The risk transfer now offered in PPP contracts means the contractor has more room to manoeuvre and is not bound by tight terms and fixed prices, writes Oonagh Reidy.

PPPs have been de-risked like never before, according to speakers at Ireland’s Health and Education Construction in Dublin last month.
Much of the financial and legal uncertainty has been now removed, with tender prices more realistic and margins more guaranteed, said speaker Mary Dunne, head of projects at BCM Hanby Wallace.

“There are growing opportunities in Public Private Partnerships and if you are prepared to take the risk profile that goes with government design and build contracts, then you shouldn’t be afraid of PPP”.

With Brain Cowen a known fan of PPPs and the financial basis of the NDP2 having been revised due to a lower tax take, it is believed the model will become a favoured form of public procurement over the next five years.

Although perceived as a lengthy and often seemingly complex road, PPPs in Ireland have become more mainstream with the Department of Finance embracing them wholesale since their first pilot project in 2002.

Another speaker said there is currently a pot of €1.5 billion over which various departments are currently putting their case. Dunne confirmed an ever-increasing number of high profile public sector projects will now be taking the PPP route including the National Concert Hall redevelopment, the new Munster Prison as well as a multitude of education and transport projects.

Since the first pilot, lessons have been learned and the possibilities for projects and refurbishments for construction firm are endless, she declared. Although contractror experience in PPPs is favoured by the assessors, if an inexperienced bidder is strong on price this still allows them to be a strong contender for the project, she said.

“It’s easier (for government) to pay for something over 30 years than to have to come up with the capital immediately”, making PPP the optimal solution if the infrastructure billed under the NDP is to be delivered on time and on budget, she asserted. There are also clear benefits for the contractor and PPP is an attractive and lucrative option and “who doesn’t want a paymaster who has a triple A rating... and government departments are not known for going into liquidation”.

However, herein lies the rub - PPPs are subject to a matrix of strict EU procurement laws: Public Service, Utilities and Remedies Directives as well as nine different guidance documents from the Irish government all of which govern the often lengthy PPP process.

This article is an extract from an article featured in the Irish Construction Industry Magazine - Click HERE to subscribe