Public Private Partnership
Public Private Partnership, abbreviated PPP, is a model for cooperation between the public and private sectors in which private companies plan, build, operate and finance public construction tasks.
PPP contracts typically stretch over 30 years. The public party defines the task and the private party provides it. All at a pre-agreed price. The public party thus purchases a complete package from a private supplier – not simply a physical construction.
In the case of the Kliplev-Sønderborg motorway, the project will be tendered after the route has been finally determined and the necessary compulsory purchases carried out. Payment for the road will not begin until it is opened and will fall in an agreed number of rates during the operating period. This form of payment will allow the Danish Road Directorate to regulate its payments if the motorway does not meet the requirements specified in the contract.
Benefits of PPP
In PPP projects, a larger amount of responsibility and risk is placed on the private party than with other forms of tender.
As planning, construction, operation and financing are all the responsibility of the private party, PPP also encourages this party to think in terms of overall cost. It is in the private party's best interests to complete a project which is optimised in relation to its operation.
In other words, the construction must be of such quality that operational and maintenance costs are as low as possible. The private party will also be motivated to think innovatively in order to optimise its solutions.