Public-Private Partnership (PPP) and Infrastructure Provision in Nigeriaby Olufemi A. Oyedele
ABSTRACT Public Private Partnership (PPP) is a collaboration of the public and private sectors in the financing and development of public goods and services (agriculture, communication, infrastructure etc). This phenomenon has been globally seen by many as the new economic paradigm. India has benefitted a lot in infrastructure provision by the private sector through PPP. Public Finance Initiative/Public Private Partnership (PFI/PPP) is a key policy instrument that is being used to transform public services. The key element of PFI/PPP is risk management. This assertion involved the creation of more public-private partnerships (PPPs). Criticisms of PFI especially by the UK Labour Party in 1997 before the election led to the introduction of PPP. The collaboration of government and the private sectors in the production of public goods and services is based on the notion that government has no business in production of some goods and services in order to ensure value for money (vfm). The experience of PPP in Nigeria has not been a thing to write home about. Concessioning of Lagos-Ibadan Expressway, Kuto-Bagana Bridge, Lekki-Epe and Maervis management of Airports have been sour. This paper will look into the factors that make PPP unsuccessful in Nigeria and will suggest recommendations for adoption.
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ABSTRACT: The rate of urbanization in Nigeria has witnessed tremendous increase in the last two decades. Census in the early Fifties showed that there were about 56 cities in the country and about 10.6% of the total population lived in these cities. This rose dramatically to 19.1% in 1963 and 24.5% in 1985. Today, the national population is now estimated to be about 120 million with the urban population constituting about 30%. The rapid growth rate of urban population in Nigeria since the early seventies was mainly due to immigrating induced by the concentration of the gains from the oil sector in the urban areas. Given the expected increases in Urban population, the magnitude of housing problem in the country is enormous. According to the National Rolling Plan (NRP) the national housing requirement is between 500,000 and 600,000 units considering the prevailing occupancy ratio of between Three and Four persons per room. If this estimated annual requirement was to be provided at an average of N500,000 per unit (rather conservative) the costs would be enormous and indeed unrealisable. The cost of providing housing alone would be between N250 Trillion and N300 Trillion (excluding the cost of infrastructural development). This is the macro perspective of the housing problem. This is to say that the Government and Mortgage Institutions will need this much as capital base to effectively tackle the housing situation. The phenomenal rise in population, number and size of our cities over the past few years have manifested in the acute shortage of dwelling units which resulted in overcrowding, high rents, poor urban living conditions, and low infrastructure services and indeed high crime rates. On the micro-level, it has been observed that house ownership is one of the first priorities for most households and it represents the largest single investment for most (between 50% and 70% of household income). This observation becomes very significant when it is realized that per capital income in Nigeria has been on the decline (currently N3,000.00) as well as the real income of the average Nigerian. The rapid up-swing in the prices of building materials in the last five years has further reduced the affordabilities for most
- DETR (1998) Local Government and the Private Finance Initiative: An explanatory Note on PFI and Public/Private Partnerships in Local Government Review of specific procurement issues and challenges confronting MDAs..
- The Housing of Nigerians: A review of policy development and Implementation..
Public-Private Partnership (PPP) and Infrastructure Provision in
By Olufemi A. Oyedele, National Diploma in Building Technology, B.Sc. Estate Management, M.Sc.
Housing Development & Management, M.Sc. International Project Management, ANIVS, RSV.
Public Private Partnership (PPP) is a collaboration of the public and private sectors in the financing
and development of public goods and services (agriculture, communication, infrastructure etc).
This phenomenon has been globally seen by many as the new economic paradigm. India has
benefitted a lot in infrastructure provision by the private sector through PPP. Public Finance
Initiative/Public Private Partnership (PFI/PPP) is a key policy instrument that is being used to
transform public services. The key element of PFI/PPP is risk management. This assertion
involved the creation of more public-private partnerships (PPPs). Criticisms of PFI especially by
the UK Labour Party in 1997 before the election led to the introduction of PPP. The collaboration
of government and the private sectors in the production of public goods and services is based on
the notion that government has no business in production of some goods and services in order to
ensure value for money (vfm). The experience of PPP in Nigeria has not been a thing to write
home about. Concessioning of Lagos-Ibadan Expressway, Kuto-Bagana Bridge, Lekki-Epe and
Maervis management of Airports have been sour. This paper will look into the factors that make
PPP unsuccessful in Nigeria and will suggest recommendations for adoption.
