Optimal procurement choices for development of public infrastructure - identification of key metrics

Abstract

The paper examines the public procurement contracts for the supply/construction of assets or provision of public services, with particular emphasis on public-private partnerships (PPP). The paper compares the PPP and traditional procurement (TP) on the basis of cost effectiveness and quality of services and innovation. Total cost of providing service not only comprises of cost of construction/acquisition of asset but also includes cost of operation and maintenance of assets, which depends on quality and fitness for purpose of assets produced by private sector. Therefore, design of procurement contracts determines if the incentives of private sector to minimise cost of production align with overall objective of delivering better services at lower costs to public. This paper attempts to identify the metrics, which can be utilised by the government to choose appropriate procurement methods and would also help public procurement agencies/professionals to design contracts which can create maximum value for money (VfM) for the public.