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This document analyzes public-private partnerships (PPPs) and procurement methods in India. It discusses how PPPs have been implemented in India to address infrastructure needs by sharing risks between public and private entities. However, PPP projects in India have faced various problems. The document aims to identify these challenges, such as risks of delays and cost overruns, and suggest solutions like adopting procurement practices from other countries. It presents an analysis of risks involved in Indian PPPs based on a survey and finds that factors like corruption, land acquisition, and approval delays are major risks. The document concludes that minimizing knowledge gaps and properly addressing risks can help PPPs be effective for infrastructure development in India.
Ppp
- 1. ANALYSIS AND REBUILDING OF PUBLIC PRIVATE PARTNERSHIP AND ITS PROCUREMENT IN INDIA Surya C.D M.E CEM NIT, Coimbatore Ms R Aarthi Assistant Professor NIT, Coimbatore Project done by , Guided by ,
- 2. 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. 7/2/2016 2PROJECT PHASE 2
- 3. INTRODUCTION 7/2/2016 3PROJECT PHASE 2 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..
- 4. OBJECTIVE The major aim of this proposal is 7/2/2016 4PROJECT PHASE 2 •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
- 6. 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 7/2/2016 6PROJECT PHASE 2
- 7. 7/2/2016 7PROJECT PHASE 2 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”
- 8. 7/2/2016 8PROJECT PHASE 2 PPP IN INDIA Phase 1 – 19th century and 20th century Phase 2 – 1991-2006 Phase 3- After 2006
- 9. NEED OF PPP IN INDIA 7/2/2016 9PROJECT PHASE 2 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.
- 10. CURRENT STATUS 7/2/2016 10PROJECT PHASE 2 20.10% 6.60% 0.70% 2.20% 7.40% 1.10% 8% 0.50% 53.40% 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% Urban development Tourism Airports Education Energy Health care Ports Railways Roads PPP projects in India Sector Wise ( Total number of Projects = 758) Fig.4.1.PPP Projects in India sector wise
- 11. CURRENT STATUS 7/2/2016 11PROJECT PHASE 2 2.50% 5.20% 14.40% 77.90% 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% INR 100 Cr. INR 100 Cr. And 250 Cr. INR 251 Cr. To 500 Cr. More than 500 Cr. PPP project percentage on basis of value ( Total cost INR 3,833 Billion ) Fig.4.2 PPP projects on basis of value
- 12. 7/2/2016 12PROJECT PHASE 2 PROCUREMENT METHODS IN INDIA Procurement Methods BBO BLT BOOT BOO BTO DBO DBOF DOT ROO ROT
- 13. 7/2/2016 13PROJECT PHASE 2 PROCUREMENT METHODS IN OTHER COUNTRIES Procurement Methods PCF PFI DBFM DBFMO
- 14. 7/2/2016 14PROJECT PHASE 2 RISK ANALYSIS OF PPP ENGINEERS 60%Contractor 8% YP 8% MANAGERS 24% 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
- 15. 7/2/2016 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…
- 16. 7/2/2016 PROJECT PHASE 2 16 RISK ANALYSIS Q no Constraints Severity Q1 Private sector possess better resource mobility Extremely Important Q2 Private sector has ability to raise funds for project Important Q3 Enhances technology transfer to the local enterprise Extremely Important Q4 Allows for shared risk Important Q5 Reduces public sector administration cost Important Q6 Facilitate creative and innovative approaches Important Q7 Reduces the total project cost Important Q8 Saves time in delivering public project Important Q9 Offers benefit to local economic development Important Q10 Improves public infrastructure management and maintenance Important Q11 Enhances government integrated solution capacity Important Q12 Increases access to the public sector market Extremely Important Q13 Reduces the problem of public sector budget constraint Important Q14 Provides tax exemptions and reduction Important Q15 Reduces public money tied up in capital investment Important Q16 Provides incentives to new market penetration Important Q17 Provides government assistance in financing Extremely Important Contd…
- 17. 7/2/2016 PROJECT PHASE 2 17 Corruption Govt’s Intervention Expropriation and nationalization Govt’s reliability Third party reliability Public/political opposition Immature juristic system Change in law Interest rate Foreign exchange and convertibility Inflation Poor political decision making Land acquisition Approval and permit delay Financial risk Technology risk Demand change MAJOR RISKS IDENTIFIED
- 18. 7/2/2016 PROJECT PHASE 2 18 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
- 19. 7/2/2016 PROJECT PHASE 2 19 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
- 20. 7/2/2016 PROJECT PHASE 2 20 DELAYANALYSIS Q NO CONSTRAINTS SEVERITY Q1 Type of contracts Extremely Important Q2 Availability & quality of local contractors Important Q3 Labour cost/Productivity Important Q4 Availability of construction materials Extremely Important Q5 Availability of skilled & Unskilled labour Extremely Important Q6 Taxes & Non-tax incentives in construction industry Important Q7 Bidding Process Extremely Important Q8 Technology protection system Important Q9 Political risk Important Q10 Construction cost Important Q11 Delays in Construction Important Q12 Increases access to the public sector market Important Q13 Medium & Long term financing for construction projects Important Q14 Choice of technology Extremely Important Q15 Market suitability for advanced technology Important Q16 Site Conditions Important Q17 Weather Conditions Important
- 21. 7/2/2016 PROJECT PHASE 2 21 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.
- 22. 7/2/2016 PROJECT PHASE 2 22 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
- 23. THANK YOU 7/2/2016 23PROJECT PHASE 2