A public-private association does not necessarily have to be carried out through a company (company) of public and private capital or a mixed economy company[17]​ (the term "mixed company" is sometimes used, not entirely correctly, which has a broader meaning). It can also be conveyed through a concession,[18]​ a service contract, a management commission or other formulas.

The sharing of risks and the development of innovative long-term relationships between the public and private sectors are common in PPPs,[16]​ where the different risks have to fall on the party that can best manage them.[19]​ The use of private financing is another key to many PPPs especially when it comes to megaprojects,[20]​ particularly those influenced by the UK PFI model, although this facet has languished since the financial crisis of 2008.[16]​.

Usually a company is formed for each large PPP operation. In English it is called Special Purpose Entity, SPE or Special Purpose Vehicle, SPV (Special Purpose Entity or Vehicle). In Spanish it is normally a UTE (Temporary Union of Companies), also called an accidental union of companies. This company is formed to build, develop, maintain and operate the project during the period established by the contract.[21]​[22]​ When the public administration has invested directly in the assets "Asset (accounting)"), it obtains (although not always) a number of shares "Action (finance)") in the company.[23]​ The consortium is normally formed by a construction company, a maintenance company and investors in the shareholding. It is the SPE that signs the contract, both with the public administration and with its different suppliers, to build and maintain the infrastructure. In the infrastructure sector, the complex agreements and contracts that guarantee and ensure cash flow make PPPs excellent candidates for project financing. A typical example of a PPP would be the construction of a hospital by a private entrepreneur that is then leased to the health authority. The entrepreneur acts as a landlord, providing general maintenance of the building and other non-medical services, while medical services are provided by the hospital itself.[21]​.

Economic theory has studied PPPs through the prism of contract theory. The first theoretical study[24]​ on PPP was carried out by Nobel Prize-winning economist Oliver Hart. From the point of view of economic theory, what distinguishes a PPP from the traditional model (MT) of public procurement in the case of infrastructure is that the PPP packages the construction and operation phases, while in the MT the administration contracts construction with a company, and then it is that administration that operates the infrastructure, or entrusts its operation to a different company. Therefore, when the APP builds, it has strong incentives to invest thinking about the operation phase (it can, for example, use materials that are more expensive to build, but much cheaper to maintain). This way of investing can be desirable (as in the example cited), but also undesirable (if, in addition to reducing operating costs, it decreases the quality of service). There is therefore a trade-off, a situation in which an advantage in price implies a disadvantage in quality, and vice versa, so a compromise solution must be reached in which the variables that are most interesting are maximized to the extent admissible. It then depends on the particular situation whether the traditional model or a PPP is preferable.

This vision of Hart has been expanded in several directions. For example, various authors have studied the externalities between the construction and operation phases,[25]​ insurance when companies are risk averse[26]​ and the incentives of PPPs to innovate and collect information.[27]​.

PPPs often involve a contract between a public sector authority and a private party, in which the private party provides a public service and assumes substantial technical, financial or operational risks. In some types of PPP, the cost of the service is borne exclusively by its users and not by the rest of the taxpayers.[21]​ In other types (especially the PFI), on the basis of a contract with the public sector, the private sector makes an investment in capital to provide a public service whose cost is totally or partially borne by the Public Administration.

The public sector contribution to a PPP can be in kind, either transferring ownership or allowing the use of public goods) or infrastructure elements. In projects that aim to create such public goods, the State may provide a subsidy, either through a grant for capital expenditures or for income (which may consist of total or partial tax exemptions, or a guarantee of minimum income for a certain period). In all cases, the PPP represents a significant transfer of risks to the private sector, generally in an integrated manner, minimizing them for the public sector. An optimal distribution of risks is the main generator of value for the PPP formula of providing a public service. According to a report[28]​ by the Inter-American Development Bank, "it is the participation in risk financing that effectively links the private party and its banks with the good performance of the infrastructure."

Supporters of PPPs argue that this formula allows the public sector to take advantage of the experience and efficiency of the private sector to provide certain services that have traditionally been provided by the public sector. Another claimed advantage is that the PPP can be structured so that the public administration wishing to make a capital investment does not have to increase its debt (for example, a license is granted to a private company to build and operate a dam for 20 years, after which the dam will revert to the public domain). On the contrary, it is the private part of the PPP that becomes indebted. In projects where the cost of the service will be borne exclusively by the end user, the PPP is, from the perspective of the public sector, an extra-budgetary method of financing new public services or the improvement of existing ones. On the other hand, in projects where the public part is expected to compensate the private part through availability payments when the service is actually provided, the financing is already budgetary from the perspective of the public sector. However, the public administration that adopts this form will benefit from long deferrals of payments (they will not have to put in money as soon as the infrastructure begins to be built, but rather when it comes into operation). Generally the financing costs will be higher for the PPP than for the public administration, due to the higher cost of capital for the private sector. However, these higher financing costs can be offset by greater private sector efficiency, savings resulting from a holistic approach to service delivery, and better long-term risk allocation.[29]​.

Pressure to change the traditional model of public service delivery came from concerns about public debt levels, which grew rapidly during the oil crises of 1973 and 1979. Governments sought to encourage private investment in infrastructure, initially based on accounting fallacies arising from the fact that public accounts did not distinguish between recurrent expenditure and capital expenditure.

The idea that private provision of infrastructure represented a way of providing it at no cost to the taxpayer has now been abandoned; However, interest in alternatives to the traditional public supply model persisted. In particular, it has been argued that models with a greater role for the private sector, with a single company assuming responsibility for most aspects of a given project, could improve risk allocation while maintaining accountability for essential aspects of service provision.

Initially most PPPs were negotiated individually, as one-time agreements. Most of this activity began in the early 1990s in the United Kingdom.

Australia

Many Australian state governments have adopted systematic programs based on the PFI. The first, and model for most of the others, is Victoria Associations. The railway to the airport in Sydney, the tunnel to cross the city and the one across the bay[30]​ have been carried out through PPP. Also the remodeling of Melbourne South Station and the Robina hospital in Queensland.

Brazil

Measures recently adopted in Brazil have reinforced the importance of PPPs on the political agenda. Law 13,334, of September 16, 2016, consolidates the concept of “association agreements” in order to cover all forms of contractual agreements between the Government and the private sector for the execution of public companies, regardless of whether or not they have been concessioned. This new bill has also opened the doors to the broad concept of PPPs.[31]​.

Canada

Stephen Harper's federal Conservative government embodied its commitment to PPPs in the 2009 creation of the public company P3 Canada Inc. The Canadian vanguards of PPPs have been provincial organizations, supported by the Canadian Council for PPPs established in 1993 (a member-sponsored organization with representatives from the public and private sectors). As a proponent of the PPP concept, this Council conducts research, publishes its findings, facilitates discussion forums, and sponsors an annual conference on relevant national and international topics. Each year the Council praises successful PPPs through a national awards program presented at the conference.

At lower administrative levels, PPPs have been used for large transportation infrastructure projects such as the Viva Rapid Transit bus system or Ontario Highway 407. In Canada, PPPs provide significant social and infrastructure services. PPP Canada Inc. was created as a crown corporation, with an independent board of directors reporting to Parliament through the Minister of Finance. The mandate of PPP Canada Inc. is to improve the delivery of public services by giving taxpayers greater value, timeliness (also in the sense of completing infrastructure on time) and accountability. It began operations in 2009 with the appointment of a member of the board of directors and an executive director.

