Strategic Infrastructure: Steps to Prepare and Accelerate Public-Private Partnerships

Given the large, global infrastructure deficit, many governments are turning to the private sector for support. In this environment, public-private partnerships (PPPs) can accelerate infrastructure development by tapping into the private sector’s financial resources, as well as its skills in designing, building, and operating infrastructure on a whole life-cycle cost basis. In fact, institutional investors, with substantial assets under management, are seeking long-term investment opportunities. But despite the apparent fit of demand for and supply of private-sector participation, too few projects get off the ground. The reason for this paradox—especially in emerging countries—is the “project preparation gap”, i.e. the lack of well-prepared, bankable PPP projects. Furthermore, several of the PPPs that have been implemented were plagued by delays, cost overruns, or renegotiations as a result of a suboptimal preparatory phase. This World Economic Forum report, “Strategic Infrastructure: Steps to Prepare and Accelerate Public-Private Partnerships,” outlines government best practices for overcoming the challenges of PPP preparation. Four best-practice areas come under scrutiny: managing a rigorous project-preparation process, conducting a bankable feasibility study, structuring balanced risk allocation and regulation; and creating a conducive enabling environment.