Australia is currently in the midst of an infrastructure boom. The key catalyst of this is the Australian Government’s pledge to spend $110 billion on transport infrastructure projects across the nation over the next decade.
Infrastructure projects by nature are high risk, have large project values, and long construction times. Public Private Partnerships (PPP) have emerged as the preferred procurement method for such projects.
In a PPP type arrangement, the State (public sector) is legally bound to a private consortium and the partners agree to share some portion of the associated risks and rewards inherent in these
Under the PPP model, the infrastructure project will form part of a partnership between the State and the Private Sector via a long-term agreement, normally through the implementation of a Design, Build, Operate and Transfer’ (DBOT) system.
In PPP projects, the Private Sector provides the design, construction, financing, and operation of the infrastructure, in return for payments from the users of the infrastructure or the State.
Currently, there are a few large scale PPP infrastructure projects in Victoria, which have encountered cost blowouts, delays &/or legal disputes.
The West Gate Tunnel PPP project is one such case, which is presently facing substantial delays and cost overruns due to disputes over the disposal of contaminated spoil.
These issues have arisen potentially due to a lack of collaboration between the public and private sector and both parties maintaining their legal positions.
Public Private Partnerships are nothing new, yet there is an increasing need for partnerships that offer an increased opportunity to deliver better infrastructure needs with a comparable
exchange of profits, risks, and resources.