National Development Finance Agency Construction Essay

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For this dissertation I have given myself the task to find out about the Public Private Partnerships that have started in recent years in Ireland. To

1.2 Hypothesis.

Will it be possible for smaller construction companies to tender for PPP's in Ireland?

1.3 Aims

The main aim of this dissertation is to investigate whether smaller construction companies will be able to be able to tender for PPP's or to be involved in the construction of projects in the education sector or will it be down to a few groups of large companies that will be instrumental in the contracts.

1.4 Objectives

Introduction of Public Private Partnerships in Ireland

To find out how Public Private Partnership's process works

The different forms of PPP's

To find if PPP's are widely used through out Europe.

To find if PPP's will be used more now there is an economic downturn.

To find out about the Financing of PPP's

1.5 Research Methodology

In order to find out more about PPP's there was information gathered from primary and secondary research

Primary Research

A questionnaire will be sent to the company that has won the first school bundles to

A questionnaire will be sent to smaller contractors

Secondary Research

A search was carried out in the library in Galway Mayo Institute of Technology, there were very few books on the subject of PPP's in the library, but material was found in the electronic sources of the library, though the most information was gathered from the Internet. Also information

Chapter 2

2.1 Introduction of Public Private Partnerships in Ireland

The idea of public and private sectors to get together and provide services and build infrastructure in Ireland is not a new concept and has been done many times in the past with religious orders, to provide hospitals and schools.

Though in 1998 the Irish government went about commissioning a report to find out if there was potential for PPP's in Ireland. The report and its recommendations satisfied the government and PPP units were installed in to the Departments of Finance, Environment and Local government, Education and Science and Public Enterprise (now Transport). In 1999 a series of pilot programmes for roads, water services, waste, education and public transport were announced by the Minister for Finance.

A major study was carried out in 1999 into the implementation of PPP's in Ireland and with another in 2001, these reports lead to the implementation of the framework for PPP in Ireland. On the 1st November 2001 the government launched the Framework for PPP in Ireland. This Framework now provides the main starting point for Departments and State agencies to select and develop projects as potential PPP's that may then benefit the country.

In 2002 the state passed the (Public Private Partnership Arrangements) act. This act enables legislation and so allows the state authorities to enter into PPP's and also gives them power to enter into joints ventures.

The National Development Finance Agency Act was passed in 2002 and led the way for the establishment of the National Development Finance Agency (NDFA). With the role of the NDFA to advise the state authorities on the optimum means of financing public investment projects, this will allow them to achieve the best value for money and may advise on all aspects of financing, refinancing and insurance of public investment projects.

In order allow for the growth of PPP's in the public sector three more government agencies were formed which were the National Roads Authority (NRA) in the roads sector, the Railway Procurement Agency (RPA), which cover the light rail "sector"; and the Centre of Expertise for PPP procurement in the NDFA in the Central Government area.

Under the National Development Plan for 2007-2013, it is estimated that PPP's will fund some €13.35 billion of Plan investment. This represents an average of 7.2 % p.a. of total investment over the seven years of the plan. The target of €13.35 billion comprises €11.21 billion for PPP's funded by future unitary payments and €2.14 billion to be paid for by user charges, such as road tolls.

2.2 What is a Public Private Partnership?

A PPP is a partnership between the public sector and the private sector for the sole purpose of delivering a project or service that would normally have been provided by the public sector.

PPP's are the joining of two groups with the purpose of designing, planning, financing, constructing and/ or operating and infrastructures and services that enable the government to have the projects completed with out the large costs to themselves.

Types of contract for PPP's

There is a range of contractual forms associated with PPPs. The most common in Ireland are;

Design and Build

D&B contracts are entered into between the public sector bodies and the private sector with the design and construction of public facilities or infrastructure in mind. The private sector contractor is given a list of performance requirements for the facility, the contractor then builds the facility for a fixed price and if the construction costs rise then this is met by the contractor. When the contractor is finished the ownership is transferred over.

Design, Build & Operate

DBO contracts are drawn up between public sector bodies and private sector contractors for the purpose of design, construction and operation of public facilities or infrastructure. The contractor designs and builds the facility according to performance requirements and then they take on the responsibility of operating and maintaining the facility for an agreed term. At the end of the agreed term all the responsibility is returned to the public sector. All financial costs are met by the public sector.

Design, Build, Operate & Finance

DBOF contracts are drawn up between public sector and private sector contractors for the design, construction, operation and financing of public facilities. The private sector contractor is responsible for design, construction, operation and financing of the facility and it recovers the cost of the project solely from the payments of the public sector. At the end of the contract, all ownership is transferred over to the public sector who then takes over of the operation of it.

2.3.4 Concession

Concession contracts are similar to DBOF except that the private sector recovers its costs either through direct user payments or a mixture of user charges and public payments.

2.4 Types of Procurement of PPP's

Open Procedure

Restricted Procedure

Negotiated Procedure


Financing of Public Private Partnerships

Chapter 3

To find if PPP's are widely used through out Europe.

Chapter 4

An Outline of New PPP's in the education