2021-12-07

Promoting PPP Reform to a New Level: the National Conference on Performance Management of PPP Project for Financial System Focuses on Providing Service for High Quality Development

(06-AUG-2021)


It is a major decision made by the CPC Central Committee and the State Council to promote the application of PPP model in the field of public services. It is mentioned in the 14th Five Year Plan and the 2035 Long-term Goal Outline that the Public-Private Partnership (PPP) should be promoted in a standardized and orderly manner. Zou Jiayi, member of the Party group and vice minister of the Ministry of Finance, pointed out during her recent visit to China Public Private Partnership Co., Ltd. that it is necessary to correctly understand the significance of innovation of PPP, and PPP will face new development opportunities in the future. She stressed that we should treat the PPP model dialectically. One the one hand, we should see that PPP is a good model with a great significance of innovation, and we should not deny PPP completely due to the risks; On the other hand, we should also see that PPP is not omnipotent. It is not the fact that PPP model is suitable for all projects, and we need to define the scope of PPP application.


Recently, Jiao Xiaoping, director of the China PPP Center of the Ministry of Finance, said at the 2021 National Conference on Performance Management of PPP Projects for the Financial System that China’s PPP reform has achieved phased progress and outcomes. The current PPP market is characterized by deepening and refining the system reform, rational and stable recovery, powerful regulatory norms and more transparent information disclosure. China has become the largest regional PPP market in the world. The ideas and practices of value-for-money and financial affordability put forward by China’s PPP reform have been absorbed and utilized by the United Nations “PPP Legislation Guide”.

 

China’s PPP reform has achieved phased progress and outcomes

 

After seven years of practice and exploration, PPP model has become one of the important drivers China to stabilize growth, promote reform, adjust structure and benefit people's livelihood. At present, the National PPP Integrated Information Platform Project Management Database has included 10,094 projects with an investment of 15.6 trillion yuan, covering 19 industries, among which 7,286 projects have reached commercial close, with an investment of 11.9 trillion yuan, making the commercial close rate of 72.2%; 4,423 projects entered construction stage, with an investment of 6.8 trillion yuan, and the construction commencement rate was 60.7%.

 

China’s PPP reform practice has also been highly recognized by the international community, with a number of indicators among the top, ranking above the global average. According to the Procuring Infrastructure PPPs released by the World Bank, China’s PPP system and practice are at the top level among 135 countries in the world; in the InfraCompass 2020 by Global Infrastructure Hub, China ranks high in terms of various indicators pertaining infrastructure; the 2020 Technical Report of Digital Infrastructure Investment Platform by the BRICS and the 2020 Fiscal Risks and PPP Report by IMF have drawn on the good practices of PPP system of China, including mechanism, information platform and fiscal expenditure responsibility management.

In addition, the service of information supervision and disclosure of the China PPP Center has been significantly improved, and an Integrated PPP Information Platform has been set up, running vertically through the central government, the province, the city and the county, which horizontally connects the financial departments and industry authorities, so as to realize a supervision pattern described as “vertical to the end and horizontal to the side”. According to reporters, so far, the information platform has more than 3,600 financial users, with more than 6,400 industry authorities/implementing agencies, more than 7,000 private capital, more than 2,200 financial institutions, more than 5,400 project companies, more than 1,700 consulting institutions and more than 10,200 experts. There are more than 2.89 million information indicators and more than 1 million documents, among which, there are nearly 1,200 information indicators and more than 100 documents in the whole life cycle of a single project.

 

“We will use the latest technologies such as big data, Artificial Intelligence, cloud computing and blockchain to comprehensively upgrade and transform the information platform, continuously improve the functions, realize the examination of the project entry into the Database through Artificial Intelligence, make the intelligent performance management system go live, and comprehensively improve the government’s capacity in supervision, service and information disclosure, thus protecting the public’s right to know, participation and supervision,” said Jiao Xiaoping. Since 2014, with reform and innovation as the main task and high-quality development as the goal, the Ministry of Finance of China has standardized and orderly promoted the top-level design, optimized the market environment, and prevented financial risks. The economic and social benefits of PPP reform have gradually emerged, which have been seen in the PPP practice of Hebei Province.

