Advantages and challenges of PPPs
• Group C&D
• Subject: municipal law and cooperation
• University: Plasma university.
• Title: Advantages and challenges of
PPPs
• Lecturer: Ustaad Hamse Abdukadir Isse
• Group Members:
1. Cabdikariim Cabdi Cumar
2. Maxamed Ciise Munye
3. Abdirahman Osman Sulun
4. Hamse Abdi Noor
5. Asmo Abdirashid
Introduction
• Public-Private Partnerships (PPPs)
are cooperative arrangements
between the government (public
sector) and private companies
(private sector) to design, finance,
build, operate, and/or maintain
public infrastructure or services.
Common areas for PPPs include
transportation (roads, bridges,
•Advantages of Public-Private
Partnerships
•1. Efficiency in Service
Delivery
•The private sector often has
expertise, resources, and
technology that can improve the
efficiency and speed of project
execution compared to traditional
public-sector approaches.
• 2. Risk Sharing Risks
• such as financing, construction
delays, and operational
inefficiencies are shared between
the public and private sectors,
reducing the burden on taxpayers.
• 3. Access to Private Capital PPPs
attract private investment,
reducing the need for government
borrowing and spreading the
financial burden over time.
• 4. Quality Improvements
• The competition and expertise of
private firms encourage high-quality
design, construction, and
operational standards.
• 5. Innovation Private sector
participation often brings innovative
solutions to infrastructure and
service challenges, including
modern technology and advanced
management practices.
• 6. Faster Project Completion
• With streamlined decision-making
and accountability, PPPs often
complete projects quicker than
traditional public sector-led
initiatives.
• 7. Long-Term Maintenance and
Sustainability
• PPP agreements typically include
clauses for ongoing maintenance,
ensuring infrastructure remains in
• 8. Economic Growth
• Large-scale PPP projects create
jobs, boost local economies, and
improve infrastructure, fostering
overall economic development
• .9. Improved Public Services The
private sector’s focus on
customer satisfaction can
enhance the quality and
availability of public services.
• 9. Improved Public Services
• The private sector’s focus on
customer satisfaction can enhance
the quality and availability of
public services.
• 10. Cost Savings for the
Government By transferring certain
responsibilities to private entities,
governments can reduce costs
while still meeting public needs.
• 11. Focus on Core Responsibilities
• Governments can focus on
governance and policy-making
while leveraging private sector
expertise for execution.
• 12. Accountability and Performance
Contracts often include
performance-based incentives and
penalties, ensuring accountability
and adherence to high standards.
• CHALLENGES OF PPPs
• 1. High Costs
• PPPs often involve significant upfront costs
for feasibility studies, legal fees, and project
structuring. Over the long term, financing
from private entities can be more expensive
than government funding due to higher
borrowing costs and profit margins.
• 2. Complexity
• The contractual and operational
arrangements of PPPs are often complex,
requiring extensive time, expertise, and
resources to negotiate and manage
• 3. Long-Term Commitments
• PPP agreements often span
decades, limiting flexibility to
adapt to changes in technology,
public needs, or economic
conditions.
• 4. Risk of Higher User Fees
• Private sector partners may
impose higher user fees (e.g.,
tolls or service charges) to
ensure profitability, which can
• 5. Unequal Risk Allocation
• If risks are not equitably shared, the
public sector may end up bearing
the financial burden if the project
fails or does not meet expectations.
• 6. Lack of Transparency
• The complexity of PPP contracts
and the involvement of private
entities can reduce transparency,
increasing the risk of corruption,
mismanagement, or favoritism.
• 7. Government Dependence on
Private Sector
• Over-reliance on private partners
may weaken public sector
capabilities and expertise in
infrastructure and service
management.
• 8. Potential for Project Failure
• If the private partner
underperforms or fails financially,
the government may need to step
• 9. Political and Public Resistance
• PPPs may face opposition due to
concerns about privatization, loss
of public control, or perceived
inequities in service delivery.
• 10. Uncertain Financial Viability
• Revenue-based PPP projects (e.g.,
toll roads) can fail to generate the
anticipated returns due to
inaccurate demand projections,
leading to financial losses.
• 11.Environmental and Social
Concerns
• Profit-driven projects may
overlook environmental
sustainability and social equity,
causing negative long-term
impacts.
• 12. Time-Consuming Processes
• The planning, negotiation, and
approval processes for PPPs are
• 13.Limited Flexibility in
Renegotiations
• Once contracts are signed,
renegotiating terms to address
unforeseen circumstances or changing
priorities can be challenging.
• Conclusion
• To mitigate these disadvantages,
governments must establish robust
legal frameworks, conduct thorough
feasibility studies, ensure fair risk
allocation, and prioritize transparency
and accountability. Proper planning
Any Question
•Thank you
•END