Key words: Infrastructure, Infrastructure Development, Public Finance Initiative, Public-Private
Partnership, Construction Risk Management.
Infrastructure is the basic physical and organisational structures needed for the operation of a
society like industries, buildings, roads, bridges, health services, governance and so on. It is the
enterprise or the products, services and facilities necessary for an economy to function (Sulivan
and Sheffrin, 2003). Infrastructure can be described generally as the set of interconnected
structural elements that provide framework supporting an entire structure of development. It is the
means of achieving an objective or set of objectives and also includes the objectives. It is an
important term for judging a country, region or state’s and individual’s developments/status.
The term typically refers to the technical structures that support a society, such as roads, water
supply, sewers, electrical national grids, telecommunications, and so forth, and can be defined as
"the physical components of interrelated systems providing commodities and services essential to
enable, sustain, or enhance societal living conditions" (Fulmer, 2009).\
Viewed functionally, infrastructure facilitates the production of goods and services, and also the
distribution of finished products to end-users (markets), as well as basic social services such as
schools and hospitals; for example, roads enable the transport of raw materials to a factory
(American Heritage Dictionary, 2009). In military parlance, the term refers to the buildings and
permanent installations necessary for the support, redeployment, and operation of military forces
(Department of Defense Dictionary, 2005).
The word infrastructure has been used in English since at least 1927 according to Online
Etymology Dictionary (2012), originally meaning "The installations that form the basis for any
operation or system ". Infrastructure in developing countries connotes roads and transport
infrastructures. The advent of telecommunication infrastructure in Nigeria brought infrastructure to
the front seat as the products and services necessary for the performance of an entity. There are
two types of infrastructure, “Hard and Soft" infrastructure. Hard refers to the large physical
networks necessary for the functioning of a modern industrial nation, whereas "soft" infrastructure
refers to all the institutions which are required to maintain the economic, health, and cultural and
social standards of a country, such as the financial system, the education system, the health system,
the governance system, and judiciary system, as well as security (Kumar, 2005).
Public-Private Partnership (PPP) is one of the Public Finance Initiatives (PFIs) and is a contractual
agreement between the public and the private sectors to share financial, technical and management
risks in project development and management. PPP is seen by many as the almighty formula in
infrastructure provision especially with the economic crunch ravaging world economies. Finance
for project development is now scarce and masses aspiration for projects very high because of
globalism and widely use of information technology.
This paper will assess the challenges of PPP in infrastructure provision in Nigeria and proffer
suggestions for its usage.
The Nature of Infrastructures in Third World Countries (NIGERIA)
Infrastructure development is one of the bases of assessing the achievements of democratic leaders
and it is the foundation of good democratic governance. Agitation for infrastructural development
in developing nation is higher in democratic government than in military dictatorship or compared
to developed countries. This is because the resources for provision of infrastructure are always
scarce. Ethnic-interest agitation and lobbying are common things in democratic governance in
developing countries. This is why the Office of Government Commerce (OGC) in United
Kingdom, advised that infrastructure project initiation should be done by an office specifically
established to do this job (P3O, 2008).
The Infrastructural report of Nigeria just like any third world country is nothing to write home
about. The housing situation is in a sorry state both quantitatively and qualitatively (Onibokun,
1996, Agbola, 1998; Nubi, 2000; Ajanlekoko, 2001; Oyedele, 2006). Most infrastructures are now
decayed and need repair, rehabilitation, refurbishment or replacement. Government is the system
that plans, organizes, controls and supervises the people who are resident in an area in other for all
to have conducive-environment for living and a sense of belonging. Governments have the power
to put in place all measures that it deem fit will make an environment beneficial for living for
Infrastructure development in democratic governance is more challenging because of the
accessibility of people to government and involves identifying the right project, carrying out
feasibility and viability studies and embarking on physical development of the project. The
challenges are numerous and include finance, technology for development, maintenance and
The challenges also include quality requirements of projects to meet international standard and to
be sustainably developed. Projects must meet the carbon emission standards (green requirements)
set by international organizations like International Standard Organisations. Air capture and
analysis are done in communities to ensure that they emit as little greenhouse gases (GHGs) as
possible, human settlements must be bio-diversified with co-habitation of other animals and plants
and natural environment must be conserved for sustainable development and so on.
