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What is PPP?. Planning + Building + Financing + Operation (+ Post-contract life) = PPP. PPP-Sectors: PPP – construction, PPP – infrastructure. Folie 2. Movement of selected public sectors towards private structures. Types of PPP contracts - in German law -.

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what is ppp
What is PPP?

Planning

+ Building

+ Financing

+ Operation

(+ Post-contract life)

= PPP

PPP-Sectors: PPP – construction, PPP – infrastructure

types of ppp contracts in german law
Types of PPP contracts- in German law -

Differences and core content

Acquisition model Hire-purchase of facility/asset

Owner model Planning, construction, financing, operation under ownership

of the principal

Leasing model Rent with option to buy

Rent model Contract for rent extending beyond 10 years

Contracting model Contract to operate the facility/asset

Licence model Operation of facility/asset with user fees collected privately

Company model Operation by way of project group

ppp project structure example

Licenser

Advisor

Advisor

Fed / Land / Municipality

PPP project structure- example -

Service

Construction

Concession

Grant

Loan provider

Shareholder

Equity capital

Loan

Licensee

Banks/capital market

Investors

Project company

Return

Interest/re-payment

Maintenance

Operation

Remuneration

Remuneration

Construction at agreed

price and timeframe

Remuneration

Operator

Maintenance

Operation

Maintenance

General contractor

Provision of service

Rent or fee

Construction planning

Public sector or private sector use

history of ppp at eu level
History of PPP at EU level

07 May 2003 Commission publishes “Internal market strategy – priorities 2003 – 2006”, which highlights the need to clarify legal issues relating to PPP. The publication of a green paper on PPP is announced.

21 May 2003 Commission publishes Green Paper on services of general interest. This paper entails a substantial review of the Commission's service policy and asks whether a general legal framework should be created at Community level for services of general interest. The Commission plans top publish a green paper on public procurements and on PPP in the second half of the year.

30 Apr 2004 Commission adopts Green Paper

30 Apr 2004 Forwarded to the Council

30 Apr 2004 Forwarded to the European Parliament (EP)

27 Oct 2004 Opinion by the European Economic and Social Committee

17 Nov 2004 Opinion by the Committee of the Regions

End 2005 Commission announces resolution on further PPP legislation for the end of 2006

26 Oct 2006 Resolution by EP

history of ppp at federal level in germany
History of PPP at federal level in Germany

Source: PPP Task Force, Federal Ministry for Transport, Building and Urban Affairs

market structure of ppp in germany

More PPP

More private capital for public tasks

Market structure of PPP in Germany

More co.’s in the provision of public services

Framework

More/bigger projects

Admin. building

Education Research

Laws

Regulations

Models

Transport

modify:

Contracts

PC

PSC

Budget issues

System of NA

Double entry bookkeeping

Defence

Health

Provision amendments:

Competition law

Tax law

Accounting law

Statistics law

Change in rules on awarding contracts

PB = Profitability calculations

PSC = Public Sector Comparator

NA = National accounting

ppp organisation of the govt in germany

Ministry of Transport

Ministry of Defence

Ministry of Economics

ConstructionTransportCivil Defence

PPP organisation of the govt in Germany

Project working group PPP

Task Force

g.e.b.b.,

Dept. M / Group M I

Gesellschaft für

Entwicklung, Beschaffung

und Betrieb mbH

Project development co.

Roads Rail,

Sea,

Air

Ministry of Finance

Federal states

East West

Deutsche Einheit

Fernstraßenplanungs-

und -bau GmbH

Verkehrsinfrastruktur-

entwicklungsgesellschaft mbH

Deges

VIFG

= Project management co.’s

the ppp procurement process in germany agreed procedure between central and regional government

The phases in the PPP procurement process

Steps in examining PPP profitability

Phase I

Determining needs, financeability and profitability of measures

PPP test for suitability

Preliminary decision for or against continuing to pursue varies PPP options

Phase II

Drawing up conventional comparative values (Public Sector Comparator – PSC)

Provisional examination of profitability

Preliminary decision for or against publishing call for tender

Determining the maximum amount to be appropriated in the budget (budget readiness)

Appropriation in budget and call for tender

Phase III

Final profitability analysis

Final decision on awarding and signing of contract

Phase IV

Project controlling

The PPP procurement process in GermanyAgreed procedure between central and regional government

an example for possible risk allocation traditional procurement vs ppp
An example for possible risk allocation – traditional procurement vs. PPP

