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€94.010 -0.37 %   12/08/2022 17:35

Critics: PPPs are expensive

Not true!

PPPs are awarded after a highly competitive process, which guarantees the best services for the best price.

Naturally, the private operator aims to make money on the basis of the capital it invests, the risks it takes and the work it does, and to make a profit.

Although building infrastructure is expensive, that cost only represents a small portion of the total cost for operating and maintaining the infrastructure over the long term. It’s important to consider, from the outset, the total cost of infrastructure construction, maintenance and operation throughout its life cycle, which is possible under a PPP because the costs are defined in the contract at the start of the project.

Life cycle cost of infrastructure: Stade de France example

The construction cost only represents a small portion of the total cost to maintain and operate the infrastructure over the longer term.

To be able to assert that PPPs are expensive would require a comparison to be made with the cost to a local authority of the same facility built under public programme management and operated by a public entity, with the costs including construction and delivery, financing, repair and maintenance (particularly payroll costs), and operation over 10, 20 or 30 years. Unfortunately, this comparison is hardly ever made.

Last updated: 26/02/2019