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Module 07: Defining Parameters (scope)
7.2 What key processes are
involved in defining
parameters?
Due to the differences in project fundamentals, country constraints
and government objectives it is impossible for policymakers to choose
a ready-made solution to defining project parameters. However, if it
can provide clear answers to the following questions, the government
or municipality should be able to formulate an optimal set of parameters.
1. Which tasks (design, build, maintenance, operation, financing
and so on) are going to be delegated to the private sector?
2. What is the level of autonomy that will be left to the
private sector and how is the private contractor to be controlled?
3. Will the project be implemented as a single link or as
part of the network?
4. How will the project risks be allocated between the public
and private sectors, and how will risk allocation evolve during construction
and/or operation?
5. What type of cost recovery system will be used (for example:
tax payer or direct and/or indirect user; specific taxes; dedicated resources;
private sector remuneration linked (or not) to recovered costs; external
costs; and so on)?
6. Which methods of financing are possible and suitable (for
instance: government budget through taxes and loans; national
savings or international funding; private financing with or without support
from the government; or International Finance Institutions (IFIs)?
The fact that each of these six questions has a wide range of possible
answers, which will result in an almost infinite variety of combinations,
leaves the project designer with the difficult task of adjusting project
parameters harmoniously in order to suit project needs.
Defining the parameters of a PPP should start with the identification
of the main project fundamentals, in particular:
◊ the nature of the project; and
◊ the objectives of the stakeholders.
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