Governments are increasingly turning to the private sector to help them fund infrastructure projects. These projects leverage the expertise, efficiency and innovation of the private sector to deliver projects that are in the public interest. There are many different types of projects where public-private partnerships in construction (PPP) are used. These include include hospitals, schools, public transport, roads, waste and sporting facilities.

So, what’s behind this trend?

What is private investment?

Private investment occurs when the government and the private sector agree to share the costs of  major infrastructure projects. Common types of private investment include:

• Build-Operate-Transfer: This occurs when a private entity finances, builds and operates a infrastructure project for a specified period before transferring ownership to the government. This model is commonly used for large scale infrastructure projects such as roads, bridges, airports and power plants.
• Design-Build model: This occurs when the government engages a private engineering company to undertake the design and construction of an infrastructure project.
• Design-Build-Finance-Operate: This model occurs when a private sector consortium designs, builds, operates and finances a public infrastructure project.
• Build-Own-Operate: The build-Own-Operate (BOO) model is a type of project finance structure where a private company is responsible for the design, construction, and operation of an infrastructure project. The company funds the project through a combination of equity and debt financing. Then, it operates the facility to generate revenue, which is used to repay the investors and provide a return on their investment. Once the project’s concession period ends, ownership of the facility reverts to the Government agency.

• Concession Agreement: The Concession Agreement model is when a private engineering company is granted a concession to finance, build, and operate an infrastructure project for a specified period. It provides a stable source of revenue for the private engineering company through user fees or availability payments and encourages private sector investment in developing new infrastructure.
• Joint Venture: The Joint Venture model is when government agencies and private engineering companies collaborate to develop and operate an infrastructure project. It shares risks and rewards between the two sectors and encourages private sector investment in developing new infrastructure.

Why are governments turning to private investment?

Up until recently, governments have had access to significant revenue and cheap loans. However, due to tough economic conditions resulting from the COVID pandemic and global uncertainty, this is changing. Governments facing tighter fiscal constraints are looking to increase efficiency however they can.

PPP projects often reduce risk for governments. Typically, the private sector will bear responsibility for risks relating to construction, financing and operations. This assists governments in delivering projects on time and within budget. The ability to reduce risk and deliver projects on time and budget is increasingly appealing to governments in an uncertain economic climate.

What are some examples of this trend?

The Brisbane Olympic Infrastructure is a prime example of this. Under the previous state Labor government, former Premiers Annastacia Palaszczuk and Steven Miles rejected using PPP to fund the Brisbane Arena and the main Olympic stadium. However, new Premier David Crisafulli is looking to fund some of the Olympic projects using a PPP model.

PPPs have been used to successfully deliver sporting infrastructure in the past. Perth’s Optus Stadium was 60% funded by the Western Australian government, with the remaining 40% funded by private investments.

Are there any downsides?

Private companies are motivated by profit. In some cases, this can limit the projects that they are willing to invest in. It can also impose financial obligations on users of a service after it is delivered. For example, drivers must pay to use roads that operate under a toll system.

Additionally, this can lead to conflicts between private and public sector partners. While governments may be focussed on social enterprise, private sector partners may be focused purely on maximising profit.
Public and private sector partnerships combine the strengths of the public and private sectors to deliver projects important to the general public.

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Article References

Black, D (n.d) ‘Risk, rewards and results: What we’ve learned from public-private partnerships’, Queensland University Of Technology, accessed 22 April 2025.

Consult ANZ (2 March 2025) ‘Public-Private Partnerships (PPPs) for civil engineering and construction projects’, Consult ANZ, accessed 22 April 2025.

Walker, J (20 April 2025) ‘Industry body records rebound in private investment in major infrastructure projects’, The Australian, accessed 22 April 2025.