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Public-Private Construction

Partnership
Jakarta, Indonesia Many believes that public-private partnerships or P3 can be the longawaited solution for the construction industry, developing new strategic alliances,
improving public services and reducing government costs. This kind of business in the
construction industry happens when the government partners with private construction
companies like Axis Capital Group in creation of public works and highways. Public-private
partnerships can be negotiated using different contracting methods producing the
projected results allowing a faster benefit to all citizens. Depending on the job being
executed Public Private Partnerships will results in greater benefits and will allow the
business to develop into an exciting emerging market.
Public Private Partnerships (P3) offer several benefits:
Public Private Partnerships could increase and provide greater infrastructure solutions.
It will offer faster project completion and reduced delays on infrastructure projects
The Public private partnerships return of investment (ROI) is greater when compare to
traditional methods, due to innovative design and financing approaches
Public private partnerships identify the expected life-cycle cost analysis and schedules
the operation and maintenance component of the project, programming their cost and
expected devaluation

Risks are weighted from initial conceptual stages to determine the feasibility of a certain
project warning both parties on more detailed issues that may come along the way
The operational and project execution risk is transferred totally to the private sector,
leaving the public component on a win-win situation
P3 allows government funds to be re-directed to other important socio-economic areas
thus reducing complaints from citizens on public funds
Reduces government budget and budget deficits
High quality standards should be obtained and maintain through expected life-cycle of the
project
Public Private partnership allows a reduce tax payment from users
Allows the government to direct the expected function of the project in accordance to
their own interests
Public Private Partnership Disadvantages
Every Public private partnership has risks involved, and the government will have to pay
the price to transfer those risks to the private sector
Certain situations can affect the purity of the process due to specialized areas being
improved, reducing the number of contractors available to perform the requested projects
Profits of the projects can vary depending on the assumed risk, competitive level,
complexity and volume of the project being performed
There is a slight risk that the proposed contracting alternative being offered is not the
best suited option.
Government representative must be highly specialized personnel and contracting experts.