A survey of 157 public-private partnership practitioners in 60 countries carried out in May this year provided useful insights on how the pandemic will impact the short-, medium and long-term prospects of infrastructure projects – including those launched through public-private partnerships (PPPs).
Overwhelmingly, practitioners pointed out that it is time for refocused and more relevant projects, that are more defensible, sustainable and resilient, and which include improved collaboration and cooperation between the public and private sectors in redefined partnerships.
This general observation is a direct outcome of the impacts of the global financial crises caused by the worldwide pandemic, which is placing immense pressure on the resources of both the public and private sector, especially where it comes to providing alternative financing for infrastructure projects (ie PPPs).
Declining fiscal revenues have resulted in an immediate shortfall in the availability of government funding for projects. Although the focus is on short-term impacts, there is consensus that we are in for the long haul. Many experts feel that it could take two to three years for the world’s economy to reach pre-Covid levels.
In cash strapped countries around the world there is an emerging paradigm shift when it comes to identifying and prioritising projects that have value, not only in the sense of value for money, but also in the sense of value for people and value for the future. Future proponents of projects are going to be pressed to motivate the need for projects that do not help countries achieve their Sustainable Development Goals (SDGs) or which do not support the recovery of post pandemic economies.
This is also a concern of governments regarding current projects. Governments will have to do a hard reassessment of current infrastructure projects and infrastructure project pipelines to determine whether current PPP projects that are struggling to survive should be allocated resources out of the pool of shrinking resources. In essence an objective ‘triage’ assessment of projects will have to be completed that determines the survivability of current projects and the desirability of future projects.
These decisions cannot be taken in a vacuum however. They will require collaboration between many. Due to highly politicised decision spaces regarding the distribution of scarce resources, decisions will require focused collaboration that includes project partners in the public and private sectors (especially for PPPs), ministerial stakeholders, and members of civil society. Vanity projects will most certainly be rejected in lieu of projects that will address the immediate and long-term recovery needs of stressed economies.
Mega-projects on hold
As part of the ongoing refocusing, it is likely that mega-projects will be put on hold due to their excessive financing demands. Medium size projects that could be phased to reach the ultimate goals of mega infrastructure projects will be more favoured. An emerging paradigm shift will require government strategies and implementing guidelines to lay out harmonised forward looking approaches at both sub-national and national level.
‘Future forward’ thinking infrastructure projects will require comprehensive feasibility studies and revised selection criteria that include their sustainability, resilience, and regeneration potential. It is only projects that have passed this ‘sniff’ test that will be defensible. These will most likely be healthcare, educational and smart and green transportation infrastructure projects.
Many project proponents, potential developers and investors are also emphatic that transparent and competitive tenders will have to be launched to ensure value for money. On the other hand, the private sector as an innovation source might require accommodation for unsolicited proposals as long as they are turned into competitive procurements that protect the intellectual property of the original proponent.
David Baxter is an international development consultant at the International Sustainable Resilience Center of PPPs (ISRC) and a steering committee member of the World Association of PPP Units and Professionals (WAPPP).