Ppp

ANALYSIS AND REBUILDING OF PUBLIC PRIVATE PARTNERSHIP AND ITS

PROCUREMENT IN INDIA

Surya C.DM.E CEM

NIT, Coimbatore

Ms R AarthiAssistant ProfessorNIT, Coimbatore

Project done by , Guided by ,

ABSTRACT

“India is a developing country and our country has a mixed economy. Construction Industry is the second largest economic activity in India. Infrastructure development is a major contribution to the country by the construction industry. “

This paper mainly details,

the implementation of PPP in India

problems involved in this implementation

Risk & Delay Analysis

solutions to the problems, new procurement methods that can be adopted etc.

05/01/2023 2PROJECT PHASE 2

INTRODUCTION


Traditional procurement method prevailing in India is Design-Build method

The need of PPP arises especially when our government experiences a financial deficit.

So the government will find out a suitable private partner to share all the risks

involved in a project.

this project aims to reveal PPP as a new procurement method..

OBJECTIVE

The major aim of this proposal is


•To reveal the importance of PPP

•To reveal problems involved in procurement of various infrastructure in India

•To reveal the economic and living conditions in India

•To compare PPP in India and other developed countries.

•To analyze the PPP procurement methods in India in basis of Risk, delay and Financial elements.

•To suggest new procurement methods that can be borrowed from other developed countries

METHODOLOGY


DATA COLLECTION

Survey of published literature in diverse area of construction management

Surveys are be made to find the extent and factors causing time overun in PPP projects

Fifty companies were randomly selected to conduct survey

Date were gathered through a questionnaire



PPP – IN A GLANCE First introduced in UK in 1997

“A Public-private partnership is a government service or private business venture which is funded and operated through a partnership of government and one or more private sector companies”


PPP IN INDIA

Phase 1 – 19th century and 20th century

Phase 2 – 1991-2006

Phase 3- After 2006

NEED OF PPP IN INDIA


India – continues to remain an underdeveloped country

India’s Economic framework- A mixed Economy

The Union Finance Minister, in his Budget speech of 2015-16, has emphasized the need for increasing public investment in infrastructure

he emphasized the need for a review of the PPP model of infrastructure development, which harnesses private investment for providing public assets and services.

CURRENT STATUS


Urban development

Tourism

Airports

Education

Energy

Health care

Ports

Railways

Roads

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00%

20.10%

6.60%

0.70%

2.20%

7.40%

1.10%

8.00%

0.50%

53.40%

PPP projects in India Sector Wise ( Total number of Projects = 758)Fig.4.1.PPP Projects in India sector wise

CURRENT STATUS


INR 100 Cr.

INR 100 Cr. And 250 Cr.

INR 251 Cr. To 500 Cr.

More than 500 Cr.

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00%

2.50%

5.20%

14.40%

77.90%

PPP project percentage on basis of value ( Total cost INR 3,833 Billion )Fig.4.2 PPP projects on basis of value


PROCUREMENT METHODS IN INDIA

Procurement

Methods

BBO BLTBOOT

BOO

BTODBODBOF

DOT

ROO

ROT


PROCUREMENT METHODS IN OTHER COUNTRIES

Procurement

Methods

PCF

PFI

DBFM

DBFMO


RISK ANALYSIS OF PPP

ENGINEERS60%

Contractor8%

YP8%

MANAGERS24%

RESPONDENTS CATEGORIES

Fig 6.1 Respondents Categories

In total, hundred questionnaires were distributed.

Fifty respondents completed the whole questionnaire.

Many of the respondents were from organizations that had rich experience, knowledge, and expertise in PPPs as illustrated

05/01/2023 PROJECT PHASE 2 15

The private sector’s ability to manage risks was sought to be harnessed under PPP projects

but one of the primary concerns in the current context is to review the allocation of risks to reduce the threat of underperformance of PPP projects.

A risk analysis is done to find out major risks involved in PPP procurement.

The analysis is done by carrying out questionnaire survey.

50 companies where selected.

The respondents includes Engineers, Architects and Consultants in public and private sector.

