Proponent: Calvin Chavez III BS Arch 5a

Thesis Project | BALAY PAGLAUM: Negros Occidental Youth Development Center

Jurors Comments and Recommendations:

Ar. Nicasio Matus Jr. | Provide a short statement on the aspect of PPP (Public-Private
Partnership) Variance

Ar. Jerrelyn Guanco | Qualitative data to be included. (Referring to FGD)

Ar. Daniel Bayles | Add FGD (Focused Group Discussion) transcription to add to your
book.
Response to Ar. Matus’ recommendation:

Stated in my scope and delimitations of this study is that the proponent focuses on the
evaluation of architectural solutions for the subject matter at hand. The researcher will
only determine the advantages of PPP system but will not go into in-depth study of its
economic aspects.

Public-Private Partnership (PPP) can be broadly defined as a contractual agreement

between the Government and a private firm targeted towards financing, designing,
implementing and operating infrastructure facilities and services that were traditionally
provided by the public sector. It embodies optimal risk allocation between the parties –
minimizing cost while realizing project developmental objectives. Thus, the project is to
be structured in such a way that the private sector gets a reasonable rate of return on its
investment.

PPP offers monetary and non-monetary advantages for the public sector. It addresses
the limited funding resources for local infrastructure or development projects of the
public sector thereby allowing the allocation of public funds for other local priorities. It is
a mechanism to distribute project risks to both public and private sector. PPP is geared
for both sectors to gain improved efficiency and project implementation processes in
delivering services to the public. Most importantly, PPP emphasizes Value for Money –
focusing on reduced costs, better risk allocation, faster implementation, improved
services and possible generation of additional revenue.

In general, governments tap public-private partnership (PPP) for the following reasons:

PPPs encourage the injection of private sector capital.

National Budget and official development of assistance are limited and are subject to
government prioritization. Private sector funding, on the other hand, is readily available.
It may be tapped to augment ODA funds and the government budget to implement
critical government projects.

In the case of big ticket infrastructure projects, PPPs utilize the financial capital of the
private sector. Through it, project construction and service delivery is accelerated. For
example, the NAIA Expressway Phase II project will be financed through private sector
funding. On top of this, the government has received an upfront payment of 11 billion
pesos even before the actual project construction.

PPPs make projects affordable.

Government spending will be less if the project is undertaken as a PPP, since the
private sector funds their share of the project (including operation and maintenance)
during the duration of the concession. PPP projects consider the whole of life costing
approach (whole lifecycle costing) which ultimately lowers capital and operating costs.

All PPP projects undergo a competitive, transparent bidding. PPP project proponents
usually provide the most cost-effective capital goods necessary for the project.

PPPs deliver value for money.

Value for money (VfM) is achieved when the government obtains the maximum benefit
from the goods and services it both acquires and provides. It is the best available
outcome after taking into account all the benefits, costs, and risks over the entire project
life, which may not necessarily be the lowest cost or price.

For the PPP for School Infrastructure Project (PSIP) Phase 1, the PPP scheme was
identified as the most optimal financing option available for the government to address
the current classroom backlog in the country. Under this scheme, the government will
be able to deliver the needed classrooms in the shortest time possible.

In PPPs, each risk is allocated to the party who can best manage or absorb it.

In PPPs, risks are assumed by the party that is best able to manage and assume the
consequences of the risk involved.
PPPs enable the government to take on fewer risks due to shared risk allocation.
Generally, the private sector takes on the project’s life cycle cost risk, while the
government assumes site risks, legislative and government policy risks, among others.

PPPs force the public sector to focus on outputs and benefits from the start.

Project preparation activities are more rigorous in public-private partnerships. This

ensures that the project is highly bankable and can stand public scrutiny. Better project
preparation and execution will result in adherence to project design within the agreed
timelines.

In PPPs, the government focuses on providing quality infrastructure and services by

setting each project’s minimum performance standards and specifications (MPSS).

With PPPs, the quality of service has to be maintained for the entire duration of the
cooperation period.

In PPPs, project execution will be more rigorous as project ownership belongs to the
project proponents. The public sector only pays when services are delivered
satisfactorily.

During the implementation stage, an independent consultant is hired to ensure that both
public and private parties adhere to the terms of the contract/ concession agreement.
This is true in the case of projects presently undergoing construction—the PSIP Phase
1 and the Daang Hari- SLEX Link Road project.

PPPs encourage innovation.

PPPs maximize the use of private sector skills. It utilizes higher levels of private sector
efficiency, specialization, and technology.

In the case of the PSIP and the Daang Hari-SLEX Link Road projects, private
proponents were given flexibility in coming up with the project design that is most
efficient, taking into consideration the MPSS set by the government.