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Understanding Public Private Partnerships

Types and Descriptions of Public Private Partnerships


Public Private Partnerships can be described as the future for infrastructure projects. During the construction crisis, viable alternatives are being studied for promoting a better infrastructure using a small amount of money from local government. Public Private partnership can be the solution to financing problems, completion of jobs and investing in large projects without sacrificing the government finances.

There are several types of Public Private Partnership, depending on the needs, options available and the size of the project being considered. We can affirm that the best suited options to be executed as using Public Private Partnerships, or P3, are power generator projects and infrastructure projects.

1. Operation and Maintenance



The private component of the partnership operates and maintain the installation of the project, while the public agency acts as the owner of the project.

2. Traditional

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The public component of the partnership acts as a contracting officer; look for funding, and has the overall control over the project and its assets.

3. Design-Build

The private partner designs and builds the facility; while the public partner provides the funds for the project, and has control over the possession and assets generated by the project.

4. Design-Build-Operate

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The private partner designs, builds, and operates the facility or project. The public partner acts as the owner of the installation and get the fund for construction and operation.

5. Design-Build-Operate-Transfer

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The private partner designs, builds, and operates, for a limited time, the project, and after that specific period of time, the facility is transferred to the public partner.

6. Design-Build-Finance-Operate

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The private sector provides finance, design, build, possess and operates the project, while the public partner only provides funding while the project is being used or active.

7. Build-Transfer-Operate

The private partner builds and transfers the project to the corresponding public partner. Afterward, the public partner chooses to lease the operation of the facility to the private sector, under a long-term leasing agreement.

8. Build-Own-Operate-Transfer

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The public partner builds, possess and operate the project for a limited time, until some time when the installation is transferred, free of charge, including ownership to the public agency.

9. Build-Own-Operate

The private sector must build, possess and operate the facility and has control over profits and losses generated by the facility through time. It is similar as a privatization process.

10. Lease

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The public owner leases the facility to a private firm. The private company must operate and will provide maintenance for the facility per specified terms, including additions or remodeling process.

11. Concession

The public agency will be partnering with a private company, conceding all exclusive rights to operate, maintain for a specific period of time, under specific contract terms. The public partner will have the power over the ownership, but the private partner will possess owner rights over any addition incurred while being operated under its domain.

12. Divestiture

The public partner will make a complete or partial transference of the installation to the private sector. The government might include specific clauses in the sales agreement requiring investment and modernizations on the facility, and a continuation of the services being provided.

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