Public Private Partnerships - The Worldwide Revolution in Infrastructure Provision and Project Finance

1、Public PrivatePartnersl ipsThe Worldwide Revolution in InfrastructureProvision and Project FinanceOarrin Grimsey and Mervyn LewisPublic Private PartnershipsPublic PrivatePartnershipsThe Worldwide Revolution in InfrastructureProvision and Project FinanceDarrin GrimseyPartner, PricewaterhouseCoopers,

2、Melbourne and Fellow of the Australian Centre for Public Infrastructure at Melbourne University Private, AustraliaMervyn K. LewisProfessor of Banking and Finance, University of South Australia, Australia and Fellow of the Academy of Social Sciences in AustraliaEdward ElgarCheltenham, UK Northampton,

3、 MA, USA Darrin Grimsey and Mervyn K. Lewis 2004All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher.P

4、ublished byEdward Elgar Publishing LimitedGlensanda House Montpellier Parade CheltenhamGlos GL50 1UA UKEdward Elgar Publishing, Inc.136 West StreetSuite 202NorthamptonMassachusetts 01060USAA catalogue record for this bookis available from the British LibraryLibrary of Congress Cataloguing in Publica

5、tion DataGrimsey, Darrin, 1966Public private partnerships : the worldwide revolution in infrastructure provision and project finance / by Darrin Grimsey, Mervyn K. Lewis.p. cm.Includes bibliographical references and index.1. Infrastructure (Economics)Management. 2. Project finance Management. 3. Eco

6、nomic development projectsFinance. 4. Publicprivate sector cooperation. 5. Risk management. I. Title: Infrastructure provision and project finance. II. Lewis, Mervyn. III. Title. 2004363.60681dc22ISBN 1 84064 711 6 (cased)2004053037Typeset by Cambrian Typesetters, Frimley, SurreyPrinted and bound in

7、 Great Britain by MPG Books Ltd, Bodmin, CornwallContentsList of figures vi List of tables vii Foreword viii Glossary x1The nature of partnerships12The revolution in infrastructure193The origins of partnerships414Partnerships and conventional procurement of infrastructure715The structure of partners

8、hip agreements926Issues in public private partnerships1277Risk management1718The governance of partnerships1969PPPs in emerging markets22010An assessment244References250Index263vFigures5.1Alternative models of private sector participation in prisonservices995.2Comparison of public funding and partne

9、rships on cashflows1055.3Typical private sector consortium1105.4Contractual arrangements in the Bridgend Prison project1175.5Contractual arrangements in the Berwick Hospital project1236.1PSC and value for money1386.2Contractual arrangements for the West Middlesex UniversityHospital project1637.1Cont

10、ractual arrangements in a PFI/PPP project1737.2Flow chart of analytical approach1888.1Chronology of a PPP transaction1979.1Contractual arrangements in a typical project financing package2289.2Structure of the Sofia water concession243viTables1.1Public private partnerships in Europe31.2Public private

11、 partnerships in the United States82.1Classification of infrastructure by type213.1Range of public/private business models543.2An illustrative project partnering agreement684.1Differences between actual and estimated costs in large publicworks transport projects734.2Estimates of average optimism bia

12、s for conventional public procurement in the UK, by type of projects744.3Construction performance of PFI and conventional projects814.4Major stages in a PPP contract854.5A framework for assessing public private partnerships885.1Options for private participation in hospitals975.2Range of partnership

13、models1035.3Financing arrangements for the Bridgend and Fazakerley prisonprojects1196.1Key features of the West Middlesex University Hospital project1646.2Value-for-money test for the West Middlesex University HospitalProject1667.1Risk matrix for public sector/private sector infrastructureinvestment

14、s1807.2Risk allocation in a PPP prison project1847.3Procurer: interest rate sensitivity1897.4Procurer: inflation sensitivity1907.5Sponsors: equity/subordinated debt risk analysis1917.6Senior lenders: robustness analysis of cashflows1938.1Dispute resolution techniques1998.2Business analysis2088.3Asse

15、ssment of cashflows2108.4Risk analysis2118.5Measures of organizational health2138.6Indicators of service performance2169.1Key drivers and enablers for PPPs2349.2Alternative approaches to private sector involvement in waterand sewerage239viiForewordThis volume is the result of a collaboration that cr

16、ossed a number of divides. First, one author is an engineer by training, the other is an economist. (Both, however, have finished up working in the finance area.) Second, one is a prac- titioner who has worked on PPPs in both the UK and Australia, while the other is an academic. Third, one is Britis

17、h, the other is Australian (although each has spent a lot of time in both countries). Fourth, and most significantly, an almost unbridgeable divide has been spanned, for one is the son-in-law of the other.The collaboration is evident in a number of respects, most notably in the practitioner-based kn

18、owledge brought to bear in the book. Some of the case studies directly reflect this hands-on experience. Another way it shows up is in terms of the literature covered. Broadly speaking, the literature on public private partnerships falls into three groups. First, there is an engineering dimension, r