A variety of PPP modalities exist in British Columbia thanks to the efforts of Partnerships BC, a fully public company registered under the Business Corporations Act whose shareholder is the Ministry of Finance. Among its projects are the Canada Line elevated railway, the Abbotsford hospital and cancer center, and the Sea-to-Sky Highway.[32]

In Quebec, the PPPs include the McGill University Hospital, the western extension of Highway 30 and the University of Montreal research hospital.

China

Shantou City Council signed a 50 billion yuan PPP with CITIC Group to develop a major urban development project in an area of ​​168 square kilometers south of the city's central business district.[33] The project, named Shantou New Coastal City, includes residential construction, infrastructure (including a cross-bay tunnel) and industrial development. It aims to become a business, cultural and leisure platform in eastern Guangdong.

El Salvador

After strong social opposition, the 2012 law[15]​ excludes public health care, education, water, public security and prisons from PPPs. It requires establishing an audit to sanction companies that fail to comply with the stipulations of the contracts. And it requires that all contracts over $10 million be presented to Parliament before being signed.

Spain

A report[28]​ by the Inter-American Development Bank states that PPPs have existed in Spain since long before this concept began to be used in the United Kingdom. The figure of the concession, the most common contractual manifestation of PPPs, was developed in Spain and in many other countries with an administrative tradition. There are specific examples of public infrastructure from the Roman Empire that were built and managed by private capital in the Iberian Peninsula. But in a modern sense, PPPs were introduced in Spain with the Public Works Instruction of October 10, 1845. From 1998 to 2008 this formula has been widely used in Spain: almost 50 road projects have been awarded.

In January 2012, Mariano Rajoy's government announced that it would take charge of the roads that had gone bankrupt as part of these PPP/PPP (the European, Argentine and global names vary: the substance is the same). According to the government, the cost of this rescue would be between 2,000 and 4,500 million euros for the Spanish State, which it would have to disburse as the Patrimonial Responsibility of Public Administrations.[34]​.

USA

The states of Oregon, Washington "Washington (state)") and British Columbia launched the West Coast Infrastructure Market in 2012, an interstate cooperation platform that conducts economic feasibility studies on selected infrastructure projects and connects private investors with public infrastructure opportunities. This platform aims to replace traditional approaches to financing infrastructure and land development with “performance-based infrastructure,” which is financed, if possible, with its internal rate of return (IRR) rather than tax dollars, and evaluated based on its life cycle and social, ecological and economic impacts, rather than its addition to production capacity and the cost of capital.[35]​

The My Brother's Keeper Challenge (biblical phrase), which supports civic leaders in the black community to care for their youth, is another example of APP.

In New York, during the tenure of influential planner Robert Moses (1933-1970), PPPs proliferated. In that city they are called "Authority of...", for example the Triborough Bridge and Tunnel Authority, the Henry Hudson Highway Authority and the Port Authority (but when elsewhere in this article we talk about authorities, we are referring to the public sector, to public administration at its national, subnational or municipal levels). Moses manipulated these PPPs, either seeking their success or their failure, to gain political power.[36]​.

San Diego (California) "San Diego (California)") has reached numerous PPP agreements. In fact, "San Diego has used PPPs more extensively and, with Petco Park, on a larger scale than is typical in other cities[37]." One explanation for this propensity is that "...residents refuse to pay taxes to pay for public services and prefer that they be carried by private entities...[37]​" "...taxes are distributed with linear functions of cadastral values..., jurisdictions have an incentive to try to exclude those who would have cadastral values ​​below the average. The incentive drives local policies toward minimum lots, restrictions on multi-unit buildings, and restrictive building standards. A social cost of these policies is a reduction in housing opportunities for low- and middle-income families[38].”

India

The Government defines PPP as "a partnership between a public sector entity (representative of the authority) and a private sector entity (an incorporated company in which 51% or more of the capital belongs to the private party) for the creation or management of infrastructure for a public purpose for a period of time specified (concession period) on commercial terms and in which the private party has been selected through an open and transparent procurement system."[39]​.

The Government has estimated an investment of 320 billion US dollars ($) in its tenth plan.[40] Large infrastructure projects in the state of Maharashtra (more than 50%) are based on the PPP model. Since 2000, other states such as Karnataka, Madhya Pradesh, Gujarat and Tamil Nadu have also adopted this model. Road projects account for 53.4% ​​of the number of projects and 46% of the amount. Ports are in second place with 8% of the number of projects and 21% of the amount.[41] Other sectors such as energy, irrigation, telecommunications, water supply and airports have gained momentum through the PPP model. Investment in these sectors during 2011 was expected to reach Rs 20,271,690,000,000 (according to the price index 2006-2007).[42]​.

In India, PPPs have achieved notable successes in the development of infrastructure, particularly roads, under the National Highway Authority. Also in nutrition, with the midday meal program run by the Aksaya Patra Foundation. However, a 2013 report[15]​ by the United Nations Office on Drugs and Crime (UNODC) "Public-Private Partnership or PPP projects in India's roads and energy sectors are prone to corruption, and capital evasion by private investors, with the Government emerging as the biggest threat."

Japan

Since the decade beginning in 1981, the so-called literally "third sector" [第三セクター|daisan sekutā] in Japanese refers to mixed economy companies. This can cause confusion, since this term is a false friend: in Spanish "third sector" means "sector of the economy, halfway between the private sector and the public sector, which includes cooperatives, associated labor companies, labor societies, non-profit organizations, charitable and mutual associations or mutual societies", while in English "third sector" encompasses both the voluntary sector and PPPs.

In Japanese railways, a "third sector line" is a short line or network operated by a small company together with a municipality and smaller private interests. Third sector lines are generally lines that belonged to Japan Railways or the Japanese National Railways and have been segregated from these large companies.

Philippines

The Government maintains an online list of PPP projects[43]​ The English Wikipedia category on transport infrastructure proposals in the Philippines contains links to around twenty pages with roads, airports or bridges.

The Philippine Build-Operate-Transfer (BOT) law passed on May 5, 1994 and amended in 2012[44]​ regulates PPPs.

Mexico

The antecedent of PPPs are the Pidiregas (Productive Infrastructure Investment Project with Deferred Registration in Public Expenditure), used for the development of public infrastructure through the participation of private initiative in the parastatals Compañía Federal de Electricidad (CFE) and Petróleos Mexicanos (PEMEX).[45] It was in the government of President Vicente Fox that public-private alliances were promoted for the development of other types of infrastructure such as construction of hospitals. Later they began to be used for the development of road infrastructure. Under the government of President Felipe Calderón Hinojosa, PPPs were promoted more deeply for the generation and provision of public goods and services. It was not until 2012 that Calderón Hinojosa sent the Public-Private Partnerships Law to the Congress of the Union, which was approved.[46]​.

Puerto Rico

On the English Wikipedia page on PPP in Puerto Rico there is the following, incomplete, list:

United Kingdom

In 1992, John Major's Conservative Government introduced the PFI,[48]​ the first systematic program to promote PPPs. The 1992 program focused on reducing the public deficit, although, as explained above, the effect of a PPP on public accounts can be illusory (depending on the type of PPP chosen and its performance: a PPP for a toll road with a lot of traffic can mean significant income for the public coffers, due to the taxes charged on the company's profits, while the rescue of a failed PPP can mean a serious loss to the treasury). Tony Blair's Labor Government, elected in 1997, expanded the PFI initiative, but attempted to shift the focus to value for money, mainly through appropriate risk sharing. However, since then it has been proven that many programs went grossly over budget and have not provided the taxpayer with value for their money. Some projects even cost more to cancel than to complete.

