A PPP contract is financed vide a senior debt to equity ratio of 90: 10. However, the degree of risk associated with a project is what determines the equity ratio. As such, the debt can reach 80: 20 in some contracts (Parker & Hartley, 2002). This debt is usually serviced through several payments from the public sector or the government.
The shareholders of the PPP provide the monies for a particular project; shareholders include the contractors and facility managers. The inculcation of several financiers in a PPP acts as a motivation source to all the parties to ensure that the project is in excellent quality. The costs, operations, risk management and designs are critically identified and the qualified personnel are placed in charge (HM Treasury, 2003). Resultantly, the project are finalised on time and within the stipulated budget (Shen et al, 2006).
Another attractive aspect of PPPs is its contribution to the costs involved in the designs, construction and overall operations (Cheung et al, 2009). Innovation and efficiency have been identified as contributors to this positive aspect. The private sector employs qualified and experienced personnel coupled with modern technology in the completion of the projects (Parker & Hartley, 2003).
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