19、eflecting practitioner material. Second, there is the academic litera- ture which stems from economics, finance and public policy. Third, there are voluminous government and independent reports and guidance documents prepared by specialized units and audit offices. We have tried to thread our way th

20、rough all three, but have found the latter source to be especially valu- able, if only because one of us had a hand in the preparation of a set of guid- ance documents and was, for a time, seconded to the State Government of Victoria, Australia to advise the Treasurer on PPPs. That fund of knowledge

21、 and material has found its way indirectly into the analysis at a number of points.It is also perhaps worth mentioning that 36 of the engineering and econom- ics articles that we have referred to and used in our study have been collected together by us (Grimsey and Lewis, 2004b) in what can be seen

22、in many ways as a companion volume to this one.There are a number of people to thank. The worldwide network of PricewaterhouseCoopers provided information about developments in the PPP markets around the globe. Raphael Arndt helped us with one of the case studies. Ron McIver of the University of Sou

23、th Australia gave us valuable feedback on Chapter 6. The InterLibrary Loans section of the University of South Australia, in their usual fast and efficient manner, tracked down many difficult-to-find references. On the production side, Janelle McHale and Belinda Spagnoletti prepared some of the figu

24、res and tables, and helped with some of the text. The greatest burden, however, fell on Kay Lewis who typedviiiForewordixalmost all of the text with remarkable speed and accuracy (although under- standably, not always with good humour). Our publishers provided great support.GlossaryAccountability. T

25、he ability of the public (state and citizens) to hold to account those exercising public authority over standards and the use of public funds in delivery of services.Annual debt service cover ratio (ADSCR). This measures the pre-finance post- tax cashflow for the previous year in relation to the amo

26、unt of loan interest and principal payable for that period.Bidder. A respondent to a request for Expressions of Interest or an invitation to submit a bid in response to a Project Brief. Typically, a bidder will be a consortium of parties with one lead party responsible for the provision of all contr

27、acted services on behalf of the consortium.Build, own, operate (BOO). The developer is responsible for design, funding, construction, operation and maintenance of the facility during the conces- sion period, with no provision for transfer of ownership to the government. At the end of the concession

28、period, the original agreement may be re- negotiated, a new agreement may be negotiated, or the facility may be purchased by the government.Build, own, operate, transfer (BOOT). An arrangement whereby a facility is designed, financed, operated and maintained by a concession company. Ownership rests

29、with the concessionaire until the end of the concession period, at which point ownership and operating rights are transferred to the government (normally without charge).Build, operate, transfer (BOT). An agreement where a facility is designed, financed, operated and maintained by the concessionaire

30、 for the period of the concession. Legal ownership of the facility may or may not rest with the concession company.Bundling. This refers to the integration in a PPP of functions such as design, construction, financing, operations and maintenance of the facility, often in the form of a special purpos

31、e vehicle.xGlossaryxiBusiness case. The business case provides an overview of a partnership approach, a preliminary view on how the project will be delivered, an analysis of the various impacts of the project, and an indication of the likely level of market interest, before significant resources are

32、 spent on its devel- opment.Capital asset pricing model (CAPM). A model of the market for different financial assets which suggests that asset prices will adjust to ensure that the return on an asset precisely compensates investors for the risk of that asset when held with a perfectly diversified po

33、rtfolio.Concession. Concession-based approaches are the oldest form of public private partnership, and a variety of arrangements are based on the concept of a fixed-term concession, using various combinations of private sector resources to design, construct, finance, renovate, operate and maintain f

34、acilities. Ownership of the facility may remain with government or be transferred to the government on completion of the construction or at the end of the concession period.Contracting out. An outsourcing arrangement in which a public agency contracts with an external supplier for the provision of g

35、oods and/or services.Conventional procurement. A conventional (traditional) public procurement contract is one in which a public agency secures the finance directly and pays the contractor as works progress.Core activities. Those operational elements, involving making key decisions (setting service

36、strategy) and/or the delivery of services, that may remain with government.Default. The failure of a party to perform a contractual requirement or oblig- ation, including failures to meet deadlines, to perform to a specified stan- dard, to meet a loan repayment or to meet its obligations in relation

37、 to a materialized risk.Design, build, finance (DBF). A form of PPP that involves the procurement of an asset using private finance, without private sector operation and provi- sion of the associated services.Design, build, finance and operate (DBFO). The main form of contract in thePFI whereby the

38、service provider is responsible for the design, construction,xiiPublic private partnershipsfinancing and operation of an asset. Operation refers to the provision of some or all of the services related to the assets use.Design, build, operate (DBO). A form of PPP, in which the public sector provides

39、finance for a capital investment project but the providers of the projects retain the design and construction, and deliver some or all of the operational elements.Discount rate. The rate used to calculate the present value of future cash flows, usually determined on the basis of the cost of capital

