saadtate / ppp-evaluation-model

Evaluating the rentability of a public-private partnership (PPP)

Evaluating the rentability of a public-private partnership (PPP) can be a complex process, as it involves considering both financial and non-financial factors. Here are some steps you can follow to evaluate the rentability of a PPP:

Determine the objectives of the PPP: Identify the specific goals of the PPP and how they align with the broader goals of the government or public sector entity.

Conduct a thorough financial analysis: This should include an assessment of the costs and benefits of the PPP, including upfront costs, operating costs, and potential revenues. You should also consider factors such as the risk profile of the project, the availability of funding, and the potential for cost overruns.

Consider non-financial factors: In addition to financial considerations, you should also consider the potential impact of the PPP on other non-financial factors, such as social and environmental outcomes. This may include factors such as job creation, improvements in infrastructure and public services, and the potential for economic development in the region.

Engage with stakeholders: It is important to engage with all relevant stakeholders, including government officials, private sector partners, community groups, and other interested parties, to ensure that the PPP aligns with their needs and priorities.

Use a standardized framework: There are several frameworks and tools available for evaluating the rentability of PPPs, such as the Public Private Partnership Appraisal Guide (PPPAG) developed by the UK Department for International Development. Using a standardized framework can help ensure that all relevant factors are considered and that the evaluation is objective and transparent.

Monitor and evaluate the PPP: Ongoing monitoring and evaluation of the PPP is important to ensure that it is meeting its objectives and delivering value for money. This should include regular reviews of financial performance, as well as assessments of non-financial outcomes.

The Public Private Partnership Appraisal Guide (PPPAG) is a framework developed by the UK Department for International Development (DFID) to assess the feasibility and value for money of public-private partnerships (PPPs). The PPPAG includes a set of key performance indicators (KPIs) that can be used to evaluate the performance of a PPP. Some examples of KPIs that might be used in a PPPAG assessment include:

Financial performance: This could include indicators such as the internal rate of return (IRR) and net present value (NPV) of the project, as well as the level of private sector financing and any subsidies provided by the government.

Service delivery: This could include indicators such as the quality and availability of public services, customer satisfaction, and the efficiency of service delivery.

Social and environmental impacts: This could include indicators such as the number of jobs created, the impact on local communities, and the environmental sustainability of the project.

Governance and transparency: This could include indicators such as the level of stakeholder engagement, the transparency of the procurement process, and the effectiveness of risk management processes.

It is important to note that the specific KPIs used in a PPPAG assessment will depend on the specific goals and objectives of the PPP and the needs and priorities of stakeholders. It is also important to ensure that the KPIs are measurable and relevant to the project, and that they are used in a consistent and transparent manner.