Beruflich Dokumente
Kultur Dokumente
http://www.jofamericanscience.org
http://www.jofamericanscience.org
91
editor@americanscience.org
http://www.jofamericanscience.org
Conventional
PPP
Privatization
Finance
Relationship
Applicability
Risk
Involvement
4. Principles of PPP
According to Oxford dictionary, principle is
a general idea or plan, used to indicate something is
theoretically possible which in reality may not
actually happen. There are several principles to be
considered when applying PPP. Key principles for
applying PPP are competition tender bidding, value
for money, output specification and key performance
index (KPI), and equitable risk distribution.
4.1 Competition tender bidding
The most important principle in PPP is the
competitive bidding. It is very important that bidding
process must be transparent, clearly spelt out where
short-listed company is invited for negotiation to get
the project. But in Malaysia, open tender is not fully
applied and there are several companies which have
already been awarded projects under the PPP
procurement without any competitive bidding
(Khaderi and Aziz, 2010). For example; Penang
Second Bridge was awarded to UEM Builders Bhd
under PPP procurement without any open tender
process. Ekovest Bhd and Faber Group also got the
http://www.jofamericanscience.org
92
editor@americanscience.org
http://www.jofamericanscience.org
Economic
Legal
Risk Factor
Political conflicts
Poor decision making process
Political opposition to project
Poor financial market
Inflation rate
Legislation change
Tax regulation change
Social
Natural
Force majeure
Geotechnical conditions
Weather
Land acquisition
Level of demand for project
Financing capacity
Financial attraction to investors
Less revenue generation than expected
Delay in project approvals and permits
Construction cost overrun
Construction delay
Low operating productivity
Maintenance costs higher than expected
Inadequate experience in PPP
Inadequate distribution of responsibilities and risks
Difference working method
Lack of commitment
Staff crises
Project Selection
Finance
Design
Construction
Relationship
Third party
http://www.jofamericanscience.org
93
Preferred Allocation
Government
Government
Government
Government
Primarily to private
Shared
Primarily to private
Dependent upon
project
Shared
Private
Private
Public
Primarily to private
Private
Primarily to private
Private
Dependent upon project
Private
Private
Private
Private
Dependent upon project
Shared
Primarily to private
Shared
Primarily to private
editor@americanscience.org
http://www.jofamericanscience.org
5. Mechanism of PPP
Mechanism refers to the theory that
completes the explanation of the implementation of
any process. This section discussed on the participant
involved in PPP projects and the process of PPP
procurement.
5.1 Parties involved
There are eight participants involved in PPP
process as in Figure 2.1. From figure 1 it can be
noted that civil engineers (CEs) are represented at the
intersection of the different participants. This means
CE should represent as good leader to conduct PPP
project. So, they should be able to communicate very
well, understand the positions and also can solve
arguments from the other team members. It is not
expected that CE will be experts in all the domains
involved with PPPs, however, CE should be
Knowledgeable and skilled when interacting with the
participants from the other disciplines. On the other
Table 3: Interaction between Civil Engineers and other participants in PPP transactions
Participant
Major Role
Financial
Institutions
Lawyers
Accountants
Investors
Policy
Makers
Contractors
Public /
Users
http://www.jofamericanscience.org
94
editor@americanscience.org
http://www.jofamericanscience.org
http://www.jofamericanscience.org
95
editor@americanscience.org
http://www.jofamericanscience.org
Descriptions
Private sector is responsible to finance, design, construction, operate, and maintain the project
along concession period. Finally, the asset is transferred back to the government at the end of
concession period (Kumaraswamy and Zhang, 2001).
The private developer obtains exclusive permit to finance, build, operate, maintain, manage and
collect user fees for a fixed period to pay back investment. At the end of the contract, the facility
is transferred back to a public authority
It is similar to a BOOT project, however, the private sector retains the ownerships of the asset in
long period. The government only agrees to purchase the services produced for a fixed length of
time (Chege and Rwelamila, 2001).
This approach can be taken where local government requires a new facility or service but may not
be in a position to provide financing. Thus, the private partner involves with design, finance and
building a facility. Then leases to the Government for a specified period after which ownership is
shifted with the local government
6. Summary
PPP is now days growing procurement
method which can be beneficial in developing the
countries if implemented properly. Thus, in order to
understand
the
fundamental
concept
and
requirements of PPP, this paper has discussed review
of literature. It has highlighted the various
procurement types together with the difference
among procurement, principles. Mechanism of PPP
also was discussed to improve understanding about
practitioners involved with PPP projects and how the
PPP process works from beginning until the end of
concession period that is applied in Malaysia. In
essence, PPP can be seen as the best alternative for
Government to invite private entities involved with
nation economic development.
References
1. Sanjeev A. Procurement Models in Agri Supply
Chain Involving Public Private Partnership.
Paper presented at FAO/AFMA/FCI Regional
Workshop on Integrated Supply Chain
Management, in Delhi, India, during 31 March
4 April, 2008
2. Loosemore M, McCarthy CS. Perceptions of
Contractual Risk Allocation in Construction
Supply Chains. Journal of professional issues in
engineering education and practice, 2008;
134(1): 95105.
3. Chan APC, Yung EHK, Lam PTI, Tam CM,
Cheung SO. Application of Delphi method in
selection
of procurement
systems
for
construction projects. Construction Management
and Economics, 2001, 19(7): 699-718.
4. Hong Kong Efficiency Unit. An Introductory
Guide to Public Private Partnerships (PPPs).
Second Edition. Hong Kong. March 2008: 16
5. Business Dictionary. Retrieved on April 7, 2012,
from
http://www.businessdictionary.com/definition/pu
blic-private-partnership.html.
6. European Commission. Green paper on publicprivate partnerships and community law on
public contracts and concessions. 327 Final,
Acknowledgements:
The authors would like to thank Universiti
Tun Hussein Onn Malaysia for supporting this study
under FRGS1222.
.
Corresponding Author:
Dr. Aftab Hameed Memon,
Faculty of Civil and Environmental Engineering,
University Tun Hussein Onn Malaysia
E-mail: aftabm78@hotmail.com
http://www.jofamericanscience.org
96
editor@americanscience.org
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
http://www.jofamericanscience.org
18.
19.
20.
21.
22.
23.
24.
25.
26.
5/10/2014
http://www.jofamericanscience.org
97
editor@americanscience.org