Tradesmen and other technical human resources needed for infrastructural development are scarce
because of lack of training and motivation. “As a result many professional people, tradesmen and
senior managers are emigrating to other countries” (Robbins et al, 2009). Because of fast money,
most youths that suppose to learn a trade are now “commercial bicycle riders”.
The numerous challenges have not been tackled as they should. Nigeria's lack of basic
infrastructure to facilitate sustainable development and trade – both regionally and globally – and
to ensure competitiveness is already known by all. In particular, for the large number of local
governments, especially the rural ones, the dwellers produce have no access to markets and are not
stored, hampered by weak transport and energy infrastructure.
What is Public Private Partnership?
Public Private Partnership (PPP) is a sustained and long-term partnering relationship between the
public and private sectors to provide services and goods. Through PPP, the public sector seeks to
bring together the resources of the public sector and the technical expertise of the private sectors to
provide services and goods to the public at the best value for money (vfm) (Ministry of Finance,
Traditionally, the public sector has tended to engage the private sector merely to construct facilities
or supply equipment. The public agencies will then own and operate the facilities or equipment or
engage separate maintenance and operations companies to operate the facilities and equipment to
deliver the services to the public. PPP is born based on the fact that government provision of goods
and services should not only lay emphasis on finance but on the quality of goods and services.
“Managerially, modernization emphasizes a shift from a focus on inputs to a concern with
outcomes – providing services is no longer a sufficient justification for state intervention, it must
create added public value (Stoker, 1999, pp. 243–244). There is a more open-minded approach to
service procurement, and no presumption that in-house provision is always the best option (Hood
and McGarvey, 2002). With this, Direct Labour has been viewed to have shortcomings in
With PPP as an alternative form of financing infrastructure project, the public sector will focus on
the provision of infrastructure developments at the most cost-effective basis, rather than directly
owning and operating infrastructures. There are many possible PPP models, including joint-
ventures, strategic partnerships to make better uses of government assets, Lease and Operate,
Design-Build-Operate and Design-Build-Finance-Operate (Hood and McGarvey, 2002).
PPP was established by governments to ensure a lasting relationship between the private sector and
the public sector, breed trusts among project owners and project executors and reduce cost of
project delivery. But it has received widespread of criticisms among the public which it suppose to
serve. Criticizing PPP, Kyle (2007) argues that “this deal doesn’t pass the smell test”.
Value for money in a PFI project depends crucially on performance monitoring to provide
incentives for improvement and to ensure that service delivery is in accordance with the output
specification (Robinson and Scott, 2009). With proper project management, PPP will achieve what
it was originally designed to achieve. There are two fundamental requirements for a PFI project: (i)
value for money must be demonstrated for any expenditure by the public sector, (ii) the private
sector must genuinely assume risk. The significance of these two criteria differs depending on the
type of the privately-financed project. (Private Finance Panel, 1995, p. 12).
Prospects of PPP in Infrastructural Provision in Nigeria
PPPs have helped governments to execute a lot of projects that otherwise would not have been
executed. In Scotland, the Scottish Executive established a Private Finance Unit that provides
assistance for both public and private sectors on PFI in Scotland (Hood and McGarvey, 2002).
PFI/PPP started slowly, but almost a decade after its initial launch, it is beginning to have a
significant impact across the public sector in the United Kingdom. Infrastructure provision attracts
a greater percentage of the budget because it dictates development.
Nigeria with a population of 140 million people is Africa’s most populated nation and the biggest
infrastructural market (NPC, 2006). PFI/PPP involves the review of all central and local
government department services and activities – by consulting widely with users, by benchmarking
and by open competition – to identify the best suppliers in each case (Akintoye et al, 1998). The
focus will be on end results and service standards, rather than simply on processes. The aim will be
to secure the best quality and value for money for the taxpayer (HM Government, 1999, p. 4). PPP
in infrastructural development will provide adequate and affordable infrastructures, employment,
rural development and tax as a form of income for government.
The main purpose of PPP in infrastructure provision is that financial, technical and management
risks should be allocated to the party that is best placed to manage it at the least cost, acceptable
quality and reasonable time. In United Kingdom, Ireland, United States of America and India, PPP
has been successfully used in the provision of infrastructures. Nigeria infrastructure gap is very
wide because of the irresponsibility of past and present leaders in the provision of infrastructures
(Oyeweso, 2011, Oyedele 2012).
