What are the differencies between conventional and PPP procurements?

Conventional procurement

Public sector institution prepares detailed specifications that describe the works required to deliver the necessary good or services. The works are then put out to tender in order to get the most competitive priced bid. Once the contract is awarded, the client (or its representative) closely supervises the works carried out by the successful partner in order to ensure compliance with the specifications.

Thus the client assumes the responsibility for designing and planning the project, fulfilling all statutory requirements (such as environmental permits, heritage approvals, town planning requirements, etc.) and covering any unexpected costs. The partner is responsible for the construction of the works in accordance with the tender documentation and is thus only responsible for matters covered in the tender documentation or those which could reasonably have been foreseen from the tender documents.

Conventional procurement is based on input specification where the Institution decides what it wants in order to deliver a service and takes full responsibility for all works related to the delivery of the service.

PPP procurement

When assessing a project through a PPP process it is crucial to define the desired functionality or result for procurement on the basis of output specifications. Here, the client defines the service that is required. These output specifications are then included in a financial model to allow for comparability between the two forms of procurement: public and private. Should the PPP option be preferred, the client leaves certain design stages of the works necessary to deliver that sevice up to the partner that will be selected through the bidding process. In some circumstances, due to plicy or strategic reasons the design requirements may not be left entirely to the discretion of the partner and in these cases the client may specify some inputs. The preferred approach however is to ensure that projects are driven substantially to the private party and thereby ensure greater value for money for the Government.

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