 

Jin Haizeng, member of the Party Leadership Group and deputy director of Hebei Provincial Finance Department, said in his speech at the conference that as of the end of March this year, Hebei had 448 projects included in the Database with a total investment of 693.6 billion yuan. 335 projects reached commercial close in accordance with regulations, with an investment of 536.8 billion yuan. 236 projects entered construction stage, with an investment of 409.9 billion yuan. The PPP development in Hebei Province follows a steady trend: Taihang Mountain Expressway has become the first tourist expressway in China; a number of high-quality PPP projects are in good operation, including the ecological restoration project of Hutuo River in Shijiazhuang City, Shijiazhuang International Exhibition Center, Tangshan Grand Theater, and ecological restoration and infrastructure construction in Tangshan Donghu Area.

 

“In terms of inventory projects, the projects in Hebei’s included in the Database cover the provincial level, 13 cities and 142 counties, a 73% coverage of the county level. The number of commercial closed projects has seen steady increase, private enterprises have been further energized, performance management has been improved, and information has become more open and transparent. In terms of the trend, the PPP model promotes a virtuous cycle of fiscal and economic development, and the “new infrastructure, new urbanization initiatives and major projects” included in the Database account for the largest proportion in the city and county level. It has become a powerful boost to rural revitalization, ecological environmental protection and new-type urbanization, and a powerful driver to promote local economic and social development,” said Mr. Jin.

 

Improve the quality of projects throughout their life cycle through performance management

 

PPP performance management is an important part of financial budget performance management, which is of great significance in comprehensively deepening financial budget management, promoting the quality and efficiency of public services, and strengthening the project life cycle management. At the level of project management, PPP model implements financial performance management through value-for-money evaluation, financial affordability demonstration, risk allocation, life cycle management and other tools, so as to achieve the goal of achieving more with less cost, further optimize the financial budget management, and solve the problems that can hardly be solved by the traditional decentralized governance mode, such as the difficulties in project budget control, quality control and result control.

 

Jiao Xiaoping believes that performance management is the core of PPP whole life cycle management. The performance result works as the final verification, to test whether the project quality is good or not. The government should adhere to the principle of goal oriented and result oriented, strengthen the pay-for-performance mechanism, effectively encourage the social capital to innovate management and optimize operation, and constantly improve the quality and efficiency of public services.

 

“We should strengthen the whole life cycle management of the project, bring performance management and control into the whole process from implementation plan preparation in the preparation stage, contract signing in the procurement stage to the operation management in the implementation stage, and take performance management as an important means to promote the quality and efficiency of public service supply,” said Jiao Xiaoping.

 

Liu Baojun, a three-level researcher of the Inclusive Finance Division of the Finance Department of the Ministry of Finance, said that PPP is a emerging model, and also a good mechanism. It should neither be deified nor demonized, and standardization is for better development. After the standardized management in recent years, the current PPP market is characterized by reduced number, higher quality, sound system, stronger supervision and more transparent information disclosure. “On the whole, market players have gradually returned to rationality and the market environment has been further optimized, laying a solid foundation for the standardized and orderly development of PPP.” According to Liu, Ministry of Finance will continue to improve the PPP system, optimize the development environment and promote the sound development of the PPP.”

 

Then, how to carry out PPP project performance management? How to construct the performance target and indicator system of PPP project?

Li Lei, director of Risk Performance Department of China PPP Center, elaborated the importance of performance management and the connotation of PPP project performance management, introduced the background, purpose, main contents and key issues of the Operational Guidelines for Performance Management of PPP Projects, and came up with the next step of PPP performance management undertaking. She said that PPP performance management should be based on the Guidelines; we need to actively facilitate the construction indicator system for sub industries, promote the application of online system and accelerate the pilot operation of intelligent supervision; carry out frontier research and strengthen the publicity of good practice of PPP performance management; strengthen capacity building and give full play to the demonstration role of advanced provinces.