In the United Kingdom, two-thirds of the London Underground PPP returned to public management in 2007 after just 4 and a half years at an estimated cost of £2 billion. The then mayor of London, Boris Johnson, described the events as "an attempted robbery in broad daylight[49]." The remaining third returned to public hands in 2010 after 7 and a half years at a purchase price of £310 million.[50] The Government paid consultants £180 million to structure, negotiate and launch the PPP. The winners of the tender reimbursed the Government £275 million.[51]​.

51 % of British air traffic transferred to the private sector; However, as a result of the decline in air traffic following the September 11, 2001 attacks, the Government and BAA Limited each invested £65 million in the private sector operator in 2003.[54]​.

The South London Healthcare trust owned[15]​ three hospitals with PFI models, and was declared bankrupt by the Government. One of them, in Greenwich, revealed that capital costs amounted to 11.3% of its total budget – almost double the Government's allocation for these costs. A report by the Strategic Health Authority warned that other local trusts in a similar situation 'would incur recurring [income/expenditure] and cash flow shortfalls, even if they operated as efficiently as the average hospital trust in England.' “A high proportion of their structural [revenue/expense] and cash flow deficits are attributed to this effect.” Hospitals were forced to merge with other local hospitals, services were reduced, the number of nurses and doctors decreased, and emergency services were cut, sparking massive local protests.

Russia

The first attempt to introduce PPPs in Russia was made in Saint Petersburg (Law 627-100 of December 25, 2006, «On the participation of Saint Petersburg in public-private partnerships[55]​».

Today there are special laws on PPP in 69 members of the Russian Federation,[56]​ but most of them are just declarations. In addition, PPPs in Russia are regulated by federal law 115-FZ of July 21, 2005 "On concessional agreements"[57]​ and federal law 94-FZ of July 21, 2005 "On the provision of goods, works and services by the State and municipalities."[58]​ In a certain way, PPPs are also regulated by federal law No. 116-FZ. of July 22, 2005 "On special economic zones"[59]​ (in terms of business advantages in special territories—in a broad sense it is a variation of APP).

However, all the regulations cited do not cover all possible forms of PPP.

In February 2013, a group of experts rated members of the Russian Federation according to their readiness to carry out PPP projects. The most developed region is St. Petersburg, with a rating of 7.8; the least, Chukotka, with 0.

By 2013 there were almost 300 PPPs in Russia.[60]​.

From 1990 to 2009, nearly 1,400 PPP agreements were signed in the European Union, for an amount of approximately 260 billion euros (€)[61]​ Since the start of the financial crisis in 2008, estimates suggest that the number of PPP agreements reached has fallen by more than 40%.[62][63]​.

A communication[64]​ from the European Commission on PPPs considers investments in public infrastructure as an important means of maintaining economic activity. As a result of the significant role that PPPs have adopted in the provision of public infrastructure, in addition to the complexity of these transactions, the European PPP Expert Center (EPEC) was created, with the support of the European Investment Bank, to support the capacity of the public sector to establish PPPs and address problems that for this type of contracts arise throughout Europe.

In a 2007 survey, US municipal managers overwhelmingly cited two reasons for using PPPs: cost reduction (86.7% of respondents) and budget constraints (50.3%). None of the other reasons asked exceeded 16%. However, in the 2012 survey, 69% of respondents cited the need for better processes; 77%, building relationships with the private sector; 81%, which gave better results; 84%, resource leverage; and 86%, that the provision of services through APP is the right thing to do. Among respondents, PPP provision of public services peaked at 18% in 1977 and has declined since then. The most common form of shared service provision is agreements between administrations, which grew from 17% in 2002 to 20% in 2007. "At the same time, approximately 22% of the municipalities surveyed indicated that they had remunicipalized at least one service that they previously provided through PPP[12]."

The APP phenomenon is controversial. The lack of consensus on what a PPP is complicates the process of assessing whether it has been successful.[16]​ The results of PPP formulas in terms of value for money (VfD) and efficiency are often not available or, when they are, they are mixed.[16]​ According to a report[65]​ by the Inter-American Development Bank on PPPs, “studies that have sought to establish global recommendations on PPPs have not been successful, as they have been unable to establish with certainty that PPPs generate greater VpD than the traditional model. Aware of these problems, in 2015 the World Bank published a framework[66]​ for the proactive publication (before anyone asks for it) of information on PPP contracts that are carried out, accompanied by jurisdictional studies[67]​ and success stories.[68]​.

According to Weimer and Vining, "A PPP typically involves a private entity financing, constructing or managing a project in exchange for the promise of a stream of direct payments from the public administration or indirect payments from users over the life of the project or some other specified period of time[69]." As PPPs are directly responsible for a variety of activities, Weimer and Vining indicate that rent-seeking behaviors can cause them to evolve into monopolies.

Just as some PPP projects have been carried out without incident, others have been enormously controversial. A common problem with PPPs is that private investors obtain higher returns than government bonds even when most or all of the revenue risks are assumed by the public party.[63]​.

A 2008 report[70]​ by the consulting firm PriceWaterhouseCoopers argued that the comparison in the interest rates at which loans are made to the public and private sectors is not fair, because there are "restrictions on public borrowing", which may imply that this debt is too high, and in this way PFI projects can be beneficial by not directly increasing the deficit.

Numerous Australian studies of early initiatives to encourage private investment in infrastructure concluded that, in most cases, PPP proposals were inferior to the traditional public procurement model based on competitive public tendering of public infrastructure.[71] In 2009 the New Zealand Treasury, in response to questions from the New Zealand New National Party Government, published a report on PPPs which concluded that "there is little reliable empirical evidence on the costs and benefits of PPPs" and that there is "other ways to obtain financing from the private sector", as well as that "the advantages of PPPs must be weighed taking into account the contractual complexities and rigidities they entail".[72]​.

One response to these negative findings was the development of formal procedures for valuing PPPs focused on value for money rather than public debt reduction. Underlying a framework where value for money was achieved through appropriate risk sharing. These procedures were incorporated into the private finance initiative and its Australian counterparts from the late 1990s. Another model discussed was the community-based PPP (CPP), in which the public and private sectors work for the well-being of the community, shifting the private sector's focus on profit. This model is being applied in developing countries such as India.[73]​.

Clarence N. Stone calls PPPs “governing coalitions.” Analyzing the political regimes that governed Atlanta from 1946 to 1988, he points out the crosscurrents in coalition formation. Government coalitions are susceptible to numerous problems, mainly corruption and conflicts of interest. This slippery slope is created by insufficient oversight.[74]​ Corruption and conflicts of interest lead to opportunistic behavior that harms the public interest. Other costs related to PPPs are production and negotiation costs.[75]​.

It should always be taken into account that cases in which an APP goes wrong will cause dissatisfaction in the users of the service and will probably reach the media, while in cases in which it goes well, users will not even know that the service is provided through the APP. This information bias may predispose some people against PPPs. The various pages that seek to promote PPPs, sponsored by private companies that carry out this type of agreements, do not provide data on the numbers of PPPs that have gone well, those that have gone badly, the amounts of money they involve or the sectors where they are located.

