4 | Public-Private Partnerships in Urban Bus Systems
the risk allocation process. The risk matrix supports the assessment of various opportunities for private sector participation. Planners who complete the risk matrix can better identify funding sources, financial instruments, and other essential elements of an operation concession. The analytical framework is not comprehensive, but it does include references to additional resources and tools. Chapter 6 outlines the risks that merit special attention, while chapters 7 and 8 review how risks are allocated and planned for, which serves as the basis for subsequent analyses and informs the next steps of the preparation stage. Part III extends deeper into the preparation stage, helping planners polish the project structure stemming from the finalized risk matrix. Chapter 9 outlines examples of various project structures and discusses how risks and functions are allocated in each of them, using the guidance provided in part II. Practitioners may use several risk management strategies to improve their structure. Chapter 10 provides a list of funding and financing mechanisms that may be used to support the identification, analysis, and inclusion of needed instruments in the project structure. Reconsidering funding sources and financing mechanisms may result in adjustments to risk reallocation and new mitigation mechanisms.2 Finally, chapter 11 defines the essential elements of an operational concession contract—that is, those elements most critical for achieving project objectives. This chapter does not lay out how to draft a concession contract for operation. However, thinking about how the risk matrix relates to these essential elements may help to correct structural imbalances. By the end of a project’s preparation stage, the essential elements of the concession contract should be aligned with the risk and function allocations. Once planners have defined a project’s structure, following the steps outlined here and with the aid of other tools, they are ready to enter the structuring phase. PPP transaction advisers will oversee the drafting of bidding and legal documents; refine technical, financial, and legal analyses; and guide the project through the procuring process until financial closure. Many chapter sections end with references to practical tools and further reading materials. Depending on the nature of the content, chapters include guiding questions to help users process the concepts, templates, and instructions outlined. The analytical framework is not comprehensive; it is based on relevant case studies and is intended to be used in combination with other tools and references. It does not support all of the activities necessary to undertake project identification and preparation. It is not possible to foresee all possible risks or mitigation strategies. That said, the document points out a good number of them and suggests further reading on how to manage, mitigate, and measure their impact. A substantial literature addresses procurement, contract management, contract development, and other essential guidance relevant to PPPs (see, for example, APMG 2018; PPP Knowledge Lab n.d.; World Bank Group and PPIAF n.d.).
KEY MESSAGES Given the number of failing urban bus PPPs, the world over, this framework encourages practitioners and planners to think carefully about their specific contexts before adopting this now very popular, yet complex, model.
