Civil Engineering August 2022 | Vol 30 No 7

Civil Engineering August 2022 25 1. Efficiency – spending well 2. Effectiveness (outcomes) – spending wisely 3. Economy (inputs) – spending less. There is a fourth E, “equity”, which is often added in making the viability assessment of a PPP, which is the extent to which services are available to and reach all people that they are intended to reach. This consideration has particular relevance in the African environment. A PPP may conceivably provide value for money compared to traditional pro- curement models if the advantages of risk transfer combined with private sector in- centives, experience, and innovation – in improved service delivery or efficiencies over the project lifetime are realised – and this could outweigh the increased costs of contracting and financing. Such an analysis, from anecdotal evidence, demonstrates that PPPs are su- perior to traditional public procurement. Accordingly, PPP procurement is often favoured over traditional public procure- ment models. PPPs do not offer a miraculous solution for every public sector infrastructure problem. Usually, this kind of arrangement takes longer and costs more. The main drawbacks are mostly related to the public sector’s inability to deal with such struc- tures (due to lack of experience), insuf- ficient competition, lengthy and complex negotiations and high transaction costs. 2 PPPs are not a simple one-size-fits-all formula. Each project must be arranged to suit the prevailing circumstances of: Q Q The public entity Q Q The private entity Q Q The project Q Q The end user Q Q Available resources Q Q Available funding. The reasons for adopting a PPP implementa- tion strategy may be summarised as follows: 6 Q Q Borrowing and budgetary constraints means this is the only implementation strategy available – probably the most common reason that PPPs are used in sub-Saharan Africa. Q Q The project can be developed sooner rather than waiting for when budget is available. Q Q PPPs used for infrastructure projects frees up government resources for use on other projects. Q Q Private sector efficiency and innova- tion may produce a better result. Q Q The public sector is forced into long- term planning and budgeting. This enhances the possibility of the project being successful. Q Q A PPP can avoid construction cost and time over-runs that can be a feature of public sector projects. Q Q A PPP ensures that long-term mainte- nance is carried out. Throughout the whole project life cycle, the public partner must ensure that it maintains effective control that enables it to instantly react when the PPP strays from the set path, and thus limit the potential damage that may arise. 2 It is crucial therefore that the PPP con- tract clearly defines the instruments that allow the public partner to intervene in the PPP in order to protect the public interest and avoid consequences for both partners. Secondly, the PPP contract must define, clearly and in advance, the conditions and consequences of early termination of the PPP, especially in terms of charges, dam- ages, penalties, etc. to which each of the partners is entitled in such cases. In the African region, investment flows are dominated by three countries – South Africa, Morocco and Nigeria – which col- lectively account for 54% of total commit- ments. By contrast, the number of projects spans 48 African countries, of which a quarter concluded PPP contracts entailing little to no investment commitments. 2 STANDARD FORMS AVAILABLE In any PPP arrangement there are a number of contractual relationships that must be catered for, as illustrated in Figure 2. The special purpose vehicle (SPV) will obviously enter into a PPP with the public entity which makes provision for design, construction, financing, operation and maintenance of the facility or service. Some observers 1 have commented that standard form contracts such as FIDIC or the NEC may not be appropriate for PPPs due to the fact that they are designed for conventional project delivery methods. It should however be noted that FIDIC is planning to release a standard form contract for PPP projects in 2024, including a concession agreement and direct agree- ments that are currently not covered by the Silver Book. It is therefore apparent that if EPC contract services are required, the FIDIC Silver Book or one of the NEC Suite of documents could be used. Alternatively, if it is a Design Build Operate (DBO) ar- rangement, the FIDIC Gold Book or the NEC4 DBO Contract may be suitable. CREATING A SYMPATHETIC ENVIRONMENT FOR THE ADOPTION OF PPPs Since the 1990s there has been widespread adoption of PPPs across Africa as a project implementation strategy, as demonstrated by the number of countries where ena- bling legislation has been implemented. To this extent, Africa has a level of matu- rity in the PPP market. There have been some successes as well as failures. Current recommendations for im- proving the environment for implementa- tion include: 7 Q Q Changing legislation to make public engagement mandatory during the entire project life cycle Q Q Establishing guidelines to encapsulate the scope, procedure to be followed and approach to public participation Figure 2 Contractual relationships in a PPP arrangement