Public-Private Partnerships (PPP)

Dr Daniel W.M. Chan, Associate Professor

and Associate Head (Teaching)
Department of Building and Real Estate
The Hong Kong Polytechnic University
 PolyU – IfE – Belt and Road Cross-
Professional Advancement Programme
Workshop 5 - International Project
Management and Relational Contracting
Systems (NEC and PPP)

(30-31 August 2019)

Dr Daniel W.M. Chan, Associate Professor

Dr Francis M.F. Siu, Assistant Professor

Department of Building and Real Estate

The Hong Kong Polytechnic University
Belt and Road Cross-Professional Advancement Programme
Belt and Road Cross-Professional Advancement Programme
 Outline of Public-Private
Partnerships (PPP)
 Definition of PPP
 Types of PPP (e.g. PFI / DBFO / BOT / BOO / BOOT /
O&M / JV / Leasing)
 Concepts and common features of PPP
 Organizational structure of a typical PPP project

 Key drivers for adopting PPP

 Potential obstacles of PPP during implementation
 Critical success factors for PPP
 Case studies of PPP (i.e. United Kingdom / Australia /
Hong Kong / Mainland China / BRI Countries)
5
What is PPP? (Efficiency Unit 2003)

Public-Private Partnerships
(PPP) are collaborations
where the public and private
sectors both bring their
complementary skills to a
project, with different levels
of involvement and
responsibility, for the sake of
providing public facilities or
services efficiently.

6
 Types of PPP (Kwan 2005)

 Private Finance Initiative (PFI)

 Design-Build-Finance-Operate (DBFO)
 Build-Operate-Transfer (BOT)
 Build-Own-Operate (BOO)
 Build-Own-Operate-Transfer (BOOT)
 Operation and Maintenance (O&M) (e.g. MTRC)
 Joint Venture between Public Sector and Private
Sector
 Leasing (e.g. Link REIT 領展房地產基金)
領展房地產基金 ……
7
 The Rise of PPP
 The success of Eurotunnel in raising US$1.72
billion equity from private investors in 1987 for the
Channel Tunnel project further inspired world-wise
interests in the PPP schemes.

 Developing countries like Mainland China, Malaysia,

Indonesia, Thailand and the Philippines, see PPP
as a way of reducing public sector borrowing.

 At the same time, promoting direct foreign

investments in their countries’ infrastructure
projects (e.g. China / Thailand).
8
 The World Bank’s Report (Kassum 2004)

 Countries in the East Asia and Pacific region will require at least
US$200 billion per annum to meet their infrastructure needs over the
remainder of this decade (US$1,000 billion over next five years).

 Looking forward the challenge is to find ways to finance

infrastructure that will attract private capital and management
expertise, at minimum fiscal costs to the government – PPP may be
the answer.
(Ref: http://siteresources.worldbank.org/NEWS/Speeches/20154515/jksp-012304.pdf) 9
 Concepts of PPP Scheme
 PPP is usually initiated by the appropriate level of
government of a country or state in which the
facility/service is provided.

 The Government defines the quality and quantity of

services, and the timeframe in which they are to be
delivered.

 The private sector is responsible for delivering the

defined service while the government is mainly
involved in regulation and procurement.
10
 Concepts of PPP Scheme
 The host government will invite interested private
consortia to bid for a public facility/service by submitting a
PPP project proposal.

 The successful bidder (consortium) needs to finance,

design, construct, operate and maintain the facility/service
for the agreed concession period (e.g. 30 years) under a
franchise agreement according to the contract terms
defined by the host government.

 Normally certain quality standards or performance targets

must be achieved (e.g. expected revenue or number of
vehicle users for tunnel).
11
 Concepts of PPP Scheme
 The concession period provides the private consortium
the opportunity for repayment of debts and an adequate
return on funds invested based on the revenues
generated from the completed facility/service.

 Responsibilities and risks are allocated to the party best

capable to manage them.

 Upon the expiry of concession period, the private

consortium will normally return the ownership of the
facility/service to the host government free of charge.

12
 Common Features of PPP Scheme
 High construction costs due to usually large-scale

 Limited resources in a single company  Multi-

parties involvement like forming JV consortium

 Long period of time for negotiations

 Different financing methods, e.g. share, bank loan,

government loan

 Uncertainty in exchange rates for overseas projects

 Highly dependent on prevailing government policies 13

 Key Parties Involved in a PPP
Project

 Local government department / public sector

 Private consortium / private sector

 Employees of the project

 Public and end-users of the facility/service

14
 Organizational Structure of a Typical
PPP Project
Hong Kong
Legal Counsel
Government
Lender’s agreement
Shareholder’s agreement

Project agreement / Enabling Ordinance

Financiers Sponsors

Franchisee
Design and works checking agreement Operation and Maintenance agreement

Turnkey contract
Project operator
Design Works
Engineer
checker checker

Construction
Project manager Consortium Designer

Civil subcontractors E&M subcontractors Sub-Designer

15
 Highlights of Research
Findings on Drivers, Obstacles
and Success Factors for PPP
Projects

16
 Highlights of Research Findings on
Drivers, Obstacles and Success Factors
for PPP Projects
 Chan, A.P.C., Lam, P.T.I., Chan, D.W.M., Cheung, E. and Ke Yongjian.
(2009). Drivers for Adopting Public Private Partnerships - Empirical
Comparison between China and Hong Kong Special Administrative
Region. Journal of Construction Engineering and Management, ASCE,
135(11), November, 1115-1124.
[URL: http://dx.doi.org/10.1061/(ASCE)CO.1943-7862.0000088]

 Chan, A.P.C., Lam, P.T.I., Chan, D.W.M., Cheung, E. and Ke Yongjian.

