PPP (Public Private Partnership) Projects and Financing (Excel Supported)
Duration: 2 days
Instructor: Fatih KURAN
Objective: Public-Private Partnerships (PPP) represent a procurement method based on the principle of private sector entities implementing, financing, and managing infrastructure investments, such as energy, highways, hospitals, schools, and other infrastructure projects, under the supervision and oversight of the public sector. The increasing demand for infrastructure investment in developing countries has made it nearly impossible to execute these projects solely with public resources. Implementing projects through PPPs not only allows countries to execute investment projects swiftly but also leads to improvements in efficiency and service quality. This approach enables governments to focus on their core oversight and supervisory roles instead of directly managing projects.
This intensive 2-day program will explore PPP practices worldwide, examine various PPP models and sectors where they are widely implemented, and highlight the advantages of PPP. Additionally, the techniques used in financing PPP projects and their close relationship with project finance will be comprehensively evaluated. Excel-supported applications will be used to analyze the risk profiles of PPP projects from investors’ and public sector perspectives and assess their implications for project financing.
Fundamental Concepts of PPP
The Reasons for the Growing Importance of the PPP Model
Current Situation, Future Trends and Expectations
Differences Between Traditional Public Procurement and PPP
Types of PPP
In the world Different PPP Applications in Industries
Examples of PPP Practices in Various Sectors Worldwide
Contractual and Legal Responsibilities in PPP Practices
Basics of Financial Feasibility Studies and Their Importance in PPP
Risk Analysis
Financing Sources for PPP Projects
The Relationship Between Project Risk and Funding Costs
Differences Between Corporate Finance and Project Finance
Project Finance and Its Uses?
Fundamentals of Project Finance
PPP Procurement and Process
Stakeholders in PPP Transactions
Importance of Contract Management Plans
Target Audience: Professionals in the private and public sectors working in the evaluation of PPP projects, financial sector professionals responsible for credit marketing and allocation, bankers, leasing sector employees, investors, project developers and managers, machinery vendors involved in investment projects, contractor company executives, PPP project consultants of all types, insurance companies, and other individuals involved in PPP projects.
Content:
1. PPP Concepts, Advantages and Contract Options
• Definition of PPP
• Three Key Elements for an Effective PPP Model
• Advantages of PPP
• Principles of PPP
• PPP Practices Worldwide
• Current Status, Future Trends, and Expectations
• Types of PPP and Application Examples:
o Service Contracts
o Management Contracts
o Leasing
o Joint Ventures
o BOT and Concession Contracts
o BOO and Divestitures
• Output-Based Aid and PPP
• General Terms of PPP Contracts
• Applications
2. Project Evaluation and Feasibility Studies
• Project Evaluation
• Factors Influencing the Preference for PPP
• Characteristics of PPP Structures
• Conditions Unsuitable for PPP Structures
• Differences Between Traditional Public Procurement and PPP
• Technical and Environmental Feasibility Checklists for PPP
• Fundamental Elements of Feasibility Studies
o Needs Analysis
o Affordability Analysis
o Value-for-Money Analysis
o Preliminary Risk Assessment
o Stakeholder Evaluation
o Bankability Assessment
o Legal Review
o Market Testing
o PPP Preference Selection
o Indicative Implementation Plan
• Value Determination
o Affordability
o Risk Transfer to the Private Sector (Design, Construction, Operations, Maintenance)
o Demand Risk
o Political Risk
o Revenue Risk
o Currency Risk
o Interest Rate Risk
o Regulatory Risks
o Force Majeure
o Value-for-Money Calculations
o Payment Mechanisms:
User Payments
Usage Payments
Availability Payments
Service Performance Payments
o Applications
3. Project Finance and Investment Analysis
• Types of Investments
o Energy
o Transportation
o Healthcare
o Education
o Infrastructure
• Ideal Project Cash Flow and Usage
• Cash Flows in Public Sector Projects
• Cash Flows in Private Sector Projects
• Relationship Between Funding, Risk, and Returns
• Risk Management in PPP:
o Construction and Completion Risk
o Operational Risk
o Sales Risk
o Activity Risk
o Financial Risks
o Economic Risks
o Political Risk
o Legal Risk
o Environmental Risks (‘Equator Principles’)
• Public Sector Risks in Projects
• Financing Sources and Risks for PPPs
• Risk Sharing and Management in PPP Projects
• Typical Funding Structures:
o Debt/Equity Balance
o Long Project Lifecycles
o Generally Stable Demand
o Natural Monopoly Structure
• Funding Sources
o Public/Government Resources
o Private Sector Asset-Based Funding
o Private Sector Corporate Finance
o Project Finance
• Project Finance and the SPV Concept
• Comparison of Project Finance and Corporate Finance
• Application Areas
• Why Project Finance? Advantages and Disadvantages
• Leverage Effect and Its Importance
• Purpose and Key Elements of Financial Feasibility Studies
• Cash Flow Waterfall Concept
• Net Cash Flow Concept
• DSCR, IRR, NPV
• Bankability Development Techniques:
o Tariff Increases and Structuring
o Escrow Accounts
o Equity Increases
o Mezzanine/Subordinated Debt Applications
o Additional Revenue Generation
o Reserve Accounts
o Partial Risk/Partial Credit Guarantees
• Project Sensitivity Analysis
• Case Study in Excel
4. PPP Procurement Process
• Ideal Procurement Process
o Competitiveness
o Transparency
o Objective Selection Criteria
• Practices in Different Countries
• Establishing Project Performance Criteria
o Best Practice Examples
• Types of Procurement:
o Direct Selection
o Competitive Negotiation Process
o Competitive Bidding Process
• Unsolicited Proposals
• Example Competitive Bidding Process
o Pre-Selection Stage
o Request for Proposals (RFP) Stage
o Due Diligence
o Proposal Submission
o Proposal Evaluation
• Evaluation Criteria
o Financial Strength
o Design/Construction/Technical Criteria
o Operations and Maintenance
o Human Resources
o Risk Assumption
o Unit Price (Tariff)
o Duration (Construction/Operations)
o Local Participation
o HR Practices
o Service Quality
o Additional Applications for Low-Income Groups
o Participation of Priority Development Groups
• Best Final Offer!
• Selection of the Preferred Bidder
• Negotiation Process
• Contract Management Plan
• Contract Inception and Public Announcement
• Procurement Ethics
5. PPP Process Stakeholders
• General Public
• Local Communities
• Government
• Workforce
• Customers
• Special Interest Groups:
o Associations and Unions (NGOs)
o Environmental Organizations
o Anti-Globalization Groups
o Labor Organizations
• Investors
• Project Consultants
• Media
• Stakeholder Management Mechanisms
*The course involves Excel applications, and participants are required to bring laptops with Excel 2013 or a higher version installed.