Summary of the ToolkitSummary of the ToolkitThe Toolkit is presented in six modules summarized below, each presenting a specific subject matter for the development of PPP. Each section provides links to other sections for sourcing of additional material on a given subject. Sitemap, Glossary and Search functions are provided separately on the Toolkit main page.
Module 1: Overview and Diagnosis provides an overview of PPP, their application within highway development programs and the process for the definition of a PPP strategy.
It presents the following:
Defining the partnership assesses the nature and scope for PPP in highways and the main types of PPP and their principal characteristics. It includes the advantages and drawbacks of PPP as opposed to conventional procurement.
Overview of PPP experience provides a historical perspective of PPP development, presents the PPP databases, notably the PPI data base for developing countries, examines current trends in PPP and defines the efficient application of PPP for highway development and maintenance.
Key Players and Roles presents the actors in PPP projects, comprising the public and private sectors, finance sector, insurance and export credit agencies and international institutions.
Enabling PPPs describes the process to achieve an enabling environment for PPP, a requirement for the implementation of any PPP project or program. However the nature of the enabling environment depends on the scale and complexity of the PPP projects to be implemented; the diagnosis assists public authorities in determining the required reforms to achieve an enabling environment.
PPP Strategy outlines the process for obtaining an enabling environment through the PPP policy framework. It introduces the main steps of a national PPP program and defines a development path for PPP.
Module 2: Key Components presents the principal characteristics of PPP projects and describes the process of tailoring the PPP project to its environment.
The key components of PPP projects are presented under five main headings.
Scope explains the importance of packaging PPP projects in order to implement them successfully covering scope, autonomy and pooling. It also considers the potential influence of packaging on competition.
Risk describes the four steps needed to define risk sharing, one of the main issues when considering PPP: (1) risk identification reviews the most common risks in PPP projects, (2) risk assessment provides an overview of tools to evaluate the risks, (3) risk allocation gives the main principles to share risk between the public and private sector with a focus on the allocation of traffic risks, (4) risk mitigation explains the tools available to mitigate those risks.
Revenues covers revenue and payments to the private sector, also known as the process for cost recovery. PPP may require a variety of revenue sources comprising the public financial support that may be required for a successful PPP implementation as well as user charges from the conventional methods (toll booth, vignette etc) to the latest toll collection systems (electronic tolls, free flow, heavy vehicle charge system).
Finance describes the methods for capital mobilization, both from the public and private sectors and including the emergence of infrastructure funds. It describes financial structure and financial assessment principles, including the weighted average cost of capital (WACC). Financial modeling is explained with an overview of the main financial indicators used to assess PPP projects and introduction to the financial models provided in Module 6 Tools.
Public Accounting provides a description of the impact of PPP on the State budget and their accounting treatment. In particular the issue of on or off-budget accounting is discussed.
Module 3: Policy and Planning describes the public sector functions under PPP in order to ensure protection of the public interest. It includes the definition of the PPP policy framework
Module 3 provides assistance to the public sector to provide the appropriate national and sub national planning framework to give their PPP policy and projects the best chances of success. It introduces the national or macro level of planning for PPPs, the obligations they impose on the public sector in particular and the need for PPP planning and policy frameworks to facilitate implementation of PPP projects. It provides public authorities with an important set of tools at the macro level before considering legal and contract requirements in Module 4 and finally PPP implementation in Module 5. The content of Module 3 is presented under three main headings as follows:
Sector Planning and Strategy describes highway sector and network planning, technical standards, maintenance strategies and sustainability principles and tools, and introduces PPPs within the sector planning process.
Promoting and Protecting the Public Interest describes the two key important public functions within PPP development of (i) promoting and accelerating socio-economic development and (ii) protecting the public interest. It introduces user and community perspectives including public participation, social and environmental safeguards including identifying and mitigating the negative impacts arising from for example land acquisition and the need for resettlement and on the environment, as well as including both positive and negative impacts on the poor. It also includes road safety.