Traditional procurement

PPP

Public sector Private partner

deficient construction

unavailability

bad service

insufficient usage

obsolescence

residual value below forecast

deterioration of commercial basis (framework)

force majeure

changing legislation

deficient construction

unavailability

bad service

insufficient usage

obsolescence

residual value below forecast

deterioration of commercial basis (framework)

force majeure

changing legislation

abc modules of tender i

ABC modules of tender I

Module A: Construction

Mostly invitation to tender as a general contractor subject to the provisions

of the guidelines on awarding contracts; to be built, for example, on a piece

of land owned by the party issuing the invitation to tender

Module B: Financing part A

B1: conventional lease financing via the budget

B2: pure finance leasing (no equity capital of private investors, thus no tax effects), sometimes with forfeiting.

B3: tax-optimised fund leasing models with equity capital of private investors.

Module C: Investor model

Same-source construction and financing on the basis of the conditions of

modules A and B with a fixed-price model without disclosing the details of

the calculation.

abc modules of tender ii

ABC modules of tender II

In addition to parts A, B und C, additional tenders can be invited in suitable cases:

Module D: Similar to Module C, but using functional description of construction and

with the bidder’s own planning, possibly also on a piece of land owned

by the party inviting tender.

Module E: Offers to buy, hire-purchase of simply rent suitable objects which have

already been built or which are in the process of being built.

slide13

Folie 13

Overview of the current status of the PPP Simplification ActProject working group consisting of the majority parties in the German Bundestag and including representatives of German industryAs of May 2007

overview of standardisation work of central and regional governments in germany

Overview of standardisation work of central and regional governments in Germany

* SME = Small and Medium sized Enterprises

table of ppp projects iii
Table of PPP Projects III

Landesprojekte

Bundesprojekte

slide21

Folie 23

What Partnerschaften Deutschland represents

Partnerschaften Deutschland is conceived as a broadly positioned quality service provider offering comprehensive consulting services on PPP matters for the public sector – with a focus on the early stages.

What Partnerschaften Deutschland offers:

  • Objectivity, independence and credibility
  • Cost savings (optimisation of processes, standardisation, know-how)
  • Speed (especially easy to engage its services)

But:

Public authorities can continue to procure consulting services on the open market

partnerschaften deutschland s areas of activity

Folie 24

Partnerschaften Deutschland’s areas of activity

Dual mission

Areas of activity

Projectadvisory service

Specific investment projectsProviding highly qualified, professional advice for the public sector when examining the use of PPP for investment projects as well as when scoping and implementing specific PPP projects

Basic PPP advisory service on behalf of public sector

Framework conditionsAdvising the public sector in further developing standards and the institutional basis for PPP

Systematic knowledge transferPromoting knowledge transfer between all involved in PPPs, targeted build-up of PPP know-how within the public administration

Market development Highlighting areas of priority for PPP andsupporting policymakers and the administration in creating a sustainable PPP pipeline

slide23

Folie 25

Organisation and ownership structureof Partnerschaften Deutschland

Shareholdings

Companies/executive bodies

Advisory bodies

Public-sector shareholders

Private-sector shareholders

Industry, banks, etc.

Federation

Länder

Local authorities

1%

99%

Holding company

50.1%

49.9%

General meeting

Advisory board

Supervisory Board

Management board

Partnerschaften Deutschland

avoiding the adviser tenderer problem and conflicts of interest

Folie 26

Avoiding the adviser/tenderer problem and conflicts of interest
  • Avoiding the adviser/tenderer conflict and direct holdings through the interposition of the holding company and avoiding overlap between representatives of private shareholders and bodies or employees of Partnerschaften Deutschland
  • Delegation of staff from the private shareholders of the holding company are excluded from Partnerschaften Deutschland for project work
  • As the holding company is not dedicated to a specific purposes and is not dominated by one company (or industry) either, steps have been taken to ensure that the operative activities of Partnerschaften Deutschland cannot be influenced by the particular interests of its shareholders
slide25

Folie 27

Procedure for selecting private shareholders

Formal award procedure

Informal survey of

market’s

interest

Bidding competition

Award

Examine markets‘ interest in participation

“Lots” to include

different PPP industries

  • Selection of
  • applicants qualified for PPP
  • Selection criteria
      • PPP experience / references
      • Ability
  • Acquisition of share inholding company /Partnerschaften Deutschland
  • Criteria for the award of holding
      • Price for the share
      • Quality of the concept for participation
  • Assessment criteria
      • Qualitative
      • Financial