With PPP, governments are now achieving greater provision of infrastructures. The total capital
value of these projects listed in the Scottish Executive’s Project List now exceeds £2.5bn (Scottish
Parliament, 2001, p. 2). The scale of these projects means that PFI/PPP will remain a major
political issue. PFI is fundamentally about the transfer of the risk associated with major capital
projects from the public to the private sector. Indeed, one of the key elements of central
government approval of any PFI scheme is that of risk transfer (DETR, 1998a).
According to the UK government, PPP gives local authorities access to new sources of capital
investment and management skills for new or improved facilities and creates new opportunities for
the private sector to combine construction, facilities management, finance and operating skills.
Globalisation and modern technology means that direct provision of goods and services is no more
fancied worldwide and that a dynamic and inventive kind of politics is required in response
(Wright, 2001, p. 137).
PFI/PPP helps the state to afford to engage in more capital investment than it would by following
conventional procurement methods. It is akin to taking out a mortgage, with public bodies being
forced to pay the true market rate for capital. Commercial companies provide the initial capital and
in theory assume the risks associated with construction and maintenance in return for guaranteed
leases that will allow them to cover costs and make a profit. Instead of building new offices,
schools and IT facilities, local councils now lease them from commercial companies, thereby
providing the provider of these ‘asset-based services’ with a secure low of income.
There is yet no harmony in the methods of project financing in Nigeria. The Public Procurement
Act (PPA) 2007 stipulates that all states, local governments, ministries, departments and agencies
must follow due process in its public procurement, but the Director General of the Bureau of
Public Procurement (BPP), Mr Emeka Ezeh, has highlighted corruption as one of the challenges
militating against PPA. He said ministries, departments and agencies (MDAs) delay contractors’
payments more than the stipulated 60 days by the Procurement Act (Ezeh, 2011). Personal
interests of Nigerian leaders override public interests in the management of construction projects.
According to UKCG (2009) “The construction industry is a driver of growth in other sectors due to
its heavy reliance on an extended and varied supply chain. All other sectors of the economy like
manufacturing, education, health, sports etc, depend on construction industry for performance.
This paper will discuss the objectives of financing construction projects, the challenges of
construction project financing worldwide, the shortcomings of the construction project financing in
Nigeria and recommend novel methods of construction project financing in Nigeria.
Constraints of Private Public Partnership in public procurement
The function of the public sector is the provision of infrastructure for living. Transferring this
responsibility to the private sector is seen as “inefficiency” especially where it is marred with
controversies. PPP has been seen by many to be expensive and extravagant. “It is shaping up as
one of the key political battlegrounds in Scottish politics” (Hood and McGarvey, 2009). Pricing is
a major challenge so that our collective future will not be mortgaged. Local councilors and
officials have been highly critical ‘off the record’, arguing they have been presented with little
choice by the government (Lindsay, 2000). From the Left, PFI/PPP is seen as the latest
encroachment of big companies into the public sector as it mostly concerned itself with more
profit-making opportunities. The Scottish National Party thus drafted an alternative plan to PPP
based on the creation of Public Service Trusts.
There remains opposition to PPP from both the Scottish Trade Union Congress (STUC) and the
largest union in local government, UNISON. It has taken the government to the European Court to
protect the terms and conditions of its members affected by transferring to the private sector. A
recent report commissioned by this union and titled “Public Service, Private Finance” (UNISON,
2001) argued that PFI schemes lacked accountability, cost councils too much money and that they
should be used only as a last resort for capital projects (UNISON, 2007).
According to UNISON (2007) “PPP/PFI has been used extensively in Scotland primarily as a
means of keeping expenditure off the public balance sheet”. UNISON describes this as ‘Enron
economics' and calls for a return to proper accounting, a step that may be realised with the new
IFR standards. PPP has connotations of backdoor privatisation; the new emphasis on partnership
and joint working is more in tune with New Labour’s ‘Third Way ideology’. Broadly speaking, the
Third Way is a less ideological and more pragmatic approach to issues of public service
management and politics.
