Technical Notes:

Creating the Terms and Conditions for PPP Infrastructure Partnerships

Technical Notes

Nov 8, 2013 — Neil Boyle

PPP infrastructure partnerships are much more than a business model that conforms to certain legal formalities. To be sure, partnerships must be supported by law, but modern corporate law in most developing countries is still in process of development and is not likely to be tested anytime soon or regularly ...

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Vertical Integration as Paradigm: A graphical representation of TCE

Technical Notes

May 25, 2010 — Neil Boyle

VERTICAL INTEGRATION AS PARADIGM - A graphical representation of TCE 5-25-2010 One of many amazing accomplishments of Professor Williamson and to which we benefit from today was his extraction in reduced mathematical form (1996. pp. 106-111) of the basic structure of economic exchange.  Notwithstanding reduced form mathematics, we can generate new ...

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Problems with Traditional Institutional Analysis

Technical Notes

Dec 16, 2009 — Neil Boyle

What do I mean by “institutional problems?” Traditionally, they are problems that an analyst identifies in the course of analyzing the performance of an institution that can influence investment decisions of either a government body or private investor or both. Normally, the analysis compares the achievements of the institution against ...

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Specialized Hazards of Project Financed PPP

Technical Notes

Dec 16, 2009 — Neil Boyle

Debt governance hazard - the incentive “to go for the gold” and gloss over the unpriced hazards of unanticipated consequences that occur in the absence of credible commitments when there is the joining of the pre-emptive security of debt financing with the aggressive financial leverage that often accompanies the substitution of ...

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Tackling Corruption Hazards at the Source

Technical Notes

Dec 15, 2009 — Neil Boyle

Actions of people who are involved in designing and implementing project contracts are sometimes corrupt. Corruption in this context is subtle and not of the mafia organized crime variety. These corrupt acts arise from the constant human risk factors that beset all mankind and the variable environmental risk factors that come ...

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Negotiating Superior Safeguards

Technical Notes

Dec 15, 2009 — Neil Boyle

Negotiations calls for smarter trade-offs between price (lower or higher), technology (from simple/generic to complex/specialized and contractual safeguards (from looser to tighter). “All three (price, technology, and safeguards) are interactive, are determined simultaneously, and are scaled comparatively.”  (Williamson, 1996) Safeguards are particularly important; they must be negotiated with credible commitment by ...

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Examples of Negotiated Safeguards

Technical Notes

Dec 15, 2009 — Neil Boyle

A condition of complete safeguard occurs when hazards are relieved. Negotiated safeguards could include a broad range of institutions and mechanisms that are inserted into the contract and if required also into the internal organization of the project company. The thing to keep in mind is the importance of knowing ...

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Mitigating Bilateral Dependency

Technical Notes

Nov 24, 2009 — Neil Boyle

Bilateral dependency arises as a result of the fundamental transformation of incentives that occurs after contracts are signed and the strong incentives that are posed by autonomous traders in a large number competitive demand arrangement are conflicted with having to deal with the small number supply relation vis a vis ...

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Negotiating the Deal for Governance Closure

Technical Notes

Nov 24, 2009 — Neil Boyle

The missing ingredients in PPP projects are the following: (i) pricing out of unrelieved contract hazards; (ii)agreements that signal confidence and continuity intentions of the parties; (iii) agreement and protocol to cost share unanticipated risks; and (iv) investments by government in transaction-specific assets at the forward stage to signal: (a) ...

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Pricing Out the Unrelieved Contract Hazards

Technical Notes

Nov 24, 2009 — Neil Boyle

Negotiations of the financial closure kind are often incomplete in PPP infrastructure deals; typically financial closure is considered the last step in deal-making. Incompleteness is due less to inadequate risk identification procedures and efforts than to the existence of different identification procedures altogether. Differences are between the firm as production ...

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Negotiating Deals to Resist Unraveling

Technical Notes

Nov 20, 2009 — Neil Boyle

PPP infrastructure contracts are notoriously unstable; projected break even supply prices are frequently greater than contracted prices. The disparity is due to the unrelieved contract hazards that were glossed over during negotiations. When unrelieved hazards arise, specialized assets forego safeguards and end up exposed.  Unstable contracts are apt to revert to a simpler ...

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