Disadvantages

The apparent contradiction between these lists of advantages and disadvantages (the advantage is that the APP can reduce the cost, and the disadvantage is that it can increase it), is explained because both cases have occurred. The PPP can be positive if the contract is fair and balanced, if all those involved are honest and capable, and if the construction and number of users forecasts are met. On the other hand, if the contract is unbalanced, if there is corruption or if the actual number of service users is lower than forecast, the PPP may be negative. As an example of imbalance, the agreement[79]​ between Spain and the Abertis company on the AP-7 highway included a clause that implied "the disappearance of the risk" for the company: if traffic fell, it would be the State that would assume the loss of income. As a result, a ruling ordered the payment of 1,494 million euros to the concessionaire.

A global study[15]​ revealed that in 90% of road and railway projects, actual costs end up being much higher than those anticipated in the initial tenders, and that actual demand is lower than forecasts. The World Bank[80]​ reports that in 52 toll road projects in Mexico, only 5 met or exceeded traffic forecasts. The Government of Mexico had to assume $7.6 billion of debt and the companies' shareholders lost another $3 billion.

The number of PPPs has greatly increased in recent years, due in part to public authorities transferring the provision of public services to non-profit entities.[84] Entering a PPP can be both enriching and destructive, if not done with care and training. APPs require balance between the parts, as well as continuous maintenance. If an organization enters into them lightly, it can expect failures in several areas that drag the APP to one of the many failures that have occurred.[86]​.

Water

After a wave of PPP entry into public water services during the decade starting in 1991, mainly in developing countries, experience has failed to demonstrate that public water management is better than private or mixed water management. Instead of lower prices, greater investments and improvements in water access and sanitation as promised, water prices are very similar and have even become more expensive.

The transition to public management of the water service in Paris has not managed to reduce rates as expected, in fact it has increased in price although it is slightly lower than the national average according to the French Government.[96] In short, said public management only affects 2 million inhabitants. In metropolitan Paris, made up of 150 municipalities and more than 10 million inhabitants, the provision of the service is still carried out by a concessionaire (Veolia).[97]​ The promise to reduce the drinking water rate by 8% in Paris did not actually reach 3%, which was achieved by significantly reducing the level of investment that the previous concessionaire had made.

Contract management is a key factor in the provision of shared services, and services that are more difficult to track or reflect in detail in contractual language often remain in public hands. In the 2007 survey of American municipal managers, what they considered most difficult was the operation and management of hospitals, and the least difficult was cleaning streets and parking lots. The study revealed that municipalities often do not sufficiently follow collaborative agreements or other forms of service provision: “For example in 2002 only 47.3% of managers who used private companies to provide services reported that they evaluated these services. By 2007 this figure had dropped to 45.4%. Performance evaluation emerges from these surveys as a general concern and is frequently criticized in academic works on PPP."[12]​[13]​.

Health services

A healthcare PPP can be described as a long-term contract (typically 15 to 30 years) between a public authority and one or more private companies. The public sector provides its purchasing power, sets the objectives of an optimal healthcare system and allows the private sector to innovate, build, maintain or manage the delivery of agreed services for the duration of the contract. Companies receive payment for their activity and assume significant financial, technical and operational risks, while benefiting from potential cost savings.

Private side participants have an ongoing interest in working together to provide key competencies in operations, technology, financing and technical expertise. Hospital suppliers, medical groups, technology companies, pharmaceutical companies, health instrument vendors, medical insurers, facility managers and construction companies can participate in a healthcare APP. Financiers can be banks, philanthropists or pension funds.

PPPs have been used to finance health infrastructure since the end of the decade that began in 1991.[65]​ At the beginning of 2014, there were more than 290 in the world,[65]​ with the largest number concentrated in the United Kingdom and Canada. The price of constructing a health infrastructure through a PPP is similar to that of the traditional fully public management (MT) model. On the other hand, the construction period is reduced by a third (99 months with MT and only 36 for PPP). A 2003 study[65]​ referring to the United Kingdom found that 76% of hospitals built through PPP were delivered on time, while with MT this only occurred in 30% of cases. Another study, from 2013[65] focused on the Valencian Community (Spain) concluded that the cost per admitted patient was between 12 and 18% lower with the APP. A comparison by the European Office of Health Services[65]​ between Madrid and Valencia estimated in 2011 that the health cost per inhabitant with APP was between 20 and 25% lower than with MT. However, a health advisor[98]​ maintains that «In the United Kingdom, where the private provision model is more widespread, there are numerous critical references because it is a more expensive system, due to the need of the supplying companies to obtain profits; in which there is a rapid reduction in capacity and number of professionals and which obtains worse health results.

Product Development Partnerships

Abbreviated ADP (PDP) are a type of PPP for the development of medicines that treat diseases in developing countries. They include preventive medicine such as vaccines and microbicides, as well as treatments for "neglected diseases" (by large pharmaceutical companies, which dedicate little research effort to them since, since they affect the poor, the expected benefit is scarce[99]​). The ADPs were first created in the decade beginning in 1991 to unite the public sector's commitment to providing international public health with the pharmaceutical patents, product development and marketing expertise of the private sector.

ADPs work to accelerate research and development of drugs for underserved populations that are not profitable for private companies. They can also get involved in aid plans for the access of those most in need to the products they develop. Publicly funded by intellectual property rights assigned by pharmaceutical companies for specific markets, ADPs can focus on their missions rather than worrying about recovering treatment costs through the profitability of the drugs they develop. These non-profit organizations build a bridge between the interests of the public and private sectors, with the idea of ​​overcoming incentives and financing barriers to increase the involvement of pharmaceutical companies in the development of safe and effective medicines.

Some international ADPs:

Other PPPs focused on providing international public goods are:

A key motivation for public authorities to turn to PPPs is the possibility of providing new sources of financing for infrastructure and public services.[63] It is important to understand the main mechanisms of infrastructure projects, the main investors in developed countries, the sources of financing (limited resources, debt, equity, etc.), the typical financial structure of a project, and fundamental aspects of the transactions to finance projects.[102] An omnipresent aspect in project financing is the dual nature of the projects. involved: on the one hand, shareholders of the PPP, and on the other, its service providers.[103]​ Some governments use a public sector comparator to assess the financial benefits of a PPP and the optimal level of private sector involvement.

Risks must be allocated and managed to ensure successful financing. The party that can best manage these risks at the lowest cost is not always the private party. However, the market has numerous mechanisms for project sponsors, project leaders, and governments to mitigate project risks: futures contracts, hedge contracts, insurance, and other specific products[104]​ provided by international financial institutions.

The World Bank (2007)[105] states that governments tend to create centralized PPP units in response to the weakness of central governments in managing PPP programs. Different administrations suffer different institutional failures in PPP provisioning. Therefore, if a given administration decides to create an APP unit, it will be specifically configured to cover any failures that that same administration has. Therefore, the functions, organizational dependency and scope of these units vary between countries, but generally include:

The report "Evaluation of the costs and benefits of centralized PPP units",[107]​ which tried to evaluate the convenience or not of establishing these units, found that:.

The Public Services International report[15]​ considers that "PPP units invariably consist of private sector executives who have a particular interest in promoting PPPs, generally through some officials, embedded within governments."

The World Bank, in its PPP Resource Center, provides a map with the countries where these units exist.

