Through the specific expertise available in industry and business a project can benefit from tried and tested concepts whilst remaining open for innovation. In this way solutions are achieved offering greater efficiency and superior quality. Since payments from the client are related to the actual performance provided, private parties are strongly motivated to meet the required level of service.
There are many ways in which clients can benefit from PPP.
Financial advantages
- Long-term assurance about the cost. DBFMO contracts are long-term agreements with a term ranging from 20 to 30 years. Clients no longer need to provide advance financing, but the investment sum is spread out over the term of the project, offering long-term predictability of expenditure.
- Total project costs are lower due to the optimal coordination of design, construction, maintenance, operation and supporting services over the contract term (life cycle management).
- Risks are placed with the parties best able to control them, another cost-lowering factor.
Qualitative and operational advantages
- The client is assured of a high-quality and sustainable project.
- The client assumes only a general directive role, thus requiring only a small internal project organisation mainly limited to functional and performance specifications and contract issues. He spends significantly less time on technical specifications for the design and construction process.
- Timely delivery. Since the contractor effectively finances the investment in the construction asset, and only receives payment when this is complete, this logically forms a serious incentive for completing the construction phase in time.
Performance advantages
- Risk allocation, both in terms of time and money, is agreed at an early stage between the parties. The client contracts out the services he requires according to clear and measurable performance criteria.
- If the quality of the services does not meet the agreed performance requirements, the contractor is penalised by reductions to his periodic payments. Contractors will therefore make every effort to meet the agreed performance standards.