Core Concepts and Principles Flashcards
7 cards from real CP3P practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Core Concepts and Principles flashcards as text
Why are PPP contracts typically long-term, often 20-35 years?
Answer: To allow the private partner to recover investment and bear lifecycle risk over the asset's life
Long terms match the asset's life and allow investment recovery and lifecycle cost optimization.
What is the main purpose of a PPP unit within government?
Answer: To provide expertise, guidance, and quality control for PPP programs across agencies
PPP units centralize expertise, develop policy and standards, and support or review agency PPP projects.
Which is a common risk of poorly structured PPPs?
Answer: Lack of flexibility, making future service changes costly
Long-term contracts can be rigid, so unplanned changes may be expensive if variation mechanisms are weak.
Fiscal commitments from PPPs that depend on uncertain future events (e.g., guarantees) are called:
Answer: Contingent liabilities
Contingent liabilities, such as revenue or debt guarantees, become payable only if specified events occur.
Which statement about PPP financing cost is generally true?
Answer: Private financing usually costs more than government borrowing, so VfM must come from risk transfer and efficiency
Private capital typically has a higher cost, so PPP VfM depends on efficiency gains and effective risk transfer.
A 'brownfield' PPP refers to a project that:
Answer: Involves an existing asset being rehabilitated, expanded, or operated
Brownfield PPPs involve existing infrastructure, whereas greenfield PPPs involve new construction.
Which party in a PPP typically holds the 'first-loss' position if project cash flows fall short?
Answer: Equity investors
Equity sits below debt in the capital structure, so equity investors absorb losses first.