A public-private association does not necessarily have to be carried out through a company (company) of public and private capital or a mixed economy company[17]​ (the term "mixed company" is sometimes used, not entirely correctly, which has a broader meaning). It can also be conveyed through a concession,[18]​ a service contract, a management commission or other formulas.

The sharing of risks and the development of innovative long-term relationships between the public and private sectors are common in PPPs,[16]​ where the different risks have to fall on the party that can best manage them.[19]​ The use of private financing is another key to many PPPs especially when it comes to megaprojects,[20]​ particularly those influenced by the UK PFI model, although this facet has languished since the financial crisis of 2008.[16]​.

Usually a company is formed for each large PPP operation. In English it is called Special Purpose Entity, SPE or Special Purpose Vehicle, SPV (Special Purpose Entity or Vehicle). In Spanish it is normally a UTE (Temporary Union of Companies), also called an accidental union of companies. This company is formed to build, develop, maintain and operate the project during the period established by the contract.[21]​[22]​ When the public administration has invested directly in the assets "Asset (accounting)"), it obtains (although not always) a number of shares "Action (finance)") in the company.[23]​ The consortium is normally formed by a construction company, a maintenance company and investors in the shareholding. It is the SPE that signs the contract, both with the public administration and with its different suppliers, to build and maintain the infrastructure. In the infrastructure sector, the complex agreements and contracts that guarantee and ensure cash flow make PPPs excellent candidates for project financing. A typical example of a PPP would be the construction of a hospital by a private entrepreneur that is then leased to the health authority. The entrepreneur acts as a landlord, providing general maintenance of the building and other non-medical services, while medical services are provided by the hospital itself.[21]​.

Economic theory has studied PPPs through the prism of contract theory. The first theoretical study[24]​ on PPP was carried out by Nobel Prize-winning economist Oliver Hart. From the point of view of economic theory, what distinguishes a PPP from the traditional model (MT) of public procurement in the case of infrastructure is that the PPP packages the construction and operation phases, while in the MT the administration contracts construction with a company, and then it is that administration that operates the infrastructure, or entrusts its operation to a different company. Therefore, when the APP builds, it has strong incentives to invest thinking about the operation phase (it can, for example, use materials that are more expensive to build, but much cheaper to maintain). This way of investing can be desirable (as in the example cited), but also undesirable (if, in addition to reducing operating costs, it decreases the quality of service). There is therefore a trade-off, a situation in which an advantage in price implies a disadvantage in quality, and vice versa, so a compromise solution must be reached in which the variables that are most interesting are maximized to the extent admissible. It then depends on the particular situation whether the traditional model or a PPP is preferable.

This vision of Hart has been expanded in several directions. For example, various authors have studied the externalities between the construction and operation phases,[25]​ insurance when companies are risk averse[26]​ and the incentives of PPPs to innovate and collect information.[27]​.

PPPs often involve a contract between a public sector authority and a private party, in which the private party provides a public service and assumes substantial technical, financial or operational risks. In some types of PPP, the cost of the service is borne exclusively by its users and not by the rest of the taxpayers.[21]​ In other types (especially the PFI), on the basis of a contract with the public sector, the private sector makes an investment in capital to provide a public service whose cost is totally or partially borne by the Public Administration.

The public sector contribution to a PPP can be in kind, either transferring ownership or allowing the use of public goods) or infrastructure elements. In projects that aim to create such public goods, the State may provide a subsidy, either through a grant for capital expenditures or for income (which may consist of total or partial tax exemptions, or a guarantee of minimum income for a certain period). In all cases, the PPP represents a significant transfer of risks to the private sector, generally in an integrated manner, minimizing them for the public sector. An optimal distribution of risks is the main generator of value for the PPP formula of providing a public service. According to a report[28]​ by the Inter-American Development Bank, "it is the participation in risk financing that effectively links the private party and its banks with the good performance of the infrastructure."

Supporters of PPPs argue that this formula allows the public sector to take advantage of the experience and efficiency of the private sector to provide certain services that have traditionally been provided by the public sector. Another claimed advantage is that the PPP can be structured so that the public administration wishing to make a capital investment does not have to increase its debt (for example, a license is granted to a private company to build and operate a dam for 20 years, after which the dam will revert to the public domain). On the contrary, it is the private part of the PPP that becomes indebted. In projects where the cost of the service will be borne exclusively by the end user, the PPP is, from the perspective of the public sector, an extra-budgetary method of financing new public services or the improvement of existing ones. On the other hand, in projects where the public part is expected to compensate the private part through availability payments when the service is actually provided, the financing is already budgetary from the perspective of the public sector. However, the public administration that adopts this form will benefit from long deferrals of payments (they will not have to put in money as soon as the infrastructure begins to be built, but rather when it comes into operation). Generally the financing costs will be higher for the PPP than for the public administration, due to the higher cost of capital for the private sector. However, these higher financing costs can be offset by greater private sector efficiency, savings resulting from a holistic approach to service delivery, and better long-term risk allocation.[29]​.

Pressure to change the traditional model of public service delivery came from concerns about public debt levels, which grew rapidly during the oil crises of 1973 and 1979. Governments sought to encourage private investment in infrastructure, initially based on accounting fallacies arising from the fact that public accounts did not distinguish between recurrent expenditure and capital expenditure.

The idea that private provision of infrastructure represented a way of providing it at no cost to the taxpayer has now been abandoned; However, interest in alternatives to the traditional public supply model persisted. In particular, it has been argued that models with a greater role for the private sector, with a single company assuming responsibility for most aspects of a given project, could improve risk allocation while maintaining accountability for essential aspects of service provision.

Initially most PPPs were negotiated individually, as one-time agreements. Most of this activity began in the early 1990s in the United Kingdom.

Australia

Many Australian state governments have adopted systematic programs based on the PFI. The first, and model for most of the others, is Victoria Associations. The railway to the airport in Sydney, the tunnel to cross the city and the one across the bay[30]​ have been carried out through PPP. Also the remodeling of Melbourne South Station and the Robina hospital in Queensland.

Brazil

Measures recently adopted in Brazil have reinforced the importance of PPPs on the political agenda. Law 13,334, of September 16, 2016, consolidates the concept of “association agreements” in order to cover all forms of contractual agreements between the Government and the private sector for the execution of public companies, regardless of whether or not they have been concessioned. This new bill has also opened the doors to the broad concept of PPPs.[31]​.

Canada

Stephen Harper's federal Conservative government embodied its commitment to PPPs in the 2009 creation of the public company P3 Canada Inc. The Canadian vanguards of PPPs have been provincial organizations, supported by the Canadian Council for PPPs established in 1993 (a member-sponsored organization with representatives from the public and private sectors). As a proponent of the PPP concept, this Council conducts research, publishes its findings, facilitates discussion forums, and sponsors an annual conference on relevant national and international topics. Each year the Council praises successful PPPs through a national awards program presented at the conference.

At lower administrative levels, PPPs have been used for large transportation infrastructure projects such as the Viva Rapid Transit bus system or Ontario Highway 407. In Canada, PPPs provide significant social and infrastructure services. PPP Canada Inc. was created as a crown corporation, with an independent board of directors reporting to Parliament through the Minister of Finance. The mandate of PPP Canada Inc. is to improve the delivery of public services by giving taxpayers greater value, timeliness (also in the sense of completing infrastructure on time) and accountability. It began operations in 2009 with the appointment of a member of the board of directors and an executive director.

