We've turned down projects for a variety of reasons. We have to determine whether clear performance objectives can be set and whether those objectives will remain stable over a long period.
Take information technology for example. Those projects require huge investments. Can the private sector really enter into a binding contract with the government for 25 years and invest in IT? That's extremely difficult given how much IT can change in 25 years.
Sometimes, it's not easy to transfer risk to the private sector. How could the government transfer the risk associated with maintaining military equipment during a war, for example? How could the private sector manage that? In the PPP world, the key is knowing who can do the better job managing the risk.
In some situations, the private sector is better positioned than the government to manage risk. That would be the case with a bridge construction or maintenance project, say, where the private sector has the experience and expertise to manage the risk optimally. It's not that difficult to identify what the government wants over a 25-year period. If it's looking for a bridge that can accommodate a certain traffic volume, it needs the least costly solution over the 25-year period, taking into account the maintenance, design, installation and oversight phases of the project. If the performance standards don't lead to an outcome that meets expectations, payments will be affected. Not all situations offer stable performance standards over 25 years, and not all risks are best managed by the private sector.