PPP will always be a more expensive method of funding capital projects because of the
requirement to finance the profits of the private firms and the additional borrowing costs. This has
caused an affordability gap for many public service organisations even after Scottish Government
subsidies for PPP projects. In addition to the cost, PFI/PPP has resulted in a culture of secrecy that
has excluded the public and staff from many aspects of the design of projects with a consequential
impact on service quality.
Numerous studies have highlighted a range of serious flaws in PFI/PPP policy, the most recent
being the House of Commons Public Accounts Committee Report of 27 November 2007. It
focused on tendering and benchmarking and concluded that value for money (vfm) for taxpayers
was often not being achieved with PPP projects in England and Wales for several reasons,
including fewer serious bidders due to the high costs and very lengthy tendering times. These
problems clearly exhibit itself in Scotland, through the many ways in which this policy leads to
profiteering at the expense of school children, hospital patients and taxpayers.
In October 2007 UNISON published “At What Cost” - a UNISON Scotland report on the
aggregate costs of PFI/PPP projects in Scotland. This revealed new figures which confirm that
billions of pounds of taxpayers' money are being wasted. The report looked at Full Business Cases
from 35 projects. These official documents claim to demonstrate that the PFI/PPP route is
providing value for money. But UNISON findings show that UNISON's calculation of £5.8 billion
being wasted on PFI is likely to be an underestimate.
Many see PFI/PPP as indicative of the secret relationship the government has with big businesses.
It is the large multinationals that are frequently the key beneficiaries of PPP schemes. For example,
in Scotland, PFI training is provided by PricewaterhouseCoopers under a programme approved by
the Treasury Taskforce. PFI/PPP schemes frequently have very high transactions costs. Public
bodies have to pay large consultancy fees to legal, financial, management and other advisers.
Another problem is that the complexity of many PFI/PPP schemes dims ‘the searchlight of
democracy’ as many councillors and MSPs struggle to grapple with the legal and contractual
intricacies of partnership arrangements. Moreover, as these ‘deals’ frequently involve substantial
capital sums and long-term commitment on the part of councils, they are effectively binding
successive administrations into arrangements they may not wish to be part of PPP institutionalizes
the private sector in Scottish local government.
Public Private Partnership can be more successful if there is transparency in the partnership.
According to Robinson and Scott (2009) “both the public and private sectors are undergoing a
learning process, which should lead to improvements in future PFI contracts. PPP has received a
lot of criticisms in UK, especially in Scotland where Public Finance Initiative (PFI) has been
replaced by Scottish Futures Trust Fund. PPP has been criticized to be too expensive and
outrageous for public projects. A school of thought said PPP places the contractors (private sector)
over and above the project owners (public sector). “There is also evidence of the public sector
forgoing entitled deductions in the 'spirit of partnership' and in exchange for minor contract
variations in the output specification (Robinson and Scott, 2009).
Clearly, if the public sector wished to transfer all of the risks associated with a PFI project to the
private sector, the costs involved would be prohibitive (Glaister, 1999). Public sector in United
Kingdom appears ill-prepared to manage the risk transfer process inherent in PPP.
According to UNISON (2007) “many politicians at national and local level have in the past
supported PFI/PPP projects with some reluctance, for pragmatic reasons. It was seen as ‘the only
game in town' for the provision of new public infrastructure, but there has been considerable
unease about the true financial costs to the taxpayer”. UNISON believes that a commitment to
creating a genuine level playing field could be the basis for cross-party consensus. UNISON
proposed that Scottish Futures Trust initiative be developed to solve procurement problems in
Essential Features of PPP
1. The Legal Framework must be sound because of the different objectives of the parties.
2. There must be efficient and effective costing. The costing must take into consideration all
the risks involved. PESTLES may be used in assessing the risk situation and in
3. The source of finance must be assured, accessible and sustainable.
4. Both parties must have technical knowledge of the infrastructure being developed though
it may be at different levels.
5. It must be based on value for money (vfm), must be economical, efficient and effective.
The Benefits of Infrastructure Development in National Development
The African Development Bank (ADB) has made infrastructure development a cornerstone in its
development agenda with regional member countries (TMSA, 2012). The Bank recognizes that
lack of adequate social and economic infrastructure is one of the key constraints to short- and
medium term poverty reduction in Africa, and has thus been a major force in private and public
sector infrastructure development through the provision of financial and technical resources. At the
same time, the Bank recognises the increasing importance of governance for infrastructure
development and has made good governance an imperative in its lending and non-lending
There have been considerable changes in the delivery of national infrastructure services across
Africa. While Nigeria has improved its telecommunication infrastructural situation, it has not
improved in other areas like health, education, airport infrastructures, electricity, housing and
transportation. However, performance in terms of infrastructure service delivery and quality
continue to vary across countries. Infrastructure is the medium of production of goods and services
and forms the national asset of any nation.
