PPP Center
Partnership structures, and where each one fits
A structure is a tool for allocating risk to whoever is best placed to manage it. Choosing the wrong one is the most common reason infrastructure transactions fail — so each is set out here with its limitations, not only its benefits.
No NBP project has yet reached commercial structuring, so no structure below has been selected for any initiative. This page explains the options so that when structuring begins, the reasoning is legible to every party. A structure is screened against value for money and risk allocation — never adopted because it is fashionable or because it moves cost off a balance sheet.
Nine structures
Public Procurement
The public authority funds the asset and contracts a supplier to build it. Ownership and operation remain public throughout.
Potential use cases
- Assets with no user revenue
- Works where scope is well defined
- Smaller or urgent projects
Benefits
- Simplest to procure
- Lowest transaction cost
- Public authority retains full control
Limitations
- Public balance sheet carries the whole cost
- No private capital mobilised
- Whole-life cost incentives are weak
Risk considerations
Construction and lifecycle risk sit with the public authority. Cost overruns fall on the public budget.
Design-Build
A single contractor takes responsibility for both design and construction against a defined output specification.
Potential use cases
- Projects where design and build coordination drives cost
- Standardised facilities
Benefits
- Single point of responsibility
- Design and construction risk transfer
- Often faster delivery
Limitations
- No operating incentive
- Public authority still funds the asset
Risk considerations
Interface risk reduces, but operating performance is not the contractor’s concern once handed over.
DBFM — Design, Build, Finance, Maintain
The private partner designs, builds, finances and maintains the asset, and is paid availability payments over the term.
Potential use cases
- Social infrastructure
- Assets with no user charge
- Where maintenance quality matters over decades
Benefits
- Whole-life cost incentive
- Private finance mobilised
- Maintenance obligations contractually enforced
Limitations
- Long procurement
- Higher financing cost than sovereign borrowing
- Requires reliable payment capacity
Risk considerations
The public authority carries demand risk and must sustain availability payments for the full term.
DBFO — Design, Build, Finance, Operate
As DBFM, with the private partner also operating the service, typically taking some or all of the demand risk.
Potential use cases
- Assets with user revenue
- Where operating expertise is the constraint
Benefits
- Operating expertise transferred
- Strong performance incentives
- Demand risk may transfer
Limitations
- Complex to structure
- Requires credible demand forecasting
- Renegotiation risk over long terms
Risk considerations
Demand risk transfer is only real if the forecast is credible. Optimistic forecasts return as renegotiation.
Concession
The private partner is granted the right to operate an asset and collect revenue for a defined term, then returns it.
Potential use cases
- Ports
- Toll roads
- Utilities with tariff revenue
Benefits
- Substantial private investment
- Operating and demand risk transfer
- No ongoing public payment
Limitations
- Requires viable user charges
- Tariff regulation must be settled first
- Affordability constraints
Risk considerations
Tariff and regulatory risk determines viability. Handback condition must be specified precisely at the outset.
Lease (Affermage)
The private operator runs and maintains a publicly owned asset, retaining part of the revenue, while the authority funds capital works.
Potential use cases
- Water utilities
- Existing assets needing operational improvement
Benefits
- Operating improvement without transferring capital risk
- Shorter term than a concession
Limitations
- Capital investment remains public
- Limited incentive for major upgrades
Risk considerations
Suits assets where operating performance rather than capital is the binding constraint.
Joint Venture
Public and private parties co-own the project company, sharing both control and returns in proportion to their stakes.
Potential use cases
- Industrial zones
- Strategic assets where public participation is required
Benefits
- Aligned incentives
- Shared capital burden
- Public authority retains visibility
Limitations
- Governance can be slow
- Conflicts between commercial and public objectives
Risk considerations
Decision rights and deadlock provisions must be settled before formation, not after.
Independent Power Producer
A private generator builds and operates capacity, selling output under a power purchase agreement.
Potential use cases
- Generation capacity
- Renewable projects with a creditworthy offtaker
Benefits
- Rapid capacity addition
- Private capital and operating expertise
- Established structure
Limitations
- Requires a creditworthy offtaker
- Grid capacity must exist to accept output
Risk considerations
Offtaker creditworthiness is the determining factor. Without it, the structure will not finance.
Managed Service
A private provider delivers a defined service against performance standards, without owning the underlying asset.
Potential use cases
- Digital services
- Facilities management
- Equipment maintenance
Benefits
- Fast to procure
- Performance-based
- Easily re-tendered
Limitations
- No capital investment mobilised
- Limited scope
Risk considerations
Suits capability gaps rather than capital gaps.