Public–Private Partnerships (Ppps) Definition
A Public–Private Partnership (PPP) is a cooperative arrangement between a public agency (federal, state, or local government) and a private sector entity (typically a corporation, although partnerships of all types are not uncommon). The structure of the partnership is typically governed by a contract or concessions agreement. Inreturn for assuming some of the risks associated with developing and financing a project, the private partner typically receives greater flexibility in designing and operating the project than if the public sector were to develop and finance it alone. While public-private partnerships have been used extensively in Europe and other parts of the world for many years, their use in the United States has been more limited.
Public-private partnerships can take many forms, but all share a common goal: to create value for the citizens or taxpayers by addressing infrastructure needs in new and innovative ways. A key characteristic of successful public-private partnerships is that they align the interests of both the public and private partners so that each has an incentive to perform well. This alignment can be achieved through various mechanisms, such as shared risk/reward arrangements, user fees paid by beneficiaries, or availability payments made by the government to the private partner.
The use of public-private partnerships is growing in popularity as governments look for ways to stretch their budgets and take advantage of private sector innovation and efficiency. According to P3 Bulletin’s annual survey of global P3 activity, there was a record $340 billion worth of P3 projects