PPP Policy Framework describes why and how the Public Sector can provide the appropriate frameworks and environment for PPPs. It describes the various frameworks needed for successful PPP implementation including policy, regulation and regulatory bodies, risk, financial and institutional/governance (refer Module 5 for PPP project implementation). It includes sector institutional reforms and HRD/ training and enhancing the capacities of the private sector including contracting, advisory services and financing.
Module 4: Laws and Contracts examines the legal and regulatory environment to PPP. It provides a framework for diagnosis and reform and provides the basis for preparation of PPP contracts.
Module 4 defines the legal framework that can facilitate the successful implementation of PPPs in the road sector. It contains the two main elements of such a framework found within any legal system in the world: laws and regulations on the one hand and contracts on the other hand.
Legislation considers the institutional framework that fosters private investment in infrastructure. Legislative Framework explores host country's legislative provisions when promoting and implementing a PPP in infrastructure; other sections address the issues of modification and adaptation of such a framework and assessment of this legal framework.
Contracts explores what can be a maze of contractual arrangements involved with such a PPP and addresses the issues regarding contract formation, contract types and provisions, other agreements, guarantees and bonds and the renegotiation and adaptation of contracts.
The broader the scope of work, the more complex are the PPP contracts, which determines the risks and responsibilities of each actor involved in the project. For instance, if only maintenance of a road is required, the work involved can usually be done by a single shareholder project company without the need for additional project financing; however, if the scope is to include the construction of a new road, several different actors will share responsibilities and risks and there will most probably be a need for substantial project financing from commercial lenders and international financial institutions.
The information provided herein does not constitute, and shall not be construed as, legal advice. All parties should seek advice from their own legal consultants familiar with their particular circumstances.
Module 5: Implementation and Monitoring provides a comprehensive approach to implementing a highway PPP at the project level through a description of the key stages for development of PPP projects from project identification, preparation, tendering and contract monitoring and renegotiation.
At an implementation level, Module 5 can be considered as the central part of the Toolkit by advising and guiding public sector users on the whole process for a given PPP project and by referring when necessary to other Modules, which provide for the required strategy, policy framework and legal and regulatory environment for PPP development.
Module 5 describes the five key stages in the process from selection of projects, through contract award and until the transfer back of the facilities to the public authority. The stages allow for each PPP project to be individually tailored to its particular characteristics and environment, essential for successful implementation.
Additional sections are included on Amendments to Contracts, including Renegotiation, and Dispute Resolution, Use of Advisors and Dialogue Process.
In particular, the importance of the role of the Transaction Advisor is highlighted in order to obtain sound advice, geared to the users' particular needs and requirements, essential when developing and implementing PPP project contracts with long durations. Advisors can help avoid costly political and financial mistakes related to PPP projects.
Module 6: Tools provides complementary references and features to the Toolkit modules as well as specific functions to assist the presentation and dissemination of Toolkit related materials.
Case studies present both well and lesser-known examples of PPP on all five continents and which comprise the range of PPP options from performance-based maintenance contracts to highway BOT concessions. The case studies present either the specifics of a particular PPP project (seven project case studies) or the development and application of policy and strategy for PPP projects and programs (six country case studies).
Financial Models are intended to familiarize non-financial users with the basics of project finance and better understand the key parameters which affect the financial viability of a highway project. Two models are proposed, a graphical model as a pedagogical tool for financial simulation and a numerical model for an initial project analysis at pre-feasibility level of possible PPP options, including possible toll rates and subsidy levels.
Bibliography is the key reference source for documents included in the toolkit. Each document listing includes the principal reference details, main topics addressed in the document and links to relevant document sources, including pdf file, weblink and publisher website. All pdf files are integrated in the toolkit for easy reference.
Key issues: This section facilitates consultation of the Toolkit on a number of key issues related to PPP development, particularly with respect to those subjects included in several sections of the Toolkit. For each key issue, a series of questions guides the user to the related section of the Toolkit. The section also provides a brief summary of other World Bank toolkits which may assist in certain aspects related to PPP development in the highway sector.
Toolkit files allows the download of the complete Toolkit in PDF version and of all Toolkit figures for professional-level outputs for consultation, reports and presentations, as well as of the complete CD-Rom version with CD cover and label.