Contd…


RISK ANALYSIS

Q no Constraints Severity

Q1Private sector possess better resource mobility Extremely Important

Q2Private sector has ability to raise funds for project Important

Q3Enhances technology transfer to the local enterprise Extremely Important

Q4 Allows for shared risk ImportantQ5 Reduces public sector administration cost ImportantQ6

Facilitate creative and innovative approaches ImportantQ7 Reduces the total project cost ImportantQ8 Saves time in delivering public project ImportantQ9

Offers benefit to local economic development Important

Q10

Improves public infrastructure management and maintenance Important

Q11Enhances government integrated solution capacity Important

Q12Increases access to the public sector market Extremely Important

Q13Reduces the problem of public sector budget constraint Important

Q14Provides tax exemptions and reduction Important

Q15Reduces public money tied up in capital investment Important

Q16Provides incentives to new market penetration Important

Q17Provides government assistance in financing Extremely Important

Contd…


CorruptionGovt’s InterventionExpropriation and nationalizationGovt’s reliabilityThird party reliabilityPublic/political opposition Immature juristic systemChange in law Interest rateForeign exchange and convertibility InflationPoor political decision makingLand acquisitionApproval and permit delayFinancial riskTechnology riskDemand change

MAJOR RISKS IDENTIFIED


RISK MITIGATION

Bear risk in its normal course of its business

Assessment - relative ease and efficiency of managing risks

Cost effectiveness of managing the risks needs to be evaluated

Sophisticated modeling techniques

Robust concession agreement


DELAY ANALYSIS

Delays and cost overruns have become common facts in industry

Researches used many techniques to assess project delays

Delays become hallmark of infrastructure projects

Delays give rise to disruption of work and loss of productivity, late completion

of project, increased time related costs

Delays occur


DELAY ANALYSISQ NO CONSTRAINTS SEVERITY

Q1 Type of contracts Extremely ImportantQ2 Availability & quality of local contractors ImportantQ3 Labour cost/Productivity ImportantQ4 Availability of construction materials Extremely ImportantQ5 Availability of skilled & Unskilled labour Extremely ImportantQ6 Taxes & Non-tax incentives in construction industry ImportantQ7 Bidding Process Extremely ImportantQ8 Technology protection system ImportantQ9 Political risk Important

Q10 Construction cost ImportantQ11 Delays in Construction ImportantQ12 Increases access to the public sector market ImportantQ13 Medium & Long term financing for construction projects ImportantQ14 Choice of technology Extremely ImportantQ15 Market suitability for advanced technology ImportantQ16 Site Conditions ImportantQ17 Weather Conditions Important


CONCLUSION

to minimize the knowledge gap between public authority and private entities in PPP project has been made.

Risk Analysis and Delay Analysis shows the importance of PPP in infrastructure development.

The risks and their mitigation measures in PPP projects were identified through literature review, case study and interviews.

The possible risks including their causes and financial consequences in PPP projects were explored.

Major drawbacks and the suggested mitigation measures in the evaluation and implementation process of PPP projects in India were discussed.


REFERENCES Benedict Amade (2012), ‘An Evaluation of Factors Constraining the Implementation of Public Private Partnerships (PPPs) in Construction Infrastructure Projects in Nigeria’, International Journal of Science and Engineering Investigations, vol. 1, issue 9. Darrin Grimsey and Mervyn Lewis (2007),’ Public Private Partnerships and Public Procurement’, Agenda, Volume 14, pp 171-188 Darrin Grimsey and Mervyn K Lewis (2000),’Evaluating the risks of Public-Private Partnerships for Infrastructure Projects’, International Journal for Project Management,Vol 20, pp 107-118 Esther Malini (2014),’ Financial Structuring of Public-Private Partnerships for Road Infrastructure Projects in India’, Volume 1 Issue Karunendra Pratap Singh (2011),’Issues And Prospects Of Public Private Partnership In India’,Vol 1. Paul Posner, Shin Kue Ryu and Ann Tkachenko (2009),’ ‘Public-Private Partnerships:The Relevance of Budgeting’, OECDJournal on Budgeting,Vol 2009/1 Rajkumari and AnandaKumar (2013),’ A Study on Critical Factors Influencing The Infrastructure Development Projects Under Public Private Partnership’, International Journal of Emerging Technology and Advanced Engineering, Vol 3,issue 12 Roine Leiringer (2003), ‘Technological innovation in PPPs: incentives, opportunities and actions’, Construction Management and Economics Journal’,Vol. 24(3), 301-308 Sathana Priya and and P.Jesintha (2011) , ‘Public Private Partnership In India, | Journal of Management and Science’, Vol.1, No.1 Siddesh K Pai and Raj Bharath (2013),’ Analysis Of Critical Causes Of Delays In Indian Infrastructure Projects’,Vol 2. Tilak Ch Das and Sujit Sikidar (2014), ‘Public Private Participation (PPPP) In India-Its Operational Mechanism And Challenges Ahead’, Vol 3, Issue 4

THANK YOU


Ppp

Engineering

Transcript of Ppp