Public-Private-Partnership (PPP) Approach

Definition:

PPP Approach, one of the main approaches in financing the large-scale infrastructure projects, is very similar to Build-Operate-Transfer (BOT) Approach but the sole difference lies in the two approaches' output criteria. In the PPP model, unlike with BOT, the government buys service from project companies at agreed-upon prices and thus has a greater influence in production decisions and bears a greater share of project risks; thus the project companies are not overly exposed to changing market conditions.

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Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

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