Glossary of PPP terms


Any item of economic value, either physical in nature (such as land) or a right to ownership, expressed in cost or some other value, which an individual or entity owns.


A candidate, consortium, contractor, private sector partner, or tenderer bidding for the project.
Book Value
Net amount at which an asset or liability is carried on the books of account (also referred to as carrying value or amount). It equals the gross nominal amount of any asset or liability minus any allowance or valuation amount.
Build, own, operate and transfer
Abandoned, idled, or under-used industrial and commercial facilities where expansion or redevelopment is complicated by real or perceived environmental contaminations
Public-private partnership arrangement involving private construction, private operation for given period of time, and eventual transfer to public ownership.


Those private sector persons who together intend to deliver a PPP
The Contract or Project Agreement between the parties for the provision of the contracted service


Design and construct
DBFO (Design, Build, Finance & Operate)
A form of contract in which a consortium takes responsibility for the design, construction, financing and operation (including maintenance) of an asset for a period of years.
Design, build, finance and maintain
DBOM (Design, Build, Operate & Maintain)
A form of contract in which a consortium takes responsibility for the design, construction, operation and maintenance of an asset for a period of years, but does not finance its creation.
Design, construct and maintain
A procurement or project delivery arrangement whereby a single entity (a contractor with subconsultants, or team of contractors and engineers, often with subconsultants) is entrusted with both design and construction of a project. The term encompasses design-build-maintain, design-build-operate, design-build-finance and other contracts that include services in addition to design and construction. Franchise and concession agreements are included in the term if they provide for the franchisee or concessionaire to develop the project which is the subject of the agreement.
An instruction to national governments from the EC, to create harmonising legislation on a specific subject area within a stated time period; a blue-print for new legislation.
Discount Rate
The rate used to calculate the present value of future cash flows


Expressions of interest for a project
EOI Phase
The phase used to shortlist parties to proceed to the RFP phase who are capable of delivering the project



A project which lacks any constraints imposed by prior work



Invitation for EOI
An invitation to the market to seek expressions of interest for a project







Output Specification
A detailed description of the functions that the new accommodation must be capable of performing. Usually split into building functions and service functions. The Output Specification is intended to state only the outputs required of the services, and not the way in which the PSP will achieve these.


Pay-As-You-Go Financing
Describes government financing of capital outlays from current revenues or grants rather than by borrowing.
PFI (Private Finance Initiative)
A procurement route established in 1995 in the UK, and more widely adopted since 1997. It is an important route for much Government spending on assets, as it transfers significant risks to the private sector. PFI requires private sector consortia to raise private finance to fund the project, which must involve investment in assets, and the long-term delivery of services to the public sector. In BSF, PFI is one of several possible procurement routes being funded.
PPP (Public Private Partnerships)
The relationship formed between the private sector and public bodies often with the aim of introducing private sector resources and/or expertise in order to help provide and deliver public-sector assets and services. The concept of PPP embraces many forms of partnership including PFI.
Present Value (PV)
The value of future cash flows discounted to the present at certain interest rate (such as the entity’s cost of capital or funds), assuming compounded interest. The GAO definition of present values is as follows: The worth of a future stream of returns or costs in terms of money paid immediately (or at some designated date). A dollar available at some date in the future is worth less than a dollar available today because the latter could be invested and earn interest in the interim. In calculating present value, prevailing interest rates provide the basis for converting future amounts into their “money now” equivalents. Under credit reform, the subsidy cost of direct loans and loan guarantees are to be computed on a present value basis and included as budget outlays at the time the direct or guaranteed loans are disbursed.
Project Revenues
All rates, rents, fees, assessments, charges, and other receipts derived by a project sponsor from a project.
The Public Sector Comparator for a project, which is defined in the Guidelines as the hypothetical, risk-adjusted whole-of-life cost of a public sector project if delivered by government



A request for proposal issued by government for a project
RFP Phase
The phase involving the release of the RFP to shortlisted bidders for detailed, fully-costed and binding RFP responses, followed by evaluation and selection of the preferred bidder
Risk Allocation
The allocation of responsibility for dealing with the consequences of each risk to one of the parties to the contract; or alternatively, agreeing to deal with a particular risk through a specified mechanism which may involve sharing that risk


SPV (Special Purpose Vehicle)
In establishing a project consortium, the sponsor or sponsors typically establish the private party in the form of a special purpose vehicle (SPV) which contracts with government. The SPV is an entity created to act as the legal manifestation of a project consortium


Technical Dialogue
A formal process of dialogue to assist in Project Scoping, undertaken by the authority and potential candidates in the period after issuing the PIN but before issuing the Contract Notice.
Tender Process
Includes each of the following phases:
▪ EOI phase;
▪ RFP phase; and
▪ Negotiation and completion phase
Traditional Procurement
The delivery of the infrastructure and associated services by government using its normal procurement processes
Transferred Risk
The value of those risks (from government’s perspective) that are likely to be allocated to the private party under a PPP project




The integration of up-front design and construction with ongoing maintenance and refurbishment elements over the life of the asset under the PPP arrangement