(2010a). Potential Obstacles to Successful Implementation of
Public-Private Partnerships in Beijing and the Hong Kong Special
Administrative Region. Journal of Management in Engineering, ASCE,
26(1), January, 30-40.
[URL: http://dx.doi.org/10.1061/(ASCE)0742-597X(2010)26:1(30)]

 Chan, A.P.C., Lam, P.T.I., Chan, D.W.M., Cheung, E. and Ke Yongjian.

(2010b). Critical Success Factors for PPPs in Infrastructure
Developments: Chinese Perspective. Journal of Construction
Engineering and Management, ASCE, 136(5), May, 484-494.
[URL: http://dx.doi.org/10.1061/(ASCE)CO.1943-7862.0000152] 17
 Key Drivers for Adopting PPP
(Chan et al. 2009)

 Relief of financial burden towards the public / government.

 Government can better focus on and fund other social needs (e.g.
education, childcare, healthcare, community services, etc).

 Transfer risks to private partners / More equitable risk sharing.

 Private sector possesses more innovative ideas and effective

strategies, and higher flexibility than public sector in delivering
good quality, cost-effective services throughout the project life
cycle.

 Private sector adopts more skills, technology and knowledge to

deliver some facilities / services leading to improved buildability
and maintenance (i.e. technology transfer). 18
 Key Drivers for Adopting PPP
(Chan et al. 2009)

 Reduce total project cost / cost savings due to lowest possible

total life cycle costs while maximizing profits under the “public
sector comparator”.

 Provide an integrated solution for public infrastructure / services

(design, construction, operation and maintenance).

 Accelerate project development / Faster project delivery.

 Enhanced asset quality and service levels to the public (only

receiving payment upon meeting some preset quality standards /
performance benchmarks).

 Benefit to local economic development by creating more business

opportunities or job openings. 19
 Potential Obstacles of
Implementing PPP (Chan et al. 2010a)
 Lengthy bidding and negotiation process – From initial phase of
public sector assessment to signing of contract may take up to 2
years. The process of inviting, preparing, assessing and refining
bids and negotiating contracts is complex and procedural.

 High bidding costs – Detailed and lengthy nature of the bidding

process implies increased transaction costs.

 Cost overruns – Considerable scope for cost inflation through the

long bidding process.

 High service charge imposed to end-users.

 Limited number of potential bidders capable to undertake PPP

(i.e. lack of competition). 20
 Potential Obstacles of
Implementing PPP (Chan et al. 2010a)
 Excessive risks to private sector / misallocation of risks – Not clear
to what extent the government can shift risks.

 Private sector failure due to lack of design innovations, suitable

skills and experience (or even aborted before contract signing).

 Difficult in seeking financially strong partners.

 Lack of well-established legal framework and indirect control of

standards for PPP.

 Reduce project accountability unlike delivery under government

control.

 Public opposition to project execution due to open political debate.

21
 Critical Success Factors for PPP
(Chan et al. 2010c)

 Stable macro-economic condition and political environment

 Strong social support and transparent procurement process

 Favourable and adequate legal framework for PPP

 Appropriate risk allocation and risk sharing

 Commitment and shared responsibility between public sector

and private sector

 Strong and competent private consortium 22

 Critical Success Factors for PPP
(Chan et al. 2010c)

 Good governance and partners’ relationship

 Project with attractive rate of return during operation

 Clear project brief and client requirements

 Competitive procurement process (i.e. enough potential

bidders in the bidding process)

 Government involvement in providing guarantee in case of

default ( 違 反 條 約 ) of the private consortium, and be
prepared to step in for re-providing the services if necessary
23
 Brief Case Studies of PPP Construction
Projects in UK, Australia and Hong Kong

United Kingdom

Hong Kong

Australia
PPP in United Kingdom
 The UK Experience
 PPP was introduced to the UK in 1992 as a way of
procuring public infrastructure by getting the private sector
to finance, build and operate it under contracts typically
lasting 25 to 30 years (Tieman 2003).

 Since its introduction, PPP has been the government’s

preferred method of public infrastructure procurement
(Handley-Schachler and Gao 2003).

1. Birmingham Northern Relief Road (M6 Toll)

2. Croydon Tramlink
3. London Underground – Connect
(References: Highways Agency, 2007; Transport for London
2007a; 2007b; City Mayors, 2007; Bromley Transport, 2007) 26
 Birmingham Northern Relief Road
(M6 Toll)
 Project scope: New motorway, 27 miles of dual 3-lane carriageway between
Junctions 4 and 11 of the M6, 1st free-standing UK tolled motorway scheme
entirely designed, built, financed and operated by the private sector
 Capital value: £85 million
 Commence operation: Dec 2003
 Contract term: 53 years
• Project location: NE
Birmingham, West Midlands
• Commissioner: Dept. for
Transport / Highways Agency
• Concessionaire: Carillion, Alfred
McAlpine, Balfour Beatty, AMEC,
Lloyds TSB

