Development of PPP Model Options & Revenue Share Negotiation Support for a Government Entity
BACKGROUND & OBJECTIVE
Public-Private Partnerships (PPPs) are a critical mechanism for governments to leverage private sector investment while ensuring public service efficiency. A government entity required expert guidance in structuring and selecting a suitable PPP model while negotiating revenue-sharing agreements with private sector partners.
The primary objectives of this engagement were to:
- Develop and outline key PPP model design dimensions, tailored to the client’s situation.
- Provide a neutral assessment of transaction economics and revenue-sharing options.
- Build a financial model to evaluate deal economics based on the PPP parameters under negotiation.
- Facilitate revenue-sharing discussions between public and private sector stakeholders.
- Support the drafting of a PPP agreement, including legal and business considerations.
This initiative aimed to provide the government entity with a structured approach to PPP selection, economic assessment, and contract negotiation.
PROJECT APPROACH
The project was executed in multiple structured phases to ensure optimal PPP structuring and effective revenue-sharing negotiations:
- PPP Model Development & Selection:
- Identified and analyzed various PPP models, including Build-Operate-Transfer (BOT), Joint Ventures, and Concessions.
- Assessed legal, financial, and operational feasibility for each model.
- Neutral Economic Assessment & Financial Modelling:
- Built customized financial models to assess the viability and profitability of each PPP model.
- Evaluated key deal parameters, cost structures, and potential revenue streams.
- Revenue Sharing Analysis & Negotiation Support:
- Conducted a comparative analysis of revenue-sharing options.
- Developed negotiation strategies to optimize financial returns for the public sector while ensuring private sector participation.
- Stakeholder Engagement & Agreement Structuring:
- Facilitated multi-party discussions to align on revenue distribution and governance models.
- Supported business and legal teams in drafting the PPP agreement terms.
OUR METHODOLOGY
A combination of financial analysis, regulatory assessment, and stakeholder engagement was used to optimize the PPP model selection and revenue-sharing framework:
- PPP Model Structuring & Feasibility Analysis
- Mapped out PPP design dimensions and risk-sharing structures.
- Assessed global best practices in PPP structuring.
- Financial Modeling & Revenue Share Optimization
- Developed deal-specific financial models to assess investment returns.
- Analyzed potential revenue-sharing structures for fairness and sustainability.
- Service Mapping & Partnership Governance
- Mapped service obligations and financial contributions between public and private partners.
- Defined a partnership governance model ensuring transparent collaboration.
- PPP Agreement Development & Negotiation Support
- Facilitated workshops to define key contract terms and negotiate financial clauses.
- Provided guidance on risk allocation, investment commitments, and legal terms.
THE RESULTS
The project successfully delivered an optimized PPP structure and revenue-sharing model, leading to tangible benefits:
- PPP Model Selection & Optimization:
- Supported the client in selecting the most suitable PPP model aligned with objectives.
- Negotiation Guidance for Revenue Sharing Models:
- Provided financial insights that enabled optimal revenue-sharing agreements.
- Legal & Business Structuring of PPP Agreement:
- Conducted multiple stakeholder workshops to finalize contract terms.
- Assisted in developing key financial and legal clauses for agreement finalization.
By structuring PPP models based on economic viability and facilitating data-driven negotiations, this project strengthened the government’s ability to secure favorable private sector partnerships while ensuring long-term financial sustainability.
