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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

  1. Which feature most clearly distinguishes a PPP from traditional public procurement?

    Answer: Significant risk and management responsibility are transferred to the private partner over a long-term contract

    PPPs are long-term contracts in which the private party bears significant risk and management responsibility, with payment linked to performance.

  2. In an availability-payment PPP, the private partner is paid mainly based on:

    Answer: Making the asset available to the required performance standards

    Availability payments are made by government when the asset meets defined availability and performance standards, with deductions for failures.

  3. Under a user-pays (concession) PPP model, which risk is typically borne mainly by the private partner?

    Answer: Demand (traffic/revenue) risk

    In user-pays concessions, the private partner's revenues depend on usage, so it bears demand risk.

  4. What is the guiding principle for allocating risk in a PPP?

    Answer: Allocate each risk to the party best able to manage it at least cost

    Optimal risk allocation assigns each risk to the party best able to control or absorb it, which maximizes value for money.

  5. Why is a PPP contract usually based on output specifications rather than input specifications?

    Answer: They let the private partner innovate in how it meets required service levels

    Specifying outputs (what must be achieved) rather than inputs (how) gives the private partner freedom to innovate and optimize whole-life cost.

  6. A Special Purpose Vehicle (SPV) in a PPP primarily serves to:

    Answer: Ring-fence the project's assets, contracts, and liabilities from the sponsors' other businesses

    The SPV is a project company that isolates project assets and cash flows, enabling limited-recourse project finance.

  7. Which statement best describes 'bundling' in a PPP?

    Answer: Combining design, construction, finance, and operation/maintenance into a single contract

    Bundling lifecycle phases under one party creates incentives to optimize whole-life costs and quality.