and financing, while the alliance model normally consists of a joint venture between private
company and a state government body.
PPP contracts have very vital reverberations for all authorities, making the fabricating of
contracts a tedious and costly process [10]. Usually, an adept contract and related documentation
exists between the two parties. These contracts are not simply treated as set of basic instructions.
A contractual specification ordinarily comprises many convoluted documents. Sometimes there
are signs of vagueness or even bitterness between them. The assimilation, of most contractual
documents is not designated in the documents themselves; there is no fixed rule that provides
instructions for how the meaning enclosed in the documents should be understood [8].
Six basic steps in PPP contracting process are shown in fig 2 below:

Contractin
g Process
in PPP

Requests
for Bids
(Notice
Inviting
Tender)

Bid
Preparation
For Open
and
Selective
Bidding

Project
Outlining and
Research

Submission of
Technical and
Financial Bid

Tender
Analysis

Verdict Stage:
Letter of
Intent and
Work Order

Figure 2: Fundamental steps in PPP contracting

4. Execution Methods of Colossal Infrastructure Projects


Infrastructure projects can be execute and governed by contrasting parties at peculiar levels. Fig.
2 shows the execution classification of colossal construction projects in different aspects for
developing countries [5, 6].

Execution of
Mega Projects

Complete
Public
Participation

Conventional
Government
Contracting
Includes
Design, Build
and Maintain

Public-Private
Partnership

1. Service Contract
Example
Rebuild-Operate-Transfer (ROT)
2. Management Contract
Example:
Rebuild-Operate-Manage (ROM)
3. Lease Contract
Example:
Lease-Build-Operate (LBO)
4. Joint Investment
Example:
Build-Operate-Transfer (BOT)
Build-Transfer-Operate (BTO)
Build-Transfer (BT)
Build-Own-Operate-Tranfer (BOOT)
Design-Build-Finance-Operate
(DBFO)
Design-Build-Operate-Transfer
(DBOT)
Design-Construct-Manage-Finance
(DCMF)

Complete
Private
Participation

Private Bodies
Service
Accouterment
(Privatization)

Figure 3: Execution of megaprojects with degrees of involvement and investment responsibility

5. Survey Results
The following section represents the survey questionnaire and their responses collected from
industry.

An online survey was designed through Survey Monkey, survey consists of 10 questions,
which were conveyed to 20 construction professionals and results are analyzed in the form of pie
charts.
Table 1: Background of construction professionals:
Background
No. of
Age
Participants
(Years)

Company/Institution

% of Total

Civil Engineers

25-30

JMC Projects (I) Ltd.

30%

Contractors

30-35

20%

Construction
Managers
Academic
Researchers

35-40

Ahluwalia Contracts (I)


Ltd.
DLF, L&T, NCC and JMC

22-28

Amity, DCE, IITs and NITs

20%

30%

Analysis
Question 1.1 was designed to check out that: Is there a strong need of PPP models for Indian
construction industry?
Responses are shown in the Fig. (20 Responses)
Majority of the people said yes (69.23%), while 23.08% people were not sure.

23%
Yes
No

8%

Can't Say

69%

Question 1.2 was designed to define the contracting process in PPP models.
Responses are shown in the Fig. (20 Responses)

Majority of the people (38.46%) said all statements contribute to the definition, while no one
said that contracting process in PPP is meant to minimize risk.
Contracting Process in PPP is defines as:
Precisely Managing Contract Formulation

Execution and Aanalysis of Contract for Improving Financial and Operational Procedure
31%
38%
Minimizing Risk
31%

All of the Above

Question 1.3 was designed as Contracting process in PPP projects does not involve which of
the following?
Responses are shown in the Fig. (20 Responses)
While planning and execution of project is not a part of contracting process, but only 25% people
voted for that.

25%
17%

25%

25%
8%

Project Outlining and


Research
Tendering and Billing
Process
Bid Submission
Verdict of Contract
Planning and Execution of
Project

Question 1.4 was designed as Do key performance indicators actually influence the future
performance of projects?
Responses are shown in the Fig. (20 Responses)
Majority of the people said yes (53.85%), while 30.77% people were not sure about that.

31%
54%

Yes
No
Can't Say

15%

Question 1.5 was designed as Which of these is not a key performance indicator of PPP
projects?
Responses are shown in the Fig. (19 Responses, 1 Skipped)
Actually, financial status of employees has nothing to do with KPIs of any PPP project, but
shockingly only 15.38% people voted for that.

15%

23%

23%

8%

31%

Type of Project
Legal Status of Project
Cost-Benefit Ratio
Safety and Heath
Management
Financial Status of
Employees

Question 1.6 was designed as Do capital market plays a role in developing PPP projects?
Responses are shown in the Fig. (20 Responses)
While in this case, people were in two minds, thats why almost half said yes while others said
no.

1%

45%

54%

Yes
No
Can't Say

Question 1.7 was For what PPPs hold strong credibility on capital markets?
Responses are shown in the Fig. (20 Responses)
PPP projects hold strong credence on all below stated aspects and majority of people (46.15%)
voted for that.

15%

46%

15%

Reduction of Risk
Arbitration
Credit Intensification
Credit Valuation
All of the Above

8%

15%

Question 1.8 was a True/False statement.


Q: Now PPPs make best use of short term collective debt than conventional long term project
finance
Responses are shown in the Fig. (20 Responses)
Majority of people (76.92%) are in favor of this statement, while 23.08% are opposing this.

23%

True
FALSE
77%

Question 1.9 was Execution of mega infrastructure projects should be done by?
Responses are shown in the Fig. (20 Responses)

This question got mixed responses, while majority of people said that both public and private
involvement should be there in mega projects.

23%

46%
8%

Complete Public
Participation
Complete Private
Participation
Public-Private Partnership
All of the Above

23%

Question 1.10 was Which of the following is not a part of PPP model?
Responses are shown in the Fig. (20 Responses)
In normal situations, marketing contract is not a part of PPP model, and 23.08% voted for this,
while, majority of people (30.77%) said that management contract is not a part of PPP models.

8%
23%
31%
15%

Service Contract
Lease Contract
Management Contract
Joint Investment Contract
Marketing Contract

23%

6. Conclusions and Recommendations


This paper studied the vital and growing aspects of PPP models, implemented across various
countries. On the basis of research findings, following are the conclusions:

Globally, PPPs are being implemented across an immense variety of commercial and
communal infrastructure projects.
PPPs are attaining a number of compelling upgrades in major project acquisition and
enhanced public service delivery.
In antiphon to demanding need of urban development, many endeavors have been made
by both the public and private sectors to promote PPPs from the conventional format of
construction [4].
PPPs are more dependent on short term finances than long term finances.
Type of project, size, location, budget, safety is all the key performance indicators (KPIs)
for PPP projects.
The PPP model is achieving value for money, cutting down procurement costs and
conveying complicated projects without any delay and within cost than the classical
methods.
PPPs are improving the discipline of contracting methods with convincing benefits for
bidders [7].
PPPs hold strong reliability on capital markets for credit rise and valuation.

The journey to success has been long and is still long, because governments and their policy
counselor in some way have been reluctant to learn from mistakes.
Following are the recommended aspects:
Only few bidders are involved in bidding process of PPP projects.
Private funding is quite wide-ranging in PPPs.
There is susceptibility of investors to political and legal risk.
High agreement costs.
Long term obligation of the lease payment.
Acknowledgements
The author would like to thank Prof. Sakshi Gupta for applying her educational expertise in
refining this manuscript.
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