The PPP delivery gap: Who manages value for money after financial close?

Public-private partnerships (PPPs) have become an important delivery model for governments around the world looking to accelerate infrastructure investment, improve public services and draw on private-sector capability.

In developing markets, PPPs often help governments unlock private investment and move ambitious infrastructure pipelines forward. In more mature PPP markets, the emphasis has shifted towards optimising risk allocation, improving operational performance and securing long-term value for money. The context may differ, but the objective is the same: better outcomes through effective partnership between the public and private sectors.

Over the past decade, significant progress has been made in how PPPs are structured and procured. As PPP programmes scale rapidly throughout the Middle East, hundreds of projects are being brought to market across multiple sectors. Investor confidence is growing, the regulatory framework continues to mature, and the quality of transaction advice supporting PPP procurement has improved significantly over the last few years.

So far, so good. But what happens after financial close? In many PPP projects, financial close is treated as the finish line. In reality, it marks the start of a relationship that may last 20, 25 or even 30 years. Once the deal is signed, the focus moves from structuring a transaction to managing a concession; and that calls for a very different capability.

The delivery challenge

PPP transactions have improved considerably in recent years. Risk allocation is more mature, procurement processes are more sophisticated, and financial, technical and legal advisers are increasingly effective at helping governments bring complex projects to market and reach financial close.

The issue is not the quality of transaction advice. The challenge is that transaction advisers are usually engaged to reach financial close – and that is exactly where their role ends. Once financial close is reached, responsibility shifts to the contracting authority. Attention turns to contract management, performance monitoring, variation assessment, stakeholder management and ensuring value for money throughout the life of the concession.

Yet in many cases, the people involved in negotiating the deal have moved on, and the transaction advisors who understood the commercial intent behind key provisions are no longer part of the team. What remains is a complex concession agreement that must now be actively managed for decades.

This is where the real challenge begins. Many public sector organisations can draw on specialist transaction support during procurement, but far fewer retain dedicated PPP capability once the project moves into delivery. That creates a capability gap, not because the contract is flawed, but because procuring a PPP and managing one require different capabilities.

Without experienced capability within the contracting authority, risks can gradually transfer back to government, underperformance can go unchallenged and payments can become disconnected from the outcomes the project was meant to deliver. As institutional knowledge fades and the private partner gain an information advantage, the authority becomes less able to protect value for money, enforce lifecycle obligations and preserve the original commercial intent. Over time, service quality and asset condition may deteriorate, leaving consequences that are costly, contentious and difficult to reverse.

Successful PPPs depend on more than risk transfer. They depend on maintaining a balance of capability between the public and private sectors throughout the life of the concession. Without that balance, there is a risk that commercial structures gradually move away from their original intent, creating outcomes that may be contractually compliant but not necessarily aligned with the long-term objectives of the public sector.

The market has become increasingly effective at reaching financial close, but the capability required to manage PPPs after financial close is still catching up.

Bringing global learnings to the Middle East

Approaches have evolved, but mature PPP markets such as the UK, Australia and Canada have shown the importance of maintaining strong public-sector contract management capability throughout the concession lifecycle. Many public sector organisations came to recognise that successful procurement and successful delivery are different disciplines. One is about creating a bankable deal; the other is about making sure that deal delivers the intended outcomes.

As a result, governments began investing more in client-side capability. Experienced programme, commercial and project specialists worked alongside contracting authorities after financial close, helping them become more intelligent and capable clients. Their role was not to renegotiate the deal; it was to make sure the deal delivered.

In practice, that means monitoring performance against contractual requirements, assessing variations and change requests, managing stakeholder interfaces, preserving institutional knowledge as people move on, and supporting sound decisions throughout the concession. Most importantly, it means government retains the capability to manage the concession for its full lifecycle, not just during procurement.

The Middle East region has an opportunity to build this capability now rather than later. As PPP programmes continue to grow, strengthening client-side delivery capability may become just as important as strengthening transaction capability.

The real measure of success

As PPP programmes continue to scale globally, particularly across the Middle East, the industry needs to pay more attention to what happens after financial close. A well-structured PPP agreement is only the beginning. Long-term value comes from effective contract management, sound decision-making and strong client-side governance throughout delivery.

Ultimately, the success of a PPP programme should not be measured solely by how many projects reach financial close. It should be measured by how effectively those projects perform over the decades that follow, and by how many achieve the outcomes they were originally intended to deliver.

Closing the delivery gap does not require a large permanent team, but it does require the contracting authority to retain a clearly mandated core capability after financial close: commercial and contractual stewardship; independent performance and payment assurance; technical and lifecycle oversight; disciplined governance, risk and decision-making; and continuity of institutional knowledge and stakeholder relationships.

Together, these capabilities allow the contracting authority to act as an intelligent client: making well-grounded decisions, protecting the original commercial intent and holding the private partner accountable for long-term outcomes. The delivery model may vary from project to project, but the principle should not: public-sector delivery capability must last as long as the concession itself.