A variety of PPP modalities exist in British Columbia thanks to the efforts of Partnerships BC, a fully public company registered under the Business Corporations Act whose shareholder is the Ministry of Finance. Among its projects are the Canada Line elevated railway, the Abbotsford hospital and cancer center, and the Sea-to-Sky Highway.[32]

In Quebec, the PPPs include the McGill University Hospital, the western extension of Highway 30 and the University of Montreal research hospital.

China

Shantou City Council signed a 50 billion yuan PPP with CITIC Group to develop a major urban development project in an area of ​​168 square kilometers south of the city's central business district.[33] The project, named Shantou New Coastal City, includes residential construction, infrastructure (including a cross-bay tunnel) and industrial development. It aims to become a business, cultural and leisure platform in eastern Guangdong.

El Salvador

After strong social opposition, the 2012 law[15]​ excludes public health care, education, water, public security and prisons from PPPs. It requires establishing an audit to sanction companies that fail to comply with the stipulations of the contracts. And it requires that all contracts over $10 million be presented to Parliament before being signed.

Spain

A report[28]​ by the Inter-American Development Bank states that PPPs have existed in Spain since long before this concept began to be used in the United Kingdom. The figure of the concession, the most common contractual manifestation of PPPs, was developed in Spain and in many other countries with an administrative tradition. There are specific examples of public infrastructure from the Roman Empire that were built and managed by private capital in the Iberian Peninsula. But in a modern sense, PPPs were introduced in Spain with the Public Works Instruction of October 10, 1845. From 1998 to 2008 this formula has been widely used in Spain: almost 50 road projects have been awarded.

In January 2012, Mariano Rajoy's government announced that it would take charge of the roads that had gone bankrupt as part of these PPP/PPP (the European, Argentine and global names vary: the substance is the same). According to the government, the cost of this rescue would be between 2,000 and 4,500 million euros for the Spanish State, which it would have to disburse as the Patrimonial Responsibility of Public Administrations.[34]​.

USA

The states of Oregon, Washington "Washington (state)") and British Columbia launched the West Coast Infrastructure Market in 2012, an interstate cooperation platform that conducts economic feasibility studies on selected infrastructure projects and connects private investors with public infrastructure opportunities. This platform aims to replace traditional approaches to financing infrastructure and land development with “performance-based infrastructure,” which is financed, if possible, with its internal rate of return (IRR) rather than tax dollars, and evaluated based on its life cycle and social, ecological and economic impacts, rather than its addition to production capacity and the cost of capital.[35]​

The My Brother's Keeper Challenge (biblical phrase), which supports civic leaders in the black community to care for their youth, is another example of APP.

In New York, during the tenure of influential planner Robert Moses (1933-1970), PPPs proliferated. In that city they are called "Authority of...", for example the Triborough Bridge and Tunnel Authority, the Henry Hudson Highway Authority and the Port Authority (but when elsewhere in this article we talk about authorities, we are referring to the public sector, to public administration at its national, subnational or municipal levels). Moses manipulated these PPPs, either seeking their success or their failure, to gain political power.[36]​.

San Diego (California) "San Diego (California)") has reached numerous PPP agreements. In fact, "San Diego has used PPPs more extensively and, with Petco Park, on a larger scale than is typical in other cities[37]." One explanation for this propensity is that "...residents refuse to pay taxes to pay for public services and prefer that they be carried by private entities...[37]​" "...taxes are distributed with linear functions of cadastral values..., jurisdictions have an incentive to try to exclude those who would have cadastral values ​​below the average. The incentive drives local policies toward minimum lots, restrictions on multi-unit buildings, and restrictive building standards. A social cost of these policies is a reduction in housing opportunities for low- and middle-income families[38].”

India

The Government defines PPP as "a partnership between a public sector entity (representative of the authority) and a private sector entity (an incorporated company in which 51% or more of the capital belongs to the private party) for the creation or management of infrastructure for a public purpose for a period of time specified (concession period) on commercial terms and in which the private party has been selected through an open and transparent procurement system."[39]​.

The Government has estimated an investment of 320 billion US dollars ($) in its tenth plan.[40] Large infrastructure projects in the state of Maharashtra (more than 50%) are based on the PPP model. Since 2000, other states such as Karnataka, Madhya Pradesh, Gujarat and Tamil Nadu have also adopted this model. Road projects account for 53.4% ​​of the number of projects and 46% of the amount. Ports are in second place with 8% of the number of projects and 21% of the amount.[41] Other sectors such as energy, irrigation, telecommunications, water supply and airports have gained momentum through the PPP model. Investment in these sectors during 2011 was expected to reach Rs 20,271,690,000,000 (according to the price index 2006-2007).[42]​.

In India, PPPs have achieved notable successes in the development of infrastructure, particularly roads, under the National Highway Authority. Also in nutrition, with the midday meal program run by the Aksaya Patra Foundation. However, a 2013 report[15]​ by the United Nations Office on Drugs and Crime (UNODC) "Public-Private Partnership or PPP projects in India's roads and energy sectors are prone to corruption, and capital evasion by private investors, with the Government emerging as the biggest threat."

Japan

Since the decade beginning in 1981, the so-called literally "third sector" [第三セクター|daisan sekutā] in Japanese refers to mixed economy companies. This can cause confusion, since this term is a false friend: in Spanish "third sector" means "sector of the economy, halfway between the private sector and the public sector, which includes cooperatives, associated labor companies, labor societies, non-profit organizations, charitable and mutual associations or mutual societies", while in English "third sector" encompasses both the voluntary sector and PPPs.

In Japanese railways, a "third sector line" is a short line or network operated by a small company together with a municipality and smaller private interests. Third sector lines are generally lines that belonged to Japan Railways or the Japanese National Railways and have been segregated from these large companies.

Philippines

The Government maintains an online list of PPP projects[43]​ The English Wikipedia category on transport infrastructure proposals in the Philippines contains links to around twenty pages with roads, airports or bridges.

The Philippine Build-Operate-Transfer (BOT) law passed on May 5, 1994 and amended in 2012[44]​ regulates PPPs.

Mexico

The antecedent of PPPs are the Pidiregas (Productive Infrastructure Investment Project with Deferred Registration in Public Expenditure), used for the development of public infrastructure through the participation of private initiative in the parastatals Compañía Federal de Electricidad (CFE) and Petróleos Mexicanos (PEMEX).[45] It was in the government of President Vicente Fox that public-private alliances were promoted for the development of other types of infrastructure such as construction of hospitals. Later they began to be used for the development of road infrastructure. Under the government of President Felipe Calderón Hinojosa, PPPs were promoted more deeply for the generation and provision of public goods and services. It was not until 2012 that Calderón Hinojosa sent the Public-Private Partnerships Law to the Congress of the Union, which was approved.[46]​.

Puerto Rico

On the English Wikipedia page on PPP in Puerto Rico there is the following, incomplete, list:

United Kingdom

In 1992, John Major's Conservative Government introduced the PFI,[48]​ the first systematic program to promote PPPs. The 1992 program focused on reducing the public deficit, although, as explained above, the effect of a PPP on public accounts can be illusory (depending on the type of PPP chosen and its performance: a PPP for a toll road with a lot of traffic can mean significant income for the public coffers, due to the taxes charged on the company's profits, while the rescue of a failed PPP can mean a serious loss to the treasury). Tony Blair's Labor Government, elected in 1997, expanded the PFI initiative, but attempted to shift the focus to value for money, mainly through appropriate risk sharing. However, since then it has been proven that many programs went grossly over budget and have not provided the taxpayer with value for their money. Some projects even cost more to cancel than to complete.