 

Zhao Shikun, an expert in PPP Expert Database of the Ministry of Finance, focused on the management requirements, mutual relationship, formation approach and ideas of PPP project performance objectives and performance indicators, and explained the construction method of performance indicators combined with practical cases. He pointed out that the performance objectives and indicators are the basis for the whole process of performance management of PPP projects. According to the requirements of the Operational Guidelines for Performance Management of PPP Projects, the performance objectives and indicators need to be formulated in the preparation stage of project identification, and gradually improved in the follow-up review, procurement, contract negotiation and other links, which will be finally specified in the PPP project contract.

 

Zhang Han, another expert in PPP Expert Database, elaborated the preparation of performance evaluation, formulation of performance evaluation work plan, organization and implementation of performance evaluation, compiling of performance evaluation report, material archiving and evaluation results feedback from the perspective of practical operation combined with typical cases. According to Zhang, a large number of projects have entered the implementation stage so far, and performance management will have a great impact on all parties involved in the project. Relevant departments should attach great importance to it and start performance evaluation as soon as possible.

 

Focus should be placed on four aspects

 

According to Jiao Xiaoping, in the next step, the China PPP Center of the Ministry of Finance will thoroughly comply with the relevant requirements of the State Council on further deepening the reform of the budget management system, and promote the PPP reform to a new level by taking the  new development stage into consideration, implementing the new development concept, building a new development pattern, and serving high-quality development.

 

First, we should pay close attention to standardized development. The “entrance” of projects should be well regulated, and the hidden debt risk of local governments should be strictly prevented. We should enhance the dynamic management of the whole life cycle of fiscal expenditure responsibility, refine the management methods incorporated into the local government’s annual budget and medium-term financial planning, strengthen the coordination with the financial debt platform, and forestall the risks caused by breaking the fiscal expenditure responsibility limit. We will use the latest technology to better play the role of PPP Integrated Information Platform in supervision and service, and accelerate the construction of a unified, standardized, transparent and orderly market.

 

Second, comprehensively promote high-quality development. Focusing on the “new infrastructure, new urbanization initiatives and major projects”, projects of pollution prevention and control, carbon neutralization, rural revitalization, regional development and basic public services, efforts should be made to address weaknesses of public services and facilitate the domestic circulation. Give full play to the foundation and important pillar role of finance in national governance, improve the efficiency of capital use, implement the performance management of the whole life cycle, set up the performance objectives and indicator system of PPP projects by industries and fields, guarantee the quality of public service supply, and implement the concept of “expenditure must be effective, while ineffectiveness shall be held accountable”.

 

Third, give full play to the guiding role of budget management. In accordance with the law and regulations, the financial expenditure responsibility of PPP projects will be fully incorporated into the budget management, and the binding effect and coordination function of the budget will be given full play. The government takes the lead in performing the contract in good faith, stabilizing market expectations and creating a sound business environment. At present, a number of PPP projects have entered the period of operation by payment. Those who comply with the law and whose social capital reaches the performance evaluation standard according to the contract must be paid by the implementing agencies according to the contract.

 

Four, support the international cooperation under “Belt and Road Initiative”. We will make good use of resources in both domestic and international resources, encourage the synergy formed jointly by government, enterprises and financial institutions, so as to enhance the overall strength of “going global” and promote the high quality development of “Belt and Road Initiative”. We will promote multi-bilateral cooperation in public services and infrastructure globally, set up a better project reserve, and establish an international PPP project database. We need to summarize the Chinese project cases, strengthen international exchanges and sharing, make contribution to infrastructure interconnection among the “Belt and Road” countries with Chinese solutions, and participate in the formulation of PPP international standards.

