Examining The Agreement Between Public Private Partnership Construction Essay

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PPP is a joint venture of Public and Private sectors and collaboration between Public and Private sectors. The PPP depend on the expertise of both the Public and Private sectors. PPP is a contract that involves a contract between Public and Private sector in which Private sectors provide a Public services/Projects and assume substantial, financial, technical and operational risk in the project. PPP is a step toward involving Private sector and to hold them accountable for input. PPP address peoples needs clearly through the appropriate allocation of resources, risk and rewards. PPP is growing day to day because it is an efficient way of delivering the Public services to the masses.

Service contracts is a contract between public agencies and private sectors and is suited for simple and short term requirements. It is the limited type of PPPs model. In this agreement the Private party procure operation of an assets for short period. The period of two to five years. In this contract the responsibility for investment and management of the project are of the Public sector and also bears the financial and residual value risks. While the Private sector provides the services.

In this type of Contracts the responsibility for the operation and management is passed to the Private sectors. The life of these types of contracts are from three to five years but can be extended. The Private sector/party is remunerated/hired on a fixed fee basis or on the incentives or bonuses basis linked to a related or specific task. In these types of contracts the Public sector bears the financial and investment risks. This is an efficient way undertaking a project because the Private sector is efficient and have enough skills and strong interest in improving the service quality.

The main advantage of these contracts are that the ownership remains with the Government and only the operation and management is transferred to the Private party. Management contracts are less controversial in nature. These types of contracts are less expansive because the Private sector is more efficient and can do the job betterly than the Public sector because of the experienced and skilled management.

Concession contracts is a type of leasing contracts in which the ownership of the assets remain with the Government and the Private party is responsible for the maintenance of the assets and also to provide the capital investment and at the end or completion of the project the Government receive the project and pay a certain sum of amount to the Private party according to the contract. In these type of contracts the Government gives concession to the Private sectors to explore some thing like oil and gas.

The advantages of the concession contract is that it mobilize the funds/capital from the Private sector for the construction and exploration of existing projects. In concession contracts the Government assets are properly utilized and maintained by the Private sector efficiently and after completion the Private sector gives the project/assets to the Government and the Government pays a certain amount of money to the Private sector according to the contract. Through bidding the contract Government creates competition among the Private sector which leads to low cost.

One of the major disadvantage of this contract is that the timing/validity of these projects are more and these contracts are long term contracts which leads to complexity. The maturity of these projects are more than 20 years. Due to the longer period it is difficult to manage and organized. It requires complex monitoring and design system and also reduce competition because a few big Private contractors are available.

These types of contracts are mostly used for the development of new projects. In these type of contracts the government only provide the land to the private sector. Examples of Greenfield contracts are projects like new factories, airports, development of parks which are build from scratch.

The risk is shared with the Private sector. Due to the efficiency in the Private sector the Government gives projects to the Private sector. The Private sector is responsible for the design, construction and service delivery. The Government gives these types of projects mostly to the experienced and skilled Private sectors. It also facilitate the transfer of advanced technology by introducing international contractors in the host country. It is an effective way to bring the Private funds for development of new projects like infrastructure and water enhancement development.

Some of the main disadvantage of this contract is that it is not suitable for small projects. The transaction cost in the BOT is higher as compared to the other contracts. The success of the BOT project depends upon the funds raising and when substantial revenue are generated in the project during the operation phase. BOT contracts may be costly some times.

The main disadvantage of this contract is that government mostly give the projects to the large Private sectors and ignores the small Private sector and also reduce the competition through ignoring the small sectors. There may arise the problem of favoritism and also the cost of project may arise through reducing competition in the Private sector and also may arise problems in designing. The perception remains, certainly amongst architects, that design and build is not the appropriate procurement method where design quality is a high priority. There is only limited scope for the employer to make changes to his

Melaka-Manipal Medical College is the first Indo-Malaysian joint venture in private medical education. The proposal was conceived from the ‘Look East Policy’ of the former Prime Minister, Tun Dr Mahathir Mohamad. He recognized the need for greater South-South cooperation in the economic and social sectors. This led to the signing of an agreement in New Delhi in 1993, witnessed by both the Prime Ministers of Malaysia and India. The agreement was between the Joint Venture Medical College Corporation (JVMC) Malaysia and the Manipal Academy of Higher Education (MAHE) India to offer a twinning programme leading to the MBBS degree. The objective was to provide additional doctors for Malaysia and offer opportunities for students in this region to study medicine at a cheaper cost than in the West. From 1953 to 1993, Manipal had trained over 2700 doctors from Malaysia. The situation changed in 1993 with the new policy on admission of foreign students to medical colleges in India. Malaysia was suddenly in urgent need of training opportunities within a minimum lead period. The Melaka-Manipal

From the above discussion and after studying the models of PPP it is clear that The Partnership is not always fruitful for the Government SO a Government should enter to contracts with Private sector after assessing the Private sector efficiency and the Government must have to share the risk with the Private party. If Government does not transfer an appropriate level of risk to the private sector then it should not be availed. But after entering the successful contract with the Private sector the Government can easily deliver quality services.