In the United Kingdom, two-thirds of the London Underground PPP returned to public management in 2007 after just 4 and a half years at an estimated cost of £2 billion. The then mayor of London, Boris Johnson, described the events as "an attempted robbery in broad daylight[49]." The remaining third returned to public hands in 2010 after 7 and a half years at a purchase price of £310 million.[50] The Government paid consultants £180 million to structure, negotiate and launch the PPP. The winners of the tender reimbursed the Government £275 million.[51]​.

51 % of British air traffic transferred to the private sector; However, as a result of the decline in air traffic following the September 11, 2001 attacks, the Government and BAA Limited each invested £65 million in the private sector operator in 2003.[54]​.

The South London Healthcare trust owned[15]​ three hospitals with PFI models, and was declared bankrupt by the Government. One of them, in Greenwich, revealed that capital costs amounted to 11.3% of its total budget – almost double the Government's allocation for these costs. A report by the Strategic Health Authority warned that other local trusts in a similar situation 'would incur recurring [income/expenditure] and cash flow shortfalls, even if they operated as efficiently as the average hospital trust in England.' “A high proportion of their structural [revenue/expense] and cash flow deficits are attributed to this effect.” Hospitals were forced to merge with other local hospitals, services were reduced, the number of nurses and doctors decreased, and emergency services were cut, sparking massive local protests.

Russia

The first attempt to introduce PPPs in Russia was made in Saint Petersburg (Law 627-100 of December 25, 2006, «On the participation of Saint Petersburg in public-private partnerships[55]​».

Today there are special laws on PPP in 69 members of the Russian Federation,[56]​ but most of them are just declarations. In addition, PPPs in Russia are regulated by federal law 115-FZ of July 21, 2005 "On concessional agreements"[57]​ and federal law 94-FZ of July 21, 2005 "On the provision of goods, works and services by the State and municipalities."[58]​ In a certain way, PPPs are also regulated by federal law No. 116-FZ. of July 22, 2005 "On special economic zones"[59]​ (in terms of business advantages in special territories—in a broad sense it is a variation of APP).

However, all the regulations cited do not cover all possible forms of PPP.

In February 2013, a group of experts rated members of the Russian Federation according to their readiness to carry out PPP projects. The most developed region is St. Petersburg, with a rating of 7.8; the least, Chukotka, with 0.

By 2013 there were almost 300 PPPs in Russia.[60]​.

From 1990 to 2009, nearly 1,400 PPP agreements were signed in the European Union, for an amount of approximately 260 billion euros (€)[61]​ Since the start of the financial crisis in 2008, estimates suggest that the number of PPP agreements reached has fallen by more than 40%.[62][63]​.

A communication[64]​ from the European Commission on PPPs considers investments in public infrastructure as an important means of maintaining economic activity. As a result of the significant role that PPPs have adopted in the provision of public infrastructure, in addition to the complexity of these transactions, the European PPP Expert Center (EPEC) was created, with the support of the European Investment Bank, to support the capacity of the public sector to establish PPPs and address problems that for this type of contracts arise throughout Europe.

In a 2007 survey, US municipal managers overwhelmingly cited two reasons for using PPPs: cost reduction (86.7% of respondents) and budget constraints (50.3%). None of the other reasons asked exceeded 16%. However, in the 2012 survey, 69% of respondents cited the need for better processes; 77%, building relationships with the private sector; 81%, which gave better results; 84%, resource leverage; and 86%, that the provision of services through APP is the right thing to do. Among respondents, PPP provision of public services peaked at 18% in 1977 and has declined since then. The most common form of shared service provision is agreements between administrations, which grew from 17% in 2002 to 20% in 2007. "At the same time, approximately 22% of the municipalities surveyed indicated that they had remunicipalized at least one service that they previously provided through PPP[12]."

The APP phenomenon is controversial. The lack of consensus on what a PPP is complicates the process of assessing whether it has been successful.[16]​ The results of PPP formulas in terms of value for money (VfD) and efficiency are often not available or, when they are, they are mixed.[16]​ According to a report[65]​ by the Inter-American Development Bank on PPPs, “studies that have sought to establish global recommendations on PPPs have not been successful, as they have been unable to establish with certainty that PPPs generate greater VpD than the traditional model. Aware of these problems, in 2015 the World Bank published a framework[66]​ for the proactive publication (before anyone asks for it) of information on PPP contracts that are carried out, accompanied by jurisdictional studies[67]​ and success stories.[68]​.

According to Weimer and Vining, "A PPP typically involves a private entity financing, constructing or managing a project in exchange for the promise of a stream of direct payments from the public administration or indirect payments from users over the life of the project or some other specified period of time[69]." As PPPs are directly responsible for a variety of activities, Weimer and Vining indicate that rent-seeking behaviors can cause them to evolve into monopolies.

Just as some PPP projects have been carried out without incident, others have been enormously controversial. A common problem with PPPs is that private investors obtain higher returns than government bonds even when most or all of the revenue risks are assumed by the public party.[63]​.

A 2008 report[70]​ by the consulting firm PriceWaterhouseCoopers argued that the comparison in the interest rates at which loans are made to the public and private sectors is not fair, because there are "restrictions on public borrowing", which may imply that this debt is too high, and in this way PFI projects can be beneficial by not directly increasing the deficit.

Numerous Australian studies of early initiatives to encourage private investment in infrastructure concluded that, in most cases, PPP proposals were inferior to the traditional public procurement model based on competitive public tendering of public infrastructure.[71] In 2009 the New Zealand Treasury, in response to questions from the New Zealand New National Party Government, published a report on PPPs which concluded that "there is little reliable empirical evidence on the costs and benefits of PPPs" and that there is "other ways to obtain financing from the private sector", as well as that "the advantages of PPPs must be weighed taking into account the contractual complexities and rigidities they entail".[72]​.

One response to these negative findings was the development of formal procedures for valuing PPPs focused on value for money rather than public debt reduction. Underlying a framework where value for money was achieved through appropriate risk sharing. These procedures were incorporated into the private finance initiative and its Australian counterparts from the late 1990s. Another model discussed was the community-based PPP (CPP), in which the public and private sectors work for the well-being of the community, shifting the private sector's focus on profit. This model is being applied in developing countries such as India.[73]​.

Clarence N. Stone calls PPPs “governing coalitions.” Analyzing the political regimes that governed Atlanta from 1946 to 1988, he points out the crosscurrents in coalition formation. Government coalitions are susceptible to numerous problems, mainly corruption and conflicts of interest. This slippery slope is created by insufficient oversight.[74]​ Corruption and conflicts of interest lead to opportunistic behavior that harms the public interest. Other costs related to PPPs are production and negotiation costs.[75]​.

It should always be taken into account that cases in which an APP goes wrong will cause dissatisfaction in the users of the service and will probably reach the media, while in cases in which it goes well, users will not even know that the service is provided through the APP. This information bias may predispose some people against PPPs. The various pages that seek to promote PPPs, sponsored by private companies that carry out this type of agreements, do not provide data on the numbers of PPPs that have gone well, those that have gone badly, the amounts of money they involve or the sectors where they are located.

