Governmental Infrastructure in a Public-private Partnership Perspective

Amanda Lyneborg Gregersen, Josephine Gøtze Johannesen & Maya Katarina Hessellund Jørgensen

Student thesis: Master thesis

Abstract

This thesis investigates the prerequisites for organising a public-private partnership (PPP) with respect to government procurement of assets regarding infrastructure. EU law, Danish procurement law and Danish contract law are the main regulations, subject to the legal analysis of PPPs. The economic analysis investigates the transaction costs associated with PPPs, and their impact on the partnership and the design of the partnership contract, especially related to incentive structures and risk allocation. The legal and economic analyses are combined in an integrated investigation of the total economic efficiency and the advantages public-private partnerships pose and whether they can be optimised. It was found that PPPs are subject to the principles of equal treatment, transparency and proportionality, as well as the Public Procurement Act during the procurement process. The contractual relationship is regulated by the contract and Danish contract law. It is deduced that there is a lack of regulation and transparency regarding the PPP market and the practical application of a PPP, despite experiences showing an increased quality and total economic efficiency using PPP. The analysis shows that PPPs are economically advantageous for the contracting parties in infrastructure contracts of a certain value and complexity. Further, it was found that the transaction costs associated with monitoring are lower for PPPs compared to traditional contracts. It was found that it is possible to set up financing- and exit models in a way that optimises cooperation incentives for the contracting parties. The fundamental collective reasoning in a PPP makes it possible to obtain a more efficient and socio-economic contract. It was concluded that in order to optimise the advantageous nature of the PPP, certain implementations have to be made: 1) clear and flexible options regarding negotiation and alteration in the contract, 2) collaborative dispute resolutions, 3) a clear definition of the partnership and what it entails, and 4) establishment of a PPP unit and explicit PPP regulation.

EducationsMSc in Commercial Law, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2021
Number of pages146
SupervisorsSarah Maria Denta & Thomas Rønde