 

Source: China Financial and Economic News


It is a major decision made by the CPC Central Committee and the State Council to promote the application of PPP model in the field of public services. It is mentioned in the 14th Five Year Plan and the 2035 Long-term Goal Outline that the Public-Private Partnership (PPP) should be promoted in a standardized and orderly manner. Zou Jiayi, member of the Party group and vice minister of the Ministry of Finance, pointed out during her recent visit to China Public Private Partnership Co., Ltd. that it is necessary to correctly understand the significance of innovation of PPP, and PPP will face new development opportunities in the future. She stressed that we should treat the PPP model dialectically. One the one hand, we should see that PPP is a good model with a great significance of innovation, and we should not deny PPP completely due to the risks; On the other hand, we should also see that PPP is not omnipotent. It is not the fact that PPP model is suitable for all projects, and we need to define the scope of PPP application.


Recently, Jiao Xiaoping, director of the China PPP Center of the Ministry of Finance, said at the 2021 National Conference on Performance Management of PPP Projects for the Financial System that China’s PPP reform has achieved phased progress and outcomes. The current PPP market is characterized by deepening and refining the system reform, rational and stable recovery, powerful regulatory norms and more transparent information disclosure. China has become the largest regional PPP market in the world. The ideas and practices of value-for-money and financial affordability put forward by China’s PPP reform have been absorbed and utilized by the United Nations “PPP Legislation Guide”.

 

China’s PPP reform has achieved phased progress and outcomes

 

After seven years of practice and exploration, PPP model has become one of the important drivers China to stabilize growth, promote reform, adjust structure and benefit people's livelihood. At present, the National PPP Integrated Information Platform Project Management Database has included 10,094 projects with an investment of 15.6 trillion yuan, covering 19 industries, among which 7,286 projects have reached commercial close, with an investment of 11.9 trillion yuan, making the commercial close rate of 72.2%; 4,423 projects entered construction stage, with an investment of 6.8 trillion yuan, and the construction commencement rate was 60.7%.

 

China’s PPP reform practice has also been highly recognized by the international community, with a number of indicators among the top, ranking above the global average. According to the Procuring Infrastructure PPPs released by the World Bank, China’s PPP system and practice are at the top level among 135 countries in the world; in the InfraCompass 2020 by Global Infrastructure Hub, China ranks high in terms of various indicators pertaining infrastructure; the 2020 Technical Report of Digital Infrastructure Investment Platform by the BRICS and the 2020 Fiscal Risks and PPP Report by IMF have drawn on the good practices of PPP system of China, including mechanism, information platform and fiscal expenditure responsibility management.

In addition, the service of information supervision and disclosure of the China PPP Center has been significantly improved, and an Integrated PPP Information Platform has been set up, running vertically through the central government, the province, the city and the county, which horizontally connects the financial departments and industry authorities, so as to realize a supervision pattern described as “vertical to the end and horizontal to the side”. According to reporters, so far, the information platform has more than 3,600 financial users, with more than 6,400 industry authorities/implementing agencies, more than 7,000 private capital, more than 2,200 financial institutions, more than 5,400 project companies, more than 1,700 consulting institutions and more than 10,200 experts. There are more than 2.89 million information indicators and more than 1 million documents, among which, there are nearly 1,200 information indicators and more than 100 documents in the whole life cycle of a single project.

 

“We will use the latest technologies such as big data, Artificial Intelligence, cloud computing and blockchain to comprehensively upgrade and transform the information platform, continuously improve the functions, realize the examination of the project entry into the Database through Artificial Intelligence, make the intelligent performance management system go live, and comprehensively improve the government’s capacity in supervision, service and information disclosure, thus protecting the public’s right to know, participation and supervision,” said Jiao Xiaoping. Since 2014, with reform and innovation as the main task and high-quality development as the goal, the Ministry of Finance of China has standardized and orderly promoted the top-level design, optimized the market environment, and prevented financial risks. The economic and social benefits of PPP reform have gradually emerged, which have been seen in the PPP practice of Hebei Province.