Disadvantages

The apparent contradiction between these lists of advantages and disadvantages (the advantage is that the APP can reduce the cost, and the disadvantage is that it can increase it), is explained because both cases have occurred. The PPP can be positive if the contract is fair and balanced, if all those involved are honest and capable, and if the construction and number of users forecasts are met. On the other hand, if the contract is unbalanced, if there is corruption or if the actual number of service users is lower than forecast, the PPP may be negative. As an example of imbalance, the agreement[79]​ between Spain and the Abertis company on the AP-7 highway included a clause that implied "the disappearance of the risk" for the company: if traffic fell, it would be the State that would assume the loss of income. As a result, a ruling ordered the payment of 1,494 million euros to the concessionaire.

A global study[15]​ revealed that in 90% of road and railway projects, actual costs end up being much higher than those anticipated in the initial tenders, and that actual demand is lower than forecasts. The World Bank[80]​ reports that in 52 toll road projects in Mexico, only 5 met or exceeded traffic forecasts. The Government of Mexico had to assume $7.6 billion of debt and the companies' shareholders lost another $3 billion.

The number of PPPs has greatly increased in recent years, due in part to public authorities transferring the provision of public services to non-profit entities.[84] Entering a PPP can be both enriching and destructive, if not done with care and training. APPs require balance between the parts, as well as continuous maintenance. If an organization enters into them lightly, it can expect failures in several areas that drag the APP to one of the many failures that have occurred.[86]​.

Water

After a wave of PPP entry into public water services during the decade starting in 1991, mainly in developing countries, experience has failed to demonstrate that public water management is better than private or mixed water management. Instead of lower prices, greater investments and improvements in water access and sanitation as promised, water prices are very similar and have even become more expensive.

The transition to public management of the water service in Paris has not managed to reduce rates as expected, in fact it has increased in price although it is slightly lower than the national average according to the French Government.[96] In short, said public management only affects 2 million inhabitants. In metropolitan Paris, made up of 150 municipalities and more than 10 million inhabitants, the provision of the service is still carried out by a concessionaire (Veolia).[97]​ The promise to reduce the drinking water rate by 8% in Paris did not actually reach 3%, which was achieved by significantly reducing the level of investment that the previous concessionaire had made.

Contract management is a key factor in the provision of shared services, and services that are more difficult to track or reflect in detail in contractual language often remain in public hands. In the 2007 survey of American municipal managers, what they considered most difficult was the operation and management of hospitals, and the least difficult was cleaning streets and parking lots. The study revealed that municipalities often do not sufficiently follow collaborative agreements or other forms of service provision: “For example in 2002 only 47.3% of managers who used private companies to provide services reported that they evaluated these services. By 2007 this figure had dropped to 45.4%. Performance evaluation emerges from these surveys as a general concern and is frequently criticized in academic works on PPP."[12]​[13]​.

Health services

A healthcare PPP can be described as a long-term contract (typically 15 to 30 years) between a public authority and one or more private companies. The public sector provides its purchasing power, sets the objectives of an optimal healthcare system and allows the private sector to innovate, build, maintain or manage the delivery of agreed services for the duration of the contract. Companies receive payment for their activity and assume significant financial, technical and operational risks, while benefiting from potential cost savings.

Private side participants have an ongoing interest in working together to provide key competencies in operations, technology, financing and technical expertise. Hospital suppliers, medical groups, technology companies, pharmaceutical companies, health instrument vendors, medical insurers, facility managers and construction companies can participate in a healthcare APP. Financiers can be banks, philanthropists or pension funds.

PPPs have been used to finance health infrastructure since the end of the decade that began in 1991.[65]​ At the beginning of 2014, there were more than 290 in the world,[65]​ with the largest number concentrated in the United Kingdom and Canada. The price of constructing a health infrastructure through a PPP is similar to that of the traditional fully public management (MT) model. On the other hand, the construction period is reduced by a third (99 months with MT and only 36 for PPP). A 2003 study[65]​ referring to the United Kingdom found that 76% of hospitals built through PPP were delivered on time, while with MT this only occurred in 30% of cases. Another study, from 2013[65] focused on the Valencian Community (Spain) concluded that the cost per admitted patient was between 12 and 18% lower with the APP. A comparison by the European Office of Health Services[65]​ between Madrid and Valencia estimated in 2011 that the health cost per inhabitant with APP was between 20 and 25% lower than with MT. However, a health advisor[98]​ maintains that «In the United Kingdom, where the private provision model is more widespread, there are numerous critical references because it is a more expensive system, due to the need of the supplying companies to obtain profits; in which there is a rapid reduction in capacity and number of professionals and which obtains worse health results.

Product Development Partnerships

Abbreviated ADP (PDP) are a type of PPP for the development of medicines that treat diseases in developing countries. They include preventive medicine such as vaccines and microbicides, as well as treatments for "neglected diseases" (by large pharmaceutical companies, which dedicate little research effort to them since, since they affect the poor, the expected benefit is scarce[99]​). The ADPs were first created in the decade beginning in 1991 to unite the public sector's commitment to providing international public health with the pharmaceutical patents, product development and marketing expertise of the private sector.

ADPs work to accelerate research and development of drugs for underserved populations that are not profitable for private companies. They can also get involved in aid plans for the access of those most in need to the products they develop. Publicly funded by intellectual property rights assigned by pharmaceutical companies for specific markets, ADPs can focus on their missions rather than worrying about recovering treatment costs through the profitability of the drugs they develop. These non-profit organizations build a bridge between the interests of the public and private sectors, with the idea of ​​overcoming incentives and financing barriers to increase the involvement of pharmaceutical companies in the development of safe and effective medicines.

Some international ADPs:

Other PPPs focused on providing international public goods are:

A key motivation for public authorities to turn to PPPs is the possibility of providing new sources of financing for infrastructure and public services.[63] It is important to understand the main mechanisms of infrastructure projects, the main investors in developed countries, the sources of financing (limited resources, debt, equity, etc.), the typical financial structure of a project, and fundamental aspects of the transactions to finance projects.[102] An omnipresent aspect in project financing is the dual nature of the projects. involved: on the one hand, shareholders of the PPP, and on the other, its service providers.[103]​ Some governments use a public sector comparator to assess the financial benefits of a PPP and the optimal level of private sector involvement.

Risks must be allocated and managed to ensure successful financing. The party that can best manage these risks at the lowest cost is not always the private party. However, the market has numerous mechanisms for project sponsors, project leaders, and governments to mitigate project risks: futures contracts, hedge contracts, insurance, and other specific products[104]​ provided by international financial institutions.

The World Bank (2007)[105] states that governments tend to create centralized PPP units in response to the weakness of central governments in managing PPP programs. Different administrations suffer different institutional failures in PPP provisioning. Therefore, if a given administration decides to create an APP unit, it will be specifically configured to cover any failures that that same administration has. Therefore, the functions, organizational dependency and scope of these units vary between countries, but generally include:

The report "Evaluation of the costs and benefits of centralized PPP units",[107]​ which tried to evaluate the convenience or not of establishing these units, found that:.

The Public Services International report[15]​ considers that "PPP units invariably consist of private sector executives who have a particular interest in promoting PPPs, generally through some officials, embedded within governments."

The World Bank, in its PPP Resource Center, provides a map with the countries where these units exist.