40、used to fund the investment from which the cash flow is expected.Discounted cash flow. A general term for analysis which discounts a stream of future cash flows in order to calculate a net present value.Expected value. The weighted average of possible values of a variable, where the weights are the

41、probabilities of cost estimates.Internal rate of return (IRR). That discount rate which would give a project a present value of zero.Joint venture (JV). A distinct legal form of PPP arrangement involving public and private bodies assuming some form of equity stake in a PPP.Key performance indicators

42、 (KPIs). Measures developed under a performance management regime to indicate how well specified performance targets are being realized.Loan life cover ratio (LLCR). This is a measure at a given date of the NPV of the project pre-finance post-tax cashflows from that date until retirement of the seni

43、or loans relative to the loan outstanding on that particular date.National Audit Office (NAO). The UKs National Audit Office scrutinizes public spending on behalf of Parliament. Totally independent, it audits the accounts of all government departments and agencies as well as a wide range of other pu

44、blic bodies, and reports to Parliament on the economy, efficiency and effectiveness with which government bodies have used public money.National Health Service (NHS). The UKs National Health Service established in 1948 to provide medical services largely financed by general taxation.GlossaryxiiiNHS

45、Trust. The organizational structure adopted in the UK to manage indi- vidual hospitals.Net present value (NPV). The discounted value of a stream of either future costs or benefits, with NPV used to describe the difference between the present value of a stream of costs and a stream of benefits.Office

46、 of Government Commerce (OGC). Established in April 2000, the OGC works with UK government departments to achieve best value for money in their commercial activities. Its responsibilities include central govern- ment procurement policy and the development of procurement partnerships with the private

47、 sector.Optimism bias. The demonstrated systematic tendency for appraisers to be over-optimistic about key project parameters, including capital costs, oper- ating costs, works duration and benefits delivery.Output specification. The output specification sets out the range of services that governmen

48、t is seeking to procure and the performance levels required for each of those services.Partnerships UK. Partnerships UK is the successor to the Treasury Taskforce.It works with the government in the development of PPP policy and contract standardization, helps with project evaluation and implementat

49、ion, and supports PPPs in difficulty. It also works closely with 4Ps (a Local Government agency set up to help Local Authorities develop and deliver PPPs) in local authority projects.Partnerships Victoria. Partnerships Victoria is a policy in the State of Victoria, Australia giving effect to a commi

50、tment to optimize the level of infrastruc- ture spending through responsible use of the resources of both the public and private sectors. Value for money and the public interest are keynotes of the policy.Private Finance Initiative (PFI). A UK programme encompassing arrange- ments whereby a consorti

51、um of private sector partners come together to provide an asset-based public service under contract to a public body.Private party. The private sector entity with which the government contracts in a PPP. Traditionally the private party has been a special purpose vehicle created specifically for the

52、purposes of the project.xivPublic private partnershipsProbity. Uprightness, honesty, proper and ethical conduct and propriety in dealings. Used by government to mean good process.Procurement. The component of the commissioning process that deals specif- ically with purchasing a service from a provid

53、er. This occurs once decisions have been taken over what outcomes or outputs are to be secured and involves the negotiation of contracts.Project Brief. The Project Brief details governments objectives, service deliv- ery requirements, policy and commercial matters, material background information an

54、d the processes for lodging and evaluating submissions.Project finance. A way of financing capital projects that depends for its secu- rity on the expected cash flow of the project itself rather than guarantees from the borrower or third parties.Project life cover ratio (PLCR). This is a measure at

55、a given date of the NPV of the projected pre-finance post-tax cashflows from that date until the end of the project relative to the loan outstanding on that particular date.Public interest test. An assessment of the impact of the project on effective- ness, accountability and transparency, affected

56、individuals and communi- ties, equity, consumer rights, public access, security and privacy.Public private partnership (PPP). A risk-sharing relationship based on a shared aspiration between the public sector and one or more partners from the private and/or voluntary sectors to deliver a publicly ag

57、reed outcome and/or public service.Public sector. Refers to public agencies and enterprises that are state financed, owned and controlled.Public sector comparator (PSC). A hypothetical constructed benchmark to assess the value-for-money of conventionally financed procurement in comparison with a pri

58、vately financed scheme for delivering a publicly funded service.Risk. A situation involves risk if the randomness facing an economic entity can be expressed in terms of specific numerical probabilities (objective or subjective).GlossaryxvRisk allocation. The allocation of responsibility for dealing

59、with the conse- quences of each risk to one of the parties to the contract, or agreeing to deal with the risk through a specified mechanism which may involve sharing the risk.Sensitivity analysis. Analysis of the effects on an appraisal of varying the projected values of important variables.Shadow t

60、oll. A payment for road usage made by the government, rather than road users, based on vehicles using a kilometre of the project road, in accor- dance with a tolling structure. Now supplemented or replaced in the UK by availability and performance measures.Special purpose vehicle (SPV). An organizat