 

Jin Haizeng, member of the Party Leadership Group and deputy director of Hebei Provincial Finance Department, said in his speech at the conference that as of the end of March this year, Hebei had 448 projects included in the Database with a total investment of 693.6 billion yuan. 335 projects reached commercial close in accordance with regulations, with an investment of 536.8 billion yuan. 236 projects entered construction stage, with an investment of 409.9 billion yuan. The PPP development in Hebei Province follows a steady trend: Taihang Mountain Expressway has become the first tourist expressway in China; a number of high-quality PPP projects are in good operation, including the ecological restoration project of Hutuo River in Shijiazhuang City, Shijiazhuang International Exhibition Center, Tangshan Grand Theater, and ecological restoration and infrastructure construction in Tangshan Donghu Area.

 

“In terms of inventory projects, the projects in Hebei’s included in the Database cover the provincial level, 13 cities and 142 counties, a 73% coverage of the county level. The number of commercial closed projects has seen steady increase, private enterprises have been further energized, performance management has been improved, and information has become more open and transparent. In terms of the trend, the PPP model promotes a virtuous cycle of fiscal and economic development, and the “new infrastructure, new urbanization initiatives and major projects” included in the Database account for the largest proportion in the city and county level. It has become a powerful boost to rural revitalization, ecological environmental protection and new-type urbanization, and a powerful driver to promote local economic and social development,” said Mr. Jin.

 

Improve the quality of projects throughout their life cycle through performance management

 

PPP performance management is an important part of financial budget performance management, which is of great significance in comprehensively deepening financial budget management, promoting the quality and efficiency of public services, and strengthening the project life cycle management. At the level of project management, PPP model implements financial performance management through value-for-money evaluation, financial affordability demonstration, risk allocation, life cycle management and other tools, so as to achieve the goal of achieving more with less cost, further optimize the financial budget management, and solve the problems that can hardly be solved by the traditional decentralized governance mode, such as the difficulties in project budget control, quality control and result control.

 

Jiao Xiaoping believes that performance management is the core of PPP whole life cycle management. The performance result works as the final verification, to test whether the project quality is good or not. The government should adhere to the principle of goal oriented and result oriented, strengthen the pay-for-performance mechanism, effectively encourage the social capital to innovate management and optimize operation, and constantly improve the quality and efficiency of public services.

 

“We should strengthen the whole life cycle management of the project, bring performance management and control into the whole process from implementation plan preparation in the preparation stage, contract signing in the procurement stage to the operation management in the implementation stage, and take performance management as an important means to promote the quality and efficiency of public service supply,” said Jiao Xiaoping.

 

Liu Baojun, a three-level researcher of the Inclusive Finance Division of the Finance Department of the Ministry of Finance, said that PPP is a emerging model, and also a good mechanism. It should neither be deified nor demonized, and standardization is for better development. After the standardized management in recent years, the current PPP market is characterized by reduced number, higher quality, sound system, stronger supervision and more transparent information disclosure. “On the whole, market players have gradually returned to rationality and the market environment has been further optimized, laying a solid foundation for the standardized and orderly development of PPP.” According to Liu, Ministry of Finance will continue to improve the PPP system, optimize the development environment and promote the sound development of the PPP.”

 

Then, how to carry out PPP project performance management? How to construct the performance target and indicator system of PPP project?

Li Lei, director of Risk Performance Department of China PPP Center, elaborated the importance of performance management and the connotation of PPP project performance management, introduced the background, purpose, main contents and key issues of the Operational Guidelines for Performance Management of PPP Projects, and came up with the next step of PPP performance management undertaking. She said that PPP performance management should be based on the Guidelines; we need to actively facilitate the construction indicator system for sub industries, promote the application of online system and accelerate the pilot operation of intelligent supervision; carry out frontier research and strengthen the publicity of good practice of PPP performance management; strengthen capacity building and give full play to the demonstration role of advanced provinces.

 

Zhao Shikun, an expert in PPP Expert Database of the Ministry of Finance, focused on the management requirements, mutual relationship, formation approach and ideas of PPP project performance objectives and performance indicators, and explained the construction method of performance indicators combined with practical cases. He pointed out that the performance objectives and indicators are the basis for the whole process of performance management of PPP projects. According to the requirements of the Operational Guidelines for Performance Management of PPP Projects, the performance objectives and indicators need to be formulated in the preparation stage of project identification, and gradually improved in the follow-up review, procurement, contract negotiation and other links, which will be finally specified in the PPP project contract.

