Public Private Partnerships – Can They Deliver Better Value for Money?

This research paper examines the risks and opportunities of Public Private Partnerships (PPPs) in delivering sustainable infrastructure. It analyzes high-profile failures, such as the collapse of Carillion in the UK, and critiques current policy approaches in the US and developing nations, arguing that PPPs often fail when used primarily to keep debt off public balance sheets rather than to optimize value for money.

• The collapse of the UK-based firm Carillion in January 2018 illustrates the risks of PPPs, where cost overruns and delays in three major projects—the Midland Metropolitan Hospital (GBP 350m), Royal Liverpool Hospital (GBP 335m), and Aberdeen bypass (GBP 745m)—led to a GBP 1 billion write-down and eventual liquidation.
• The United States' USD 200 billion "Rebuilding Infrastructure" plan is criticized for selection criteria that prioritize funding from non-federal sources (weighted at 70 per cent) over the potential to "spur economic and social returns on investment" (weighted at 5 per cent), which may favor opulent projects over essential infrastructure for lower-income citizens.
• A primary driver of PPP failure is the tendency of governments to use them as a mechanism to keep debt off public balance sheets, which can erode the incentive for optimizing value for money and lead to poor project preparation.
• In middle- and lower-income African countries, high debt levels (median above 50 per cent of GDP) and rising interest rates in North America and the EU increase the cost of servicing infrastructure bonds, straining public budgets.
• The author argues that for PPPs to be sustainable, governments must move away from selecting the lowest bidding price and instead adopt strategies like the EU's "most economically advantageous tender" or the US "Guaranteed Maximum Price" contracting approach.
• The 2017 World Bank Group's Guidance on PPP Contractual Provisions is criticized by stakeholders, including the IISD, for being skewed toward private counterparty interests and failing to provide a basis for equitable risk allocation.

APA

International Institute for Sustainable Development (2018). Public Private Partnerships – Can They Deliver Better Value for Money? https://www.iisd.org/articles/policy-analysis/public-private-partnerships-can-they-deliver-better-value-money

Chicago

International Institute for Sustainable Development. Public Private Partnerships – Can They Deliver Better Value for Money? 2018. https://www.iisd.org/articles/policy-analysis/public-private-partnerships-can-they-deliver-better-value-money.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=Public Private Partnerships – Can They Deliver Better Value for Money? |date=9 April 2018 |url=https://www.iisd.org/articles/policy-analysis/public-private-partnerships-can-they-deliver-better-value-money |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopment2018public, author = {{International Institute for Sustainable Development}}, title = {{Public Private Partnerships – Can They Deliver Better Value for Money?}}, institution = {International Institute for Sustainable Development}, year = {2018}, month = apr, url = {https://www.iisd.org/articles/policy-analysis/public-private-partnerships-can-they-deliver-better-value-money}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }