What a new World Bank report tells us about how countries manage PPPs

Managing and executing large-scale public-private partnerships is already a tough task, and governments aren’t making it any easier by not adopting best practices, according to a new World Bank report. The multilateral agency released Thursday the 2017 edition of its “Benchmarking PPP Procurement” study, which assesses the systems and processes that countries employ to carry out PPPs for large infrastructure projects. The report looked at the PPP capabilities of 82 countries measured across four areas — preparation, procurement, unsolicited proposals and contract management. The survey says that there is much room for improvement. “Many economies are yet to adopt broadly recognized good practices to prepare, procure and manage public-private partnerships,” the World Bank said in a statement announcing the launch of the report. The successful implementation of PPPs that ensure fair competition, favorable returns on public investment and resilient infrastructure will become increasingly important tools for governments and private industry to achieve the 2030 development agenda. Large infrastructure services delivered through PPP models are seen as one contributor to economic growth, poverty alleviation and other development objectives. In the Addis Ababa action agenda from the third International Conference on Financing for Development, countries underscored that importance of PPPs by expressing an intent to “build capacity to enter into public-private partnerships.” The World Bank report identifies countries as lacking best practices across all four areas, but project preparation and contract management are two areas where they fall particularly short. For example, approximately two-thirds of the countries surveyed require potential PPP projects to be measured by indicators such as socioeconomic impact, affordability, risk identification and bankability. However, only about one-third of those countries have adopted specific methodologies for conducting those assessments, the report points out. And though PPPs are complex and difficult ventures to structure, around 40 percent of the countries surveyed either do not specify a minimum period for the preparation of bids or require a period of less than 30 days. Countries could also do better job with PPP transparency by publicly disclosing more information of the contracts that govern the arrangements. A transparent and competitive bidding process is widely considered essential to achieving better outcomes for projects. Ninety-three percent of the countries surveyed publicly disclose PPP tender notices and 74 percent announce the eventual winners. But just 23 percent of countries publish the PPP contract itself and very few do so online, the report notes. “The report aims to inform decision-making on the design of PPP procurement policies and regulations by comparing economies to recognized good practices that ensure transparency and encourage fair competition,” said Fernanda Ruiz Nunez, a senior economist at the World Bank. Currently no systematic data exists to quantifiably measure the capabilities of governments to manage PPPs. But the report is the World Bank’s first attempt to collect and present comparable data on PPP indicators by assessing frameworks across 82 countries. To conduct the assessment, the World Bank used a highway transport project as a case study and cross-compared the various processes to deliver it among the different countries surveyed. The World Bank’s “Benchmarking PPP Procurement” survey first launched in 2015 with the aim of supporting policymaking decisions around public-private infrastructure arrangements. It was designed with a similar methodology as the bank’s annual “Doing Business” report, which measures the business and investment climate of countries around the world. Join Devex to network with peers, discover talent and forge new partnerships in international development — it’s free. Then sign up for the Devex Impact newsletter to receive cutting-edge news and analysis at the intersection of business and development.