 

Zhang Han, another expert in PPP Expert Database, elaborated the preparation of performance evaluation, formulation of performance evaluation work plan, organization and implementation of performance evaluation, compiling of performance evaluation report, material archiving and evaluation results feedback from the perspective of practical operation combined with typical cases. According to Zhang, a large number of projects have entered the implementation stage so far, and performance management will have a great impact on all parties involved in the project. Relevant departments should attach great importance to it and start performance evaluation as soon as possible.

 

Focus should be placed on four aspects

 

According to Jiao Xiaoping, in the next step, the China PPP Center of the Ministry of Finance will thoroughly comply with the relevant requirements of the State Council on further deepening the reform of the budget management system, and promote the PPP reform to a new level by taking the  new development stage into consideration, implementing the new development concept, building a new development pattern, and serving high-quality development.

 

First, we should pay close attention to standardized development. The “entrance” of projects should be well regulated, and the hidden debt risk of local governments should be strictly prevented. We should enhance the dynamic management of the whole life cycle of fiscal expenditure responsibility, refine the management methods incorporated into the local government’s annual budget and medium-term financial planning, strengthen the coordination with the financial debt platform, and forestall the risks caused by breaking the fiscal expenditure responsibility limit. We will use the latest technology to better play the role of PPP Integrated Information Platform in supervision and service, and accelerate the construction of a unified, standardized, transparent and orderly market.

 

Second, comprehensively promote high-quality development. Focusing on the “new infrastructure, new urbanization initiatives and major projects”, projects of pollution prevention and control, carbon neutralization, rural revitalization, regional development and basic public services, efforts should be made to address weaknesses of public services and facilitate the domestic circulation. Give full play to the foundation and important pillar role of finance in national governance, improve the efficiency of capital use, implement the performance management of the whole life cycle, set up the performance objectives and indicator system of PPP projects by industries and fields, guarantee the quality of public service supply, and implement the concept of “expenditure must be effective, while ineffectiveness shall be held accountable”.

 

Third, give full play to the guiding role of budget management. In accordance with the law and regulations, the financial expenditure responsibility of PPP projects will be fully incorporated into the budget management, and the binding effect and coordination function of the budget will be given full play. The government takes the lead in performing the contract in good faith, stabilizing market expectations and creating a sound business environment. At present, a number of PPP projects have entered the period of operation by payment. Those who comply with the law and whose social capital reaches the performance evaluation standard according to the contract must be paid by the implementing agencies according to the contract.

 

Four, support the international cooperation under “Belt and Road Initiative”. We will make good use of resources in both domestic and international resources, encourage the synergy formed jointly by government, enterprises and financial institutions, so as to enhance the overall strength of “going global” and promote the high quality development of “Belt and Road Initiative”. We will promote multi-bilateral cooperation in public services and infrastructure globally, set up a better project reserve, and establish an international PPP project database. We need to summarize the Chinese project cases, strengthen international exchanges and sharing, make contribution to infrastructure interconnection among the “Belt and Road” countries with Chinese solutions, and participate in the formulation of PPP international standards.

 

Source: China Financial and Economic News

It is a major decision made by the CPC Central Committee and the State Council to promote the application of PPP model in the field of public services. It is mentioned in the 14th Five Year Plan and the 2035 Long-term Goal Outline that the Public-Private Partnership (PPP) should be promoted in a standardized and orderly manner. Zou Jiayi, member of the Party group and vice minister of the Ministry of Finance, pointed out during her recent visit to China Public Private Partnership Co., Ltd. that it is necessary to correctly understand the significance of innovation of PPP, and PPP will face new development opportunities in the future. She stressed that we should treat the PPP model dialectically. One the one hand, we should see that PPP is a good model with a great significance of innovation, and we should not deny PPP completely due to the risks; On the other hand, we should also see that PPP is not omnipotent. It is not the fact that PPP model is suitable for all projects, and we need to define the scope of PPP application.


Recently, Jiao Xiaoping, director of the China PPP Center of the Ministry of Finance, said at the 2021 National Conference on Performance Management of PPP Projects for the Financial System that China’s PPP reform has achieved phased progress and outcomes. The current PPP market is characterized by deepening and refining the system reform, rational and stable recovery, powerful regulatory norms and more transparent information disclosure. China has become the largest regional PPP market in the world. The ideas and practices of value-for-money and financial affordability put forward by China’s PPP reform have been absorbed and utilized by the United Nations “PPP Legislation Guide”.

 

China’s PPP reform has achieved phased progress and outcomes

 

After seven years of practice and exploration, PPP model has become one of the important drivers China to stabilize growth, promote reform, adjust structure and benefit people's livelihood. At present, the National PPP Integrated Information Platform Project Management Database has included 10,094 projects with an investment of 15.6 trillion yuan, covering 19 industries, among which 7,286 projects have reached commercial close, with an investment of 11.9 trillion yuan, making the commercial close rate of 72.2%; 4,423 projects entered construction stage, with an investment of 6.8 trillion yuan, and the construction commencement rate was 60.7%.

 

China’s PPP reform practice has also been highly recognized by the international community, with a number of indicators among the top, ranking above the global average. According to the Procuring Infrastructure PPPs released by the World Bank, China’s PPP system and practice are at the top level among 135 countries in the world; in the InfraCompass 2020 by Global Infrastructure Hub, China ranks high in terms of various indicators pertaining infrastructure; the 2020 Technical Report of Digital Infrastructure Investment Platform by the BRICS and the 2020 Fiscal Risks and PPP Report by IMF have drawn on the good practices of PPP system of China, including mechanism, information platform and fiscal expenditure responsibility management.

In addition, the service of information supervision and disclosure of the China PPP Center has been significantly improved, and an Integrated PPP Information Platform has been set up, running vertically through the central government, the province, the city and the county, which horizontally connects the financial departments and industry authorities, so as to realize a supervision pattern described as “vertical to the end and horizontal to the side”. According to reporters, so far, the information platform has more than 3,600 financial users, with more than 6,400 industry authorities/implementing agencies, more than 7,000 private capital, more than 2,200 financial institutions, more than 5,400 project companies, more than 1,700 consulting institutions and more than 10,200 experts. There are more than 2.89 million information indicators and more than 1 million documents, among which, there are nearly 1,200 information indicators and more than 100 documents in the whole life cycle of a single project.

 

“We will use the latest technologies such as big data, Artificial Intelligence, cloud computing and blockchain to comprehensively upgrade and transform the information platform, continuously improve the functions, realize the examination of the project entry into the Database through Artificial Intelligence, make the intelligent performance management system go live, and comprehensively improve the government’s capacity in supervision, service and information disclosure, thus protecting the public’s right to know, participation and supervision,” said Jiao Xiaoping. Since 2014, with reform and innovation as the main task and high-quality development as the goal, the Ministry of Finance of China has standardized and orderly promoted the top-level design, optimized the market environment, and prevented financial risks. The economic and social benefits of PPP reform have gradually emerged, which have been seen in the PPP practice of Hebei Province.

 

Jin Haizeng, member of the Party Leadership Group and deputy director of Hebei Provincial Finance Department, said in his speech at the conference that as of the end of March this year, Hebei had 448 projects included in the Database with a total investment of 693.6 billion yuan. 335 projects reached commercial close in accordance with regulations, with an investment of 536.8 billion yuan. 236 projects entered construction stage, with an investment of 409.9 billion yuan. The PPP development in Hebei Province follows a steady trend: Taihang Mountain Expressway has become the first tourist expressway in China; a number of high-quality PPP projects are in good operation, including the ecological restoration project of Hutuo River in Shijiazhuang City, Shijiazhuang International Exhibition Center, Tangshan Grand Theater, and ecological restoration and infrastructