American University of Ras Al Khaimah

School of Engineering
Civil & Infrastructure Engineering Department

CIEN 441
Construction management
Assignment 2
(Public Private Partnership (PPP) report)
Instructor: Dr. Shadi Altawil
Submitted by:
Baha Azim 2015002167
spring 2019

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 Table of Contents:

Introduction ………………………………………………………………..…………. Page 3

What is (PPP)? …………………….…………………………………………………. Page 3

Types of (PPP):

(BOT) ...………………………………………………………………...………...…. Page 3

(BOO)(BOOT)(DB)(DBO)…………………………………………………...…….... Page 4

(DBFO)(DBFM)(DBMFO)(DCMF)(Operation & Maintenance)…………………… Page 5

THE PPP LIFE-CYCLE ……………………………………………...……………… Page 6

The PPP in Infrastructure projects in UAE ……...………………..……….………….. Page 7

Conclusion …………………….……………………………………….…… ……… Page 8

References …… ……………….……………………………………….… ………… Page 9

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Introduction:

Any legal project which is planed for construction, and is involving multiple sides like, the

owner, the consultant, and/or the contractor, must be built over a written, or an oral contract.

And PPP is one of the most important, and efficient ways of contracting mainly big projects.

This report will mainly focus on the definition of the PPP contract, along with its types,

advantage and disadvantages, and the life span or process of a PPP contract.

What is (PPP)?

PPP, or public private partnership, is an arrangement, or an agreement that is set between

one privet sector, and one public sector, or more sectors of each side, and is usually of a long

lifespan. Such phenomenon has been practiced by humans throughout their existence, as where

civilizations which have governments, civilians, and relations between the two sides exist,

arrangements of that sort would naturally also exist; even though such arrangements were not

properly studied until later in the history of mankind, to be exact, specialists only started

studying, and investigating the concept of public private partnership in the late 1980s, and it only

rose in the 20th century, and 21st century.

Types of (PPP):

1. Build – Operate – Transfer (BOT)

A BOT is a method used to develop individual asset, and not a whole network, for

example a toll road. This simple structure provides the most freedom for the private sector

partner during construction and the public sector bears the equity risk.

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 2. Build – Own – Operate (BOO)

This is a similar structure to BOOT (below), but the facility is not transferred to the public

sector partner. A BOO transaction may qualify for tax exempt status and is often used for water

treatment or power plants.

3. Build – Own – Operate – Transfer (BOOT)

The private sector builds and owns the facility for the duration of the contract, with the primary

goal of recouping construction costs (and more) during the operational phase. At the end of the

contract the facility is handed back to the government. This structure is suitable when the

government has a large infrastructure financing gap as the equity and commercial risk stays with

the private sector for the length of the contract. This model is often used for school and hospital

contracts.

4. Design – Build (DB)

The contract is awarded to a private partner to both design and build a facility or a piece of

infrastructure that delivers the performance specification in the PPP contract. This type of

partnership can reduce time, save money, provide stronger guarantees (as the work is with a

single entity rather than a consortium) and allocate additional project risk to the private sector.

5. Design – Build – Finance (DBO)

The private sector constructs an asset and finances the capital cost during the construction period

only.

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 6. Design – Build – Finance – Operate (DBFO)

7. Design – Build – Finance – Maintain (DBFM)

8. Design – Build – Finance – Maintain – Operate (DBMFO)

For (DBFO), (DBFM), and (DBMFO): Similar to BOOT, DBFO (and its variations) is more

used in the UK for PFI (Private Finance Initiative) projects. The private sector designs, builds,

finances, operates an asset, then leases it back to the government, typically over a 25 – 30-years

period. Public sector long-term risk is reduced and the regular payments make it an attractive

option to the private sector.

9. Design – Construct – Maintain – Finance (DCMF)

Design, Construct, Maintain and Finance is very similar to DBFM. The private entity creates the

facility based on specifications from the government body and leases it back to them. This is

generally the convention for PPP prison projects.

10. O & M (Operation & Maintenance)

In an O&M contract, a private operator operates and maintains the asset for the public partner,

usually to an agreed level with specified obligations. The work is often sub-contracted to

specialist maintenance companies. The payment for this contract is either via a fixed fee, where a

lump sum is given to the private partner, or more commonly a performance-based fee. In this

situation, performance is incentivized using a pain share / gain share mechanism, which rewards

the private partner for over-performance (according to the agreed SLAs) or induces a penalty

payment for work which has fallen short.

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THE PPP LIFE-CYCLE:

When implementing Public-Private-Partnerships, it is important to use the life-cycle concept.

Success depends on the government’s capacity to execute and manage innovative partnerships.

All too often, too much emphasis is placed on the transaction, overlooking other critical factors.

Focusing on this part is something important but a small part of a wide range

The PPP life-cycle generally involves THREE MAJOR phases:

i. POLICY AND PLANNING PHASE: This phase, includes the establishment of the legal,

regulatory, institutional and policy framework for PPP.

ii. TRANSACTION PHASE: The purpose of the transaction phase is to secure the best

value for money. This is achieved through a quantitative and qualitative analysis of

project options (feasibility studies) and the establishment of performance standards and

incentives.

iii. PARTNERSHIP PHASE: During this phase, the private partner operates the

infrastructure facility, while the budget organization provides oversight and compliance

monitoring. And there are some stages: 1-construction 2-operations 3-termination.

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ADVANTAGES AND DISADVANTAES:

ADVANTAGES:

• Uses private sector’s expertise with investments from the public sector (government).

• It allows the project to have a higher quality, because it would be done by experts.

• It may include early completion bonuses that would assist in increasing efficiency.

• Attracting national, regional and foreign investments.

• Reducing government spending and funding and/or sharing economic risks with the

private sector.

DISADVANTAGES:

• Could be more expensive.

• Are complicated, long term, and inflexible.

PPP in the UAE:

The PPP model would serve the UAE's objectives and motivation in actualizing a

reasonable, focused economy dependent on information, skills

In addition, it is an ideal option to render efficient commodities and services at a lower

“The UAE is committed to lower its carbon footprint and is getting prepared to generate at least

27 per cent of total power generation from low carbon technologies by 2021. To achieve this

target, the UAE mobilized the private sector expertise and international capital in long-term

partnerships between the public and private sectors.”

This means that PPP is one of the most important elements that helped and will help in the future

to develop and reduce losses in all respects.

In my opinion, following this approach within the UAE is very successful.

Some of (PPP) infrastructure projects in UAE:

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 • Abu Dhabi’s Masdar solar and wind projects across a range of different geographies.

• the upcoming Route 2020 project expected to extend Dubai Metro from Jebel Ali to

the Expo 2020 site.

Conclusion:

In our opinion, the importance of the project and its strength depends heavily on the funding that

the state will provide to private companies, because this will facilitate many things

But at the same time it is a risk and bear it will be on the financier.

according to what we learned from the infrastructure financing these risks must be taken

equivalent not equal.

I can conclude that the PPP is a very successful way to use it in the future in any area, if

appropriate conditions and elements are available.

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References:

• Road Safety - The Official Portal of the UAE Government,

www.government.ae/en/information-and-services/business/public-private-people-

partnership/public-private-partnership.

• rajeshrvth60 Follow. “Public Private Partnership.” LinkedIn SlideShare, 25 Mar.

2016, www.slideshare.net/rajeshrvth60/public-private-partnership-60013493.

• https://masdar.ae/en/media/detail/masdar-signs-framework-agreement-with-jordan-

to-accelerate-renewable-energy

• https://gulfnews.com/business/banking/uaes-ppps-unlock-private-capital-for-

renewable-energy-1.1939515

• “PPP Advantages and Disadvantages.” Ministry of Finance of the Republic of

Lithuania, www.finmin.lrv.lt/en/competence-areas/public-and-private-partnership-

ppp/ppp-advantages-and-disadvantages.