According to Kathmandu Final Workshop Report (2009), infrastructure can help solve four
problems: social; health and environment; development; and, economics. A region's infrastructure
network, broadly speaking, is the very socio-economic climate created by the institutions that serve
as conduits of trade and investment. Some of these institutions are public, others private. In either
case, their roles in the context of integration are transformative, helping to change resources into
outputs or to enhance trade by removing barriers. Therefore, an improvement in regional
infrastructure is one of the key factors affecting the long-term economic growth of a region.
The linkages between infrastructure and economic growth are multiple and complex. Not only
does infrastructure affect production and consumption directly, it also creates many direct and
indirect externalities. It also involves large flows of expenditure, thereby creating additional
employment. Studies have shown that infrastructure can have a significant impact on output,
income, employment, international trade, and quality of life. Infrastructure development can
reduce stress and promote good health. It will also reduce crime level.
Infrastructure has always played a key role in integrating economies within a region. Well
developed and efficient infrastructure is essential for a region's economic development and growth.
In a dynamic concept, infrastructure is seen as a regional public good that moves factors of
production within and across countries, thus helping the region attain higher productivity and
The Challenges of PPP in Nigeria
PPP is not new in Nigeria but came into prominence in the nineties. The development of Dolphin
Estate in the eighties was through PPP by the Lagos State government and HFP Construction
Limited. Also, the development of the oil industry immediately after oil was discovered in
Oloibiri in Bayelsa State in 1956, was through PPP. In recent times, the attempt to adopt PPP as
a method of construction in Nigeria failed many times. Majority of the stakeholders do not
understand the principles of PPP.
Bicourtney Concession exercise to develop and manage Lagos-Ibadan Expressway into five
lanes failed because Bicourtney (the concessioner) could not get a financier. Kuto-Bagana
Bridge over the River Benue is a PPP between the federal government, Kogi and Nasarawa State
governments. Nasarawa paid its counterpoint fund of N1billion to the development partner, but
other parties did not pay their commitment and the development partner did not have the money
it claimed it had. The only leverage it has now is the badly drawn agreement which favours the
Victoria Island-Epe Express Road failed because the concessioner (Lekki Concession Company
(LCC)) did not carry along the other stakeholders. Within a distance of less than 5 kilometres,
LCC wanted to construct three toll points to collect fees for plying the road. The people kicked
against it and threaten to go to court. The result is the construction of Alternative Roads that give
stakeholders opportunity not to use the road according to United Nation’s rule on PPP.
Messrs Maevis airport landing fee-collection concession at Murtala Muhammed Airport, Ikeja,
failed because of heavy non-receipted amount paid upfront by the concessioner.
The PPP arrangements that are popular in Nigeria public finance arrangement can be listed as
Concession is a collaborative arrangement between a government and private developer/s to
design and develop facilities through combination of participants which include the financiers
and the contractors and or consultants. The developers may not necessarily be the financiers of
the project. For example, Bicourtney Limited was expected to coordinate the financial and
technical contributions of its partners in the concession of Lagos-Ibadan Expressway.
Bicourtney’s job was supposed to be management of the concession as it is not a contractor. Its
job was to arrange for finance and look for reputable contractors to develop the road.
Build, Own and Transfer (BOT)
Under Build, Own and Transfer, the contractors who may be a developer (financier) and not
necessarily the builder, build and own the property which will be used by the client with the
agreement that the client will possess the property in the future. This arrangement is usually used
for specialized facilities like hospitals, schools, social housing and markets.
Build, Own, Operate and Transfer (BOOT)
In Build, Own, Operate and Transfer, the client does not have intention of using it and allows the
developer to own it for a period of time. Example is the construction of Murtala Muhammed
Airport II by Bicourtney Aviation Management.
Design, Build, Finance and Own (DBFO)
This is a Public Finance Initiative (PFI) in which a private organization conceived a development
idea, design, construct it and operate it in perpetuity. For example, the Millennium Park,
Maitama, designed and developed by Salini Construction Company Limited.
