A Study on the Framework of Public Private Partnership (PPP) in Construction Industry of Malaysia

Tiu, Li Wen (2018) A Study on the Framework of Public Private Partnership (PPP) in Construction Industry of Malaysia. Final Year Project (Bachelor), Tunku Abdul Rahman University College.

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Abstract

Public Private Partnership (PPP) is one of the procurement methods which have been adopted worldwide, including Malaysia in order to deliver the public services. However, there are still a few issues and problems that require earnest consideration and solutions in order to excel in PPP, which including lack of standardised forms for PPP projects, the need for a more robust scheme to evaluate PPP projects and the monopolisation by companies who are familiar with the PPP mode of procurement. Therefore, this paper aims to establish a framework for PPP in Malaysia construction context. The three (3) objective of this paper is to identify the contractual characteristic of the PPP projects, to determine the roles and responsibilities of the construction players in the public sector and private sector in PPP and to propose a framework in managing PPP projects. For data collection, interview is conducted with five (5) parties involved in the PPP project, which are Public Agency, Construction Contractors, Special Purpose Vehicle (SPV), Financiers and Facilities Management Operator. For data analysis, content analysis is used to analyse the data collected through the interview. The result from the data analysis and discussion proven that the contractual characteristics of PPP project are long-term, partnership relation, public sector procures specified outputs and private sector determines the required inputs, performance based payment mechanism and optimal sharing of risks and responsibilities. For the roles and responsibilities of the construction players in PPP, the public agency is a purchaser of the services or facilities; the construction contractor is responsible for the construction works; the SPV is purely set up to isolate financial risk from its parent company; the financier is responsible for the funding; and the facilities management operator is responsible for the management works. For the framework in managing PPP project, it is crucial to set up contract management department or team in order to form a robust and balanced contract; there should be optimal but not the maximum transfer of risks and responsibilities; the output specifications should be utilised as much as possible; and deduction or termination shall be imposed in the event of private sectors fail to perform his responsibilities based on the output specifications and incentives or benefit sharing arrangement can be implement to encourage the private parties improved performance beyond the standard. Lastly, a framework in managing PPP projects is proposed in order to excel in PPP.