27
 Croydon Tramlink
 Project scope: Tramlink connecting East Croydon,
Wimbledon, New Addington, Beckenham Junction and
Elmers End
 Capital value: £5 million
 Commence operation: May 2000
 Contract term: 99 years
 Project location: Croydon
 Commissioner:
Dept. for Transport / Transport for London
 Concessionaire: Tramtrack Croydon Limited
28
 London Underground –
Connect
 Project scope: New fibre optic
transmission system
 Capital value: £68 million
 Commence operation: Mid 2001
 Contract term: 20 years
 Project location: London
 Commissioner:
Dept. for Transport / London
Underground Ltd.
 Concessionaire:
Citylink Telecommunications Ltd.,
Lloyds TSB
29
PPP in Australia
 The Australian Experience
 The first generation principally involved BOO and BOOT style projects,
e.g. Sydney Harbour Tunnel

 The Partnerships Victoria Policy (2000) significantly changed

government’s involvement in PPP projects

1. Sydney Cross City Tunnel

2. Melbourne City Link
3. Eastlink

(References: Vic Roads, 2007; Transurban, 2007; Cuty Link 2007; Melbourne City Link
Authority, 2007; Department of Infrastructure of Victoria, 2003; Southern and Eastern
Integrated Transport Authority, 2007; Victoria Government, 2007; The Allen Consulting
Group, 2006; New South Wales Roads and Traffic Authority, 2003; Wikipedia, 2008a;
2008b; Road Traffic Technology, 2008) 31
 Sydney Cross City Tunnel
 Project scope:
Tunnel from Darling Harbour to Rushcutters Bay
 Capital value: AUD$680 million
 Commence operation: June 2005
 Contract term: 30 years
 Project location: Sydney
 Commissioner:
The Minister for Roads, The Roads and Traffic
Authority of NSW, The NSW Rail Infrastructure
Corporation, The State Rail Authority of NSW,
Energy Australia, The Sydney Harbour Foreshore
Authority
 Concessionaire:
Bilfinger Berger Aktiengesellschaft, Baulderstone
Hornibrook Pty. Ltd., Deutsche Bank
Aktiengesellschaft
 Less successful PPP project due to inaccurate traffic
forecasts and high toll levels 32
 Melbourne City Link
 Project scope: One of the first fully electronic roads in the
world and has become a testing ground for new
technologies and innovative tolling products and services
since it commenced tolling traffic in January 2000
 Commence operation: End 2000
 Contract term: 33 years
 Project location: Melbourne

 Concessionaire:
Transurban Holding Trust,
Transurban Holdings Limited,
Transurban Infrastructure Developments Ltd.
33
 Eastlink
 Project scope: Bypass with 17 interchanges over 39 km, 85 bridges, 6
pedestrian overpasses
 Capital value: £2.6 billion
 Commence operation: June 2008
 Contract term: 39 years
 Project location: Melbourne
 Commissioner: Minister for Transport
 Concessionaire: ConnectEast – Theiss, John Holland, Transfield
Services

34
(Source: Kwan, 2005)
35
 Hong Kong Cases
 Cross Harbour Tunnel (CHT) and Other Tunnels

 AsiaWorld-Expo (AWE)

 Shatin to Central Rail Link

 Guangzhou-Shenzhen-Hong Kong Express Rail Link

廣深港高速鐵路 – 香港段)
(Hong Kong Section) (廣深港高速鐵路 香港段

 啓德遊輪碼頭)
Kai Tak Cruise Terminal (啓德遊輪碼頭
啓德遊輪碼頭
36
 Features of Build-Operate-Transfer
(BOT) Scheme
 Build (B) – A private consortium agrees with a host
government to invest in a public infrastructure project (e.g.
a road or power station). The consortium then secures
their own financing to finance, design and construct the
project.

 Operate (O) – The private consortium then owns,

maintains and manages the constructed facility for an
agreed concession period (e.g. 30 years) and recoups
their investment through charges or tolls (e.g. road tolls
or electricity fee).

 Transfer (T) – After the concession period, the

consortium transfers ownership and operation of the
facility back to the host government or relevant state
authority. 37
Hong Kong Experience

 The Cross Harbour Tunnel (CHT) was the first

BOT project used in Hong Kong

 Initiated in 1969 and completed in 1972, the

success of the CHT had subsequently led to
more BOT projects in Hong Kong:
 Eastern Harbour Crossing (EHC) in 1986
 Tate’s Cairn Tunnel (TCT) in 1988
 Western Harbour Crossing (WHC) in 1993
 Route 3 Country Park Section (R3CPS) in 1995
38
39
 BOT Tunnel Projects in Hong Kong
(* Actual capacity in 1999)

Project Length Immer- No. of Traffic Planned Actual Conce Constn Open- Approx
(m) sed tube lanes Design constn constn ssion start ing cost
length capacity period period period date date (HK$
(v/d) (mths) (mths) (years) million)
CHT 1852 1064 Dual 2 90,000 47 36 30 09/69 08/72 320
120,000

EHC 2255 1860 Dual 2 90,000 42 37.5 30 08/86 09/89 4,400

+2 72,288
tracks
TCT 4000 Dual 2 90,000 37 34 30 07/88 06/91 2,150
67,200

WHC 2000 1360 Dual 3 135,000 48 44 30 08/93 04/97 7,500

43,300*

R3CPS 3800 Dual 3 135,000 38 38 30 05/95 07/98 7,250

44,700

40
 Cross Harbour Tunnel – The First
BOT Project in Hong Kong
 The CHT was the first BOT tunnel project
participated by the private sector.

 The CHT has greatly improved the mobility

of passenger and goods transport, and
caused changes to the travelling pattern of
Hong Kong people.

 The number of vehicles handled by the

CHT has increased progressively, from
26,400 vehicles daily in 1972 to a daily
average of 120,000 vehicles in 1999.

 Built in 1969, the CHT was transferred

back to the Government on 31 August
1999 after 30 years of concession period.
41
 Traffic Conditions of CHT
07:41 am
07:45 am
07:51 am

08:26 am

42
Eastern Harbour Crossing
 In the mid 1980s, increasing traffic growth
and congestion at the Cross Harbour Tunnel
signalled the need for the construction of a
second harbour vehicular crossing.

 In August 1986, the franchise for the

construction and operation of the Eastern
Harbour Tunnel was awarded to the New
Hong Kong Tunnel Company Limited.

 The franchise for the Eastern Harbour

Tunnel operation is held by the Company
for 30 years and the tunnel was transferred
back to the Government in 2016.

43
44
Tate’s Cairn Tunnel

45
 The Tate’s Cairn Tunnel
 In 1988, the Gammon-Nishimatsu Joint Venture
(GNJV) was the winner of a 30-year franchise to
finance, design, build and operate the Tate’s
Cairn Tunnel

 Construction cost: USD 277 million

 Commenced operation: June 1991

46
 Founding Shareholders

Nishimatsu Construction Co. 37%

China Resources (Holdings) 24%
New World Development Co. 24%
C. Itoh & Co. 5%
Jardine Matheson & Co. 5%
Trafagar House PLC. 5%

47
 Major Risks
 No automatic toll adjustment built
into the concession agreements
(approval by the government
required for any toll increase).

 Prevented any toll increase in the

first 5 years of operation.

 The Government did not offer any

guarantee for the loans provided by
the banks. 48
Western Harbour Crossing
 In the 1980s, the Government decided to
develop a new international airport at Chek Lap
Kok.

 WHC is one of the ten Airport Core Programs.

 WHT is a franchised facility completely financed

by the private sector at a cost of USD 969
million.

 It remains Hong Kong's single largest private

sector transportation project.
49
 The BOT Franchise

Frachanisee: Western Harbour Tunnel Co Ltd

Franchise Period: 30 years including construction period
Construction Period: Aug 1993 to Apr 1997 (45 months)
Construction Cost: HK$5.7 billion
Total Project Cost: HK$7 billion
Contractor: Nishimatsu-Kumagai Joint Venture

50
Shareholding of the WHC

51
 WHT Franchise
 The WHC project was franchised to the Company in
1993 by the Hong Kong Government under a BOT
contract.

 The franchise covers the financing, design,

construction, commissioning and operation of the
WHT for a period of 30 years, i.e. up to August
2023.

 The Western Harbour Crossing Ordinance, enacted

in 1993, stipulates that the Company is entitled to
earn a reasonable but not excessive return through
the collection of tolls.
52
 Increase in Toll Fee for both CHT and
EHC, but Decrease for WHC?
A recent hot debate has been launched in the community to decide
whether to increase the toll fees per trip of private cars by HK$ 20 for the
Cross Harbour Tunnel and HK$ 15 for the Eastern Harbour Crossing, but to
reduce by HK$ 20 per trip for the Western Harbour Crossing, so as to strike
a more balance of road-users in using the three cross-harbour tunnels.

Discussion Forum: What are your opinions on the proposed split of road-users
in using the three cross-harbour tunnels based on the suggested adjustments
of toll fees between them? Why? Any prime concerns or considerations?

Source: Mingpao
(22-Jan-2019)

未獲立會支持,
未獲立會支持 三隧分流方案 “擱置 擱置”
擱置 (2019.03.26)
https://www.youtube.com/watch?v=5c6ykFJ2TQc 53
 Route 3 Country Park Section
Length: 10.1 km (includes the 3.8 km Tai Lam Tunnel and
6.3km Tsing Long Highway)
Location: From Ting Kau at the south end, travelling below the
Tai Lam Country Park to Au Tau, near Yuen Long in
the north
Franchisee: Route 3 (CPS) Company Limited
Operator: Wilson Tunnel Management Limited
Opening date: 25 May 1998
Franchise: 30 years (including construction period)
operated in a BOT mode

54
 The Consortium

Shareholders: Sun Hung Kai Properties Ltd. (50%)

Bank of China Group Investment Ltd. (20%)
China Resources (Holdings) Co. Ltd. (20%)
China Travel Service (Holdings) HK Ltd. (10%)

Total project cost: HK$ 7.25 billion

Contractor: Route 3 Contractors Consortium

(A joint venture between Nishimatsu
Construction Co. Ltd. and Dragages et Travaux
Publics (HK) Ltd. with Gammon Construction
Limited as principal sub-contractor)
55
Tai Lam Tunnel
Traffic lanes: 6 (dual 3-lane tunnel)
Length: 3.8 km (north tunnel portal
links up to Tsing Long
Highway, south tunnel
portal connects to Ting Kau
Bridge)
Ventilation: 24 intake fans and 15
exhaust fans
Special features: Two 1-km ventilation adits
to provide effective
ventilation
Architectural design of
ventilation building to
harmonize with
surrounding environment
56
 Tsing Long Highway
Traffic lanes: 6 (dual 3-lane road)
Length: 6.3 km (north ends at Yuen Long Highway and
New Territories Circular Road, south end begins
with north portal of Tai Lam Tunnel)

57
Route 3 Country Park Section
 A toll adjustment
mechanism was initiated
for the Western Harbour
Crossing (WHC) and Route
3 Country Park Section.

 Aims to achieve a low and

stable toll regime, while
allowing the franchisee the
option to increase tolls
under certain conditions at
specified dates.
58
AsiaWorld-Expo (AWE)
 Sprawled across a 16.75 ha site at the
northeastern tip of the airport island

 AWE is a single-storey exhibition centre with

a total gross floor area of 112,888 sq m

 It contains 8 identical exhibition halls with

5,680 sq m each and 2 larger halls

 One of which is a multi-purpose hall to serve

functions such as sports events and concerts

 Developed at a cost of HK$2.3 billion, AWE

was officially opened in December 2005

59
Source: HK Engineer, 2006
 The Consortium
 The HKSAR Government / Airport Authority
 Dragages et Travaux Publics (HK) Ltd
 Yu Ming Investments Ltd
 Under a 25-year concession
 A model PPP scheme

60
Source: HK Engineer, 2006
 PPP Model in Practice
 With AWE, the operator will derive its revenue directly from the users in
the form of venue bookings.

 In addition to the challenge to achieve maximum operational efficiency,

the operator has to find ways to maximize the revenue-generating
potential of the building as well.

 Used by the Department of Health as a temporary test centre during the

public health crisis of COVID-19 pandemic in 2020 for any inbound
travellers from overseas to Hong Kong.

 Earmarked by the Hospital Authority from 1 August 2020 as the

temporary holding facility for those stable COVID-19 patients who are
infected but able to look after themselves, to ease the burden on public
hospitals. 61
AsiaWorld-Expo Phase 2 Expansion
(亞洲國際博覽館二期擴建工程
亞洲國際博覽館二期擴建工程)
亞洲國際博覽館二期擴建工程
 Shatin to Central Rail Link
(沙田至中環地鐵線
沙田至中環地鐵線)
沙田至中環地鐵線
 Eight stations currently
running from Tai Wai to Hung
Hom.

 The railway is being operated

and maintained by the MTR
Corporation Limited (MTRCL).

 The Government funded all of

the required HK$37.4 billion
for construction at 2007 price.
63
Shatin to Central Rail Link
(沙田至中環地鐵線
沙田至中環地鐵線)
沙田至中環地鐵線
 Shatin to Central Rail Link
– Contract Sum Doubled Up
沙中線造價貴逾倍 (2012年03月17日)

【蘋果日報】
蘋果日報】政府計劃在今年中動工興建拖延了多年的沙中線，
政府計劃在今年中動工興建拖延了多年的沙中線，整體
建造費由2007年預算的
建造費由 年預算的380億元
年預算的 億元，
億元，大幅上升至最終近800億元
大幅上升至最終近 億元，
億元，升幅
超過一倍。
超過一倍。政府已精簡工程設計壓縮成本
政府已精簡工程設計壓縮成本，
精簡工程設計壓縮成本，而負責建造工程的港鐵收
取的工程管理費經顧問審核後則由
工程管理費經顧問審核後則由16.5％
取的工程管理費 經顧問審核後則由 ％減至10.5％
減至 ％。

政府將於5月就沙中線工程向立法會申請撥款
政府將於 月就沙中線工程向立法會申請撥款，
月就沙中線工程向立法會申請撥款，若獲通過，
若獲通過，最快今年
中動工，
中動工，大圍至紅磡段2018年完成
大圍至紅磡段 年完成，
年完成，餘下過海至金鐘段2020年完成
餘下過海至金鐘段 年完成。
年完成。
整項沙中線工程最終總成本上漲至798億元
整項沙中線工程最終總成本上漲至 億元。
億元。

運輸及房屋局發言人解釋，
運輸及房屋局發言人解釋，成本上升是由於因應公眾意見，
成本上升是由於因應公眾意見，對鐵路路
線及設計作出多項修改，
線及設計作出多項修改，過去五年建造物料價格上升47％
過去五年建造物料價格上升 ％。當局又指，
當局又指，
工程雖受港珠澳大橋司法覆核影響，
工程雖受港珠澳大橋司法覆核影響，環評報告遲了八個月才完成，
環評報告遲了八個月才完成，但
已壓縮工作時間表，
已壓縮工作時間表，相信可趕及原來進度。
相信可趕及原來進度。
Guangzhou-Shenzhen-Hong Kong Express Rail Link
(Hong Kong Section)
廣深港高速鐵路 – 香港段)
(廣深港高速鐵路 香港段
 Guangzhou-Shenzhen-Hong Kong Express Rail
Link (Hong Kong Section)
廣深港高速鐵路 – 香港段)
(廣深港高速鐵路 香港段

 MTRCL entered into a direct concession

agreement on 22 April 2008 with Hong Kong SAR
Government to form a PPP to design, construct
and operate the Guangzhou-Shenzhen-Hong
Kong Express Rail Link (Hong Kong Section of 26
km tunnel), subject to a concession term of 50
years.

 Animation Video for Terminus from MTRC

(3 min 30 sec)
67
Guangzhou-Shenzhen-Hong Kong Express Rail
Link (Hong Kong Section)
(Guided Site Visit for BRE UG Students on 25 January 2014)

68
 Hong Kong-Zhuhai-Macao Bridge
香港-珠海
香港 珠海-澳門
(香港 珠海 澳門 大橋)大橋
 The Hong Kong-Zhuhai-Macao Bridge (HZMB) was originally
proposed back in 1983 to be procured via a BOT model for 50
years, but finally funded by three host governments under design-
and-build mode of procurement.

69
 Hong Kong-Zhuhai-Macao Bridge
香港-珠海
香港 珠海-澳門
(香港 珠海 澳門 大橋) 大橋
Discussion Forum

 Is BOT model the best or most optimal financing

model for procuring those mega-sized public
infrastructure development projects like the Hong
Kong-Zhuhai-Macao Bridge ( 香港 - 珠海 - 澳 門大橋門大 橋 )?
Why? Any prime concerns or considerations?

70
 Hong Kong-Zhuhai-Macao Bridge
香港-珠海
香港 珠海-澳門
(香港 珠海 澳門 大橋) 大橋
Discussion Forum
 港珠澳大橋 - 通車兩年
年10月
(2018年 月24日
日)車流量
車流量
從未達標(日均
從未達標 日均X回車流量
日均 回車流量
最少9,200架次
最少 架次),
架次 收益僅及
開支4.3%,
開支 如無低深潭

 Source: Apple Daily (20

October 2020) at URL:
https://hk.appledaily.c
om/local/20201020/JJ
4OFT7C6BDLJGCU2JFT
BOLICU
71
 Kai Tak Cruise Terminal
(啓德遊輪碼頭
啓德遊輪碼頭)
啓德遊輪碼頭
 Development cost: HK$2.4 billion
 Procurement system: Design-Build-Operate (DBO) model
 Design and construction: Funded by HKSAR Government
 Operation and maintenance: Private operator with a franchise /
concession period of 50 years

 Start of construction works:

Second half of 2008
 Completion of the berths:
First (Mid 2013) and second (2014)
 West Kowloon Cultural District Project
西九龍文化藝術區)
西九龍文化藝術區
(西九龍文化藝術區
 The West Kowloon Cultural District Project (WKCDP) was originally
proposed to be procured via a PPP model for 30 years, but finally
funded by the Hong Kong SAR Government under design-bid-build
mode of procurement.

73
 West Kowloon Cultural District Project
西九龍文化藝術區)
西九龍文化藝術區
(西九龍文化藝術區
Discussion Forum
 Is PPP model the best or most optimal financing model for
procuring those mega-sized public cultural facilities
development projects? Why? Any prime concerns or
considerations?

74
 Participation of MTRC in
Railway Service Projects via PPP
 MTR Corporation (MTRC) entered into a concession agreement in
2008 with Beijing Municipal Government to form a PPP to invest
in, construct and operate the Beijing Metro Line 4, subject to a
concession term of 30 years.

 MTRC was selected on 26 February 2008 to be responsible for

operation and maintenance of the “Delhi Airport Metro Express
Line” in India for 30 years under the franchisee “Reliance Energy
Ltd”.

 MTRC entered into a direct concession agreement on 22 April

2008 with Hong Kong SAR Government to form a PPP to design,
construct and operate the Guangzhou-Shenzhen-Hong Kong
廣深港高鐵)
Express Rail Link (廣深港高鐵
廣深港高鐵 (Hong Kong Section of 26 km
tunnel), subject to a concession term of 50 years.
75
 Participation of MTRC in
Railway Service Projects via PPP
 The Concession Agreement for Beijing Metro Line 16 was initialled on
8 February 2015 by the Beijing Municipal Government, Beijing MTR
Corporation Ltd (Beijing MTR) and the three shareholders of Beijing
MTR.

 Line 16 is a Public-Private Partnership (PPP) project and Beijing MTR

would participate in the investment, operation and maintenance of
the new line. Beijing MTR is a joint venture comprising MTR
Corporation Ltd (49%), Beijing Capital Group Ltd (49%) and Beijing
Infrastructure Investment Corporation Ltd (2%).

 Under the Concession Agreement, Beijing MTR would undertake the

operation and maintenance of Line 16 for a term of 30 years.
76
“Hopewell Highway Infrastructure (合和公路基建)” Projects in Pearl River Delta Region of China since 1979

京珠高速公路 花都合和新城 河源電廠

中國大酒店
猎德項目
廣州市

廣州 廣深高速公路
東南西環
一期
高速公路

廣州至湛江 順德公路
高速公路
深圳
二期 沙角電廠 深圳火車站
‘B’ ‘C’廠 聯檢大樓
廣珠西線 深圳
皇崗口岸
京珠高速公路 邊檢綜合檢查
站
荃灣悅來酒店
三期
九龍灣展貿中心
珠海 香港
西部沿海高速公路 合和中心
澳門
澳門濠景花園
 國內高速公路的投資模式
Business Model of Superhighway Investment in PRC

建造 – 營運 – 轉移 (Build-Operate-Transfer)
發展商 (Developer) 政府 (Government)
1) 負責安排投資所需的資 1) 制訂收費及調整的政
金 (Funding) 策、土地政策、稅收
2) 負責完成項目的建築 政策 (Policy)
(Construction) 2) 把一定的特許經營期
3) 負責項目在一段時間的 賦予發展商
營運管理 (Operation) (Concession Period)
投資回收 + 投資回報  持許經營期內的收入
Investment + Return  Toll Revenue
 Promotion of Private Sector
Participation in BRI Projects
 The massive Belt and Road Initiative (BRI) plans to build
roads, railways, seaports and other trade infrastructure in
dozens of developing countries in the Eurasian continent.

 The BRI aims to connect Asia to Europe, and it has

steadily expanded economic corridors and projects as far
as Africa.

 Private sector participation in BRI projects through PPP

model can contribute to affordable and superior quality
infrastructure development projects.
79
Brief Case Studies of PPP Construction Projects
in Belt and Road Initiative (BRI) Countries
 PPP Construction Projects in Belt and
Road Initiative (BRI) Countries
Discussion Forum
 Is PPP model the best or most optimal financing model for
procuring those mega-sized public infrastructure
development projects like highways and railways in those
Belt and Road Initiative (BRI) countries? Why? Any prime
concerns or considerations?

81
Pakistan – “Karot Hydropower Project”

 Hydroelectric power plant being

built on Jhelum River with
generating capacity of 720 MW

 Private Consortium: Karot Power

Company, in which China Three
Gorges South

 Asia Investment Ltd (a subsidiary

of China’s state-owned “China
Three Gorges Corporation”) is the
major shareholder.
Pakistan – “Karot Hydropower Project”
Project Highlights
 PPP Model: Build-Own-Operate-Transfer (BOOT)

 Construction Duration: 5 years

 Start Date: January 2016

 Expected Completion Date: April 2021

 Concession Period: 30 years

 Implemented in accordance with Pakistan’s Policy for

Power Generation Projects 2002
 Pakistan – “Karot Hydropower Project”
Project Highlights
 Size: Volume (164.5 million m3); Length (27 km)

 Engineering-Procurement-Construction (EPC 設計、

設計、採購、
採購、
施工 Contract Sum: ~ USD 1.6 billion
施工)

 Engineering and Construction Contractor: Yangtze Three

Gorges Technology and Economy Development Company

 Procurement Contractor: China Machinery Engineering

Corporation

 Employer's Engineer: SMEC International Pty Ltd Australia

(responsible for project management, design, review and
supervision of construction work)
Kazakhstan – “Almaty Ring Road
Project (BAKAD Project)”
 66 km long with 6/4-lane bypass
motorway

 Bypass of Almaty city with

population of over 2 million
citizen

 The first PPP and priority project

 Scope: 21 bridges and 19

viaducts

 Serve as a link to a transnational

highway connecting Western
China with Western Europe
 Kazakhstan – “Almaty Ring Road Project
(BAKAD Project)” Project Highlights
 Development Cost: USD 750 million

 Construction Duration: 5 years

 Concession Period: 20 years

 Target Completion Date: 20 October 2019

 Private Consortium: BAKAD Investment and Operations LLP (the "Project

Company") owned by Alsim Alarko Sanayi Tesisleri ve Ticaret A.S. (33.3%),
Makyol Insaat Sanayi Turizm ve Ticaret A.S. (33.3%), SK Engineering and
Construction (33.3%), and Korea Expressway Corporation (0.10%) (jointly the
"Sponsors”)

 If successful, the Almaty Ring Road PPP Project will serve as a blueprint for
new PPPs in Kazakhstan in the transport infrastructure sector and possibly in
other sectors that need to attract private funding.
Kenya – “Nairobi-Mombasa Railway”

 Kenya's biggest infrastructure

project since independence

 Standard Gauge Railway

(SGR): 478 km

 Agreement: Chinese Premier, Li

Keqiang ( 中國總理李克强 ) and
Kenyan President, Uhuru
Kenyatta (signed in May 2014)
 Kenya – “Nairobi-Mombasa Railway”
Project Highlights
 Development Cost: USD 3.804 billion

 Construction Duration: 60 months (5 years)

 Commission: May 2017

 Concession period: 30 years

 Funder: The Government of the Republic of Kenya (15%) and the Export-
Import Bank of China (85%)

 Private Consortium: Kenya Railway Corporation

 Engineering-Procurement-Construction (EPC 設計、

設計 、 採購、
採購 、 施工)
施工 Contractor:
China Road and Bridges Corporation

 Operator: China Communications Construction Company

 Bibliography on BRI PPP Case Studies
 Wissenbach, U. and Wang, Y. (2017). African politics meets Chinese
engineers: The Chinese-built Standard Gauge Railway Project in Kenya and
East Africa. Washington DC, 13.

 Neil Cuthbert and Atif Choudry (2016). “One Belt One Road PPP Alchemy – Is
the Silk Road Paved in Gold?” Available at URL:
https://www.dentons.com/en/insights/guides-reports-and-
whitepapers/2016/december/22/one-belt-one-road-ppp-alchemy-isthe-silk-
road-paved-in-gold (accessed on 22 December 2016).

 BBC News. (2019). Kenya opens first railway for a century. Available at URL:
https://www.bbc.com/news/world-africa-40092600 (accessed on 25 August
2019).

 Risberg, P. (2019). Available at URL: https://www.csis.org/give-and-take-bri-

africa (accessed on 25 August 2019).
 Bibliography on BRI PPP Case Studies
 Ebrd.com. (2019). BAKAD Road Concession. Available at URL:
https://www.ebrd.com/work-with-us/projects/psd/bakad-road-concession.html
(accessed on 25 August 2019).

 En.wikipedia.org. (2019). Mombasa–Nairobi Standard Gauge Railway. Available at

URL:
https://en.wikipedia.org/wiki/Mombasa%E2%80%93Nairobi_Standard_Gauge_Rail
way (accessed on 25 August 2019).

 Anthony Trivet. (2019). Kenya Railways-Standard Gauge Railway-Sgr Nairobi

Mombasa Testride-Mombasa Nairobi Standard Gauge Railway -CRBC SGR Head
Office-Kenyan Professional Photographers-SGR Photos (116) - Kenyan Wedding
Portraiture Fashion Photographer. Available at URL: https://antonytrivet.co.ke/sgr-
photography-crbc-mombasa-nairobi-standard-gauge-railway/kenya-railways-
standard-gauge-railway-sgr-nairobi-mombasa-testride-mombasa-nairobi-stndard-
gauge-railway-crbc-sgr-head-office-kenyan-professional-photographers-sgr-
photos-116 (accessed on 25 August 2019).
 Three-Tier Partnership for
Success of PPP Model (Mak and Mo 2005)

Government

Project
Promoter
(Private Community
Consortium)

91
 Conclusions
 PPP can be broadly defined as “bringing public and
private sectors together in long-term partnership for
mutual benefit”.

 PPP is a growing alternative for governments around

the world and inadequate public financial resources
prompt the rise of PPP projects (e.g. Belt-and-Road
Initiative (BRI) by Mainland Chinese Government).

 Win-win-win outcomes to the government, project

promoter (private consortium), and the community
can be achieved through the implementation of PPP
model.
92
 Summary of Public-Private
Partnerships (PPP)
 Definition of PPP
 Types of PPP (e.g. PFI / DBFO / BOT / BOO / BOOT /
O&M / JV / Leasing)
 Concepts and common features of PPP
 Organizational structure of a typical PPP project

 Key drivers for adopting PPP

 Potential obstacles of PPP during implementation
 Critical success factors for PPP
 Case studies of PPP (i.e. United Kingdom / Australia /
Hong Kong / Mainland China / BRI Countries)
93
 References [1]
 Chan, A.P.C., Lam, P.T.I., Chan, D.W.M., Cheung, E. and Ke Yongjian. (2009).
Drivers for Adopting Public Private Partnerships - Empirical Comparison between
China and Hong Kong Special Administrative Region. Journal of Construction
Engineering and Management, ASCE, 135(11), 1115-1124.

 Chan, A.P.C., Lam, P.T.I., Chan, D.W.M., Cheung, E. and Ke Yongjian. (2010a).
Potential Obstacles to Successful Implementation of Public-Private Partnerships
in Beijing and the Hong Kong Special Administrative Region. Journal of
Management in Engineering, ASCE, 26(1), 30-40.

 Chan, A.P.C., Lam, P.T.I., Chan, D.W.M., Cheung, E. and Ke Yongjian. (2010b).
Critical Success Factors for PPPs in Infrastructure Developments: Chinese
Perspective. Journal of Construction Engineering and Management, ASCE,
136(5), 484-494.

 Xu, Yelin, Yeung, J.F.Y., Chan, A.P.C., Chan, D.W.M., Wang, Shouqing and Ke,
Yongjian. (2010). Developing a Risk Assessment Model for PPP Projects in China
- A Fuzzy Synthetic Evaluation Approach. Automation in Construction, 19(7),
929-943. 94
 References [2]
 Efficiency Unit (2003). Serving the Community by Using the Private Sector: An
Introductory Guide to Public Private Partnerships (PPPs), Hong Kong SAR
Government, August, 70 pages (source:
http://www.info.gov.hk/eu/english/psi/psi_materials/psi_materials.html#3)

 Hong, Y.M. and Chan, D.W.M. (2014). Research Trend of Joint Ventures in
Construction: A Two-decade Taxonomic Review. Journal of Facilities Management,
12(2), May (in press).

 Lam, P.T.I. (1993). Evolution of Build-Operate-Transfer Proposals for Infrastructure

Works, BRE Departmental Working Paper No. 9, Hong Kong Polytechnic.

 Levy, S.M. (1996). Build, Operate, Transfer: Paving the Way for Tomorrow's
Infrastructure, John Wiley & Sons, New York, 411 pages.

 中央出資港珠澳橋後年上馬 港出67億收費料可減至
Ming Pao Newspaper (2008). “中央出資港珠澳橋後年上馬 港出 億收費料可減至
元下”,
元下 Chinese version only – English Translation: Chinese Central Government
200元下
Invests in Hong Kong-Zhuhai-Macao Bridge, Project Commences in Two Years, Hong
Kong Invests RMB6.7 billion, 6 August 2008, Hong Kong.
95
 References [3]
 Shen, L.Y., Li, Q.M. and Li, H. (2002). Alternative Concession Model for BOT-
Contract Project. Journal of Construction Engineering and Management, ASCE,
128(4), 326-331.

 Tiong, R.L.K. and Alum, J. (1997). Evaluation of Proposals for BOT Projects.
International Journal of Project Management, 15(2), 67-72.

 Tiong, R.L.K. and Alum, J. (1997). Financial Commitment for BOT Projects.
International Journal of Project Management, 15(2), 73-78.

 Transport and Housing Bureau (2008). Hong Kong-Zhuhai-Macao Bridge, The

Government of the Hong Kong Special Administrative Region, 7 March 2008,
http://www.thb.gov.hk/eng/policy/transport/issues/cbt_3.htm (accessed 12
August 2008).

 Zhang, X.Q. and Kumaraswamy, M.M. (2001). Hong Kong Experience in

Managing BOT Projects. Journal of Construction Engineering and Management,
ASCE, 127(2), 154-162.
96
 References [4]
 Chan, A.P.C. and Cheung, E.
(2014). ”Public Private Partnerships
in International Construction:
Learning from Case Studies”.
Routledge of the Taylor & Francis
Group: UK, 190 pages, ISBN 978-
0-415-52975-4 (hardback).
[URL:
https://www.routledge.com/Public-
Private-Partnerships-in-
International-Construction-
Learning-from/Chan-
Cheung/p/book/9781138233744]

97
Public-Private Partnerships (PPP)

~ THE END ~
98