Partnering as an Alternative to PPP
In 1994, Sir Michael Latham led a government/industry initiative to write a report (Constructing
the team) on the situation of the construction industry in the UK and how its adversarial
problems can be solved. Latham’s report which recommended team-working in the construction
industry was accepted by the government. In 1988, the Government of the United Kingdom
commissioned Sir John Egan to review the state of the UK construction industry. Egan’s report
1998, ‘‘Rethinking Construction’’ was accepted by the Government. This report which was a
follow-up to the Latham’s report 1994 laid much emphasis on partnering or collaboration.
Bennett and Jayes (1995) said that ‘‘partnering is a management approach used by two or more
organisations to achieve specific business objectives by maximising the effectiveness of each
participant’s resources. The approach is based on mutual objectives, an agreed method of
problem resolution, and an active search for continuous measurable improvements.’’
‘‘Organisations which have used partnering for construction projects are now reporting
favourable results, including decreased costs, quality improvement and delivery of project to
programme’’ (Akintoye and Black, 1999).
Partnering or collaboration is the act of working together of different people to achieve a
common goal (American Heritage Dictionary, 2011). In public finance initiative, partnering or
collaboration is the collective efforts of the procurement team in an untraditional way in order to
bring about a unique result. Nigerian procurement method is full of lack of trust between the
client and the contractors. Whereas, PPP is a profit oriented business-like arrangement,
partnering is a mutually beneficial risk-sharing arrangement. It emphasizes close monitoring and
involvement of clients in project development.
Public Private Partnership (PPP) cannot be viewed as the solution to our long quest for
infrastructure provision in Nigeria. For PPP work in the provision of infrastructure in Nigeria, the
existing trust between the stakeholders must be higher. The stakeholders must be conversant with
basics of PPP. The legal framework must be sound because PPP is a contractual agreement in
which the project constraints of time, cost and quality are not easy to define. The way that our
leaders view public is that they (the leaders) are not part of it and they negotiate on behalf of the
public to favour the private. The issue of NITEL PRIVATISATION and the sale of public
buildings will give credence to this assertion.
There is no method of procurement that is not feasible but the situation, size, technicality and the
people managing the procurement method. Corruption is the bane of our construction project
procurement method. People that represent us are using extraneous factors instead of the normal
traditional requirement of merit. Contracts are awarded to compensate loyalists of leaders and in
most cases, these contracts are not executed. PPP projects have three constraints of quality, time
and cost. In the face of corruption, any of these may be compromised. For example, the Mushin
Maternity Centre along Isolo Road, Mushin, was conceded to a private developer to develop
under thirty years lease. The cost incurred on the development of the shopping centre, which
may not be the best use, may not justify the long gestation. PPP is open to negotiation power of
the parties involved so may be difficult to assess unlike partnering.
Partnering, a system of procurement that allows the participation of both parties in procurement
is highly recommended for use in Nigeria construction project procurement, though it is not
corruption-proof. Partnering is a win-win arrangement in which communication is open and all
parties are risk takers. The government representatives see the development partners as partners
and not as businessmen. Their profits are agreed at between 15-20% and assured irrespective of
working conditions. The jobs are done under close monitoring of the public sector
representatives. The public infrastructure to be procured has budget which is an estimate and not
fixed. It can be lower or higher but agreed by all parties. People of integrity who have built
names for themselves and who can live above board should be constituted into Nigeria
Infrastructure Procurement Committee.
The governments and the construction industry can evolve a scheme for prudency to be called
Prudent Contractors Scheme just like the Considerate Constructors Scheme. The Considerate
Constructors Scheme is the national initiative set up by the construction industry to improve its
image. Sites and companies that register with the Scheme are monitored against a Code of
Considerate Practice, designed to encourage best practice beyond statutory requirements. The
Scheme is concerned about any area of construction activity that may have a direct or indirect
impact on the image of the industry as a whole. The main areas of concern fall into three
categories: the general public, the workforce and the environment.
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that they have not given money or gratification out as a way of getting contract, that the
contractors will not give out money as gratification to any stakeholder during and after
completing the job and that the contractor’s profit is not more than 25% of the contract sum. This
form should be sworn to before the commencement of job.
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