What are the advantages of PPP model?
1 to avoid cost overruns.
The participation of private organizations in government infrastructure construction means that both parties participate in the construction of the project and can play a supervisory role in each other. And only when the PPP model is completed and approved by the government can private organizations benefit. PPP mode is helpful to improve the efficiency of project construction, reduce the project cost, and avoid the risk of project funds.
2. Reduce the economic burden
PPP mode can make the government avoid heavy work and have more time to supervise the implementation of basic projects, which not only ensures the quality of projects, but also reduces the government budget.
3. Mutual benefit * * *
PPP mode enables the government and private organizations to learn from each other's strong points, give full play to their respective advantages and make up for each other's shortcomings. Both sides can form a win-win situation.
4. Reasonable risk allocation
PPP realizes reasonable risk allocation in the initial stage of the project, and the government shares some risks. Thereby reducing the risks of contractors and investors, and also reducing the financing difficulty of the project. It means that the investment risk of PPP projects is shared by the government.
Regarding the PPP model, the financial planner said that the rise of PPP model is in recent years, but this model is still immature and has many shortcomings, especially the research on the risks of PPP projects is not enough. How big is the risk of PPP, and what disadvantages of this model need further study. Therefore, investors must be cautious when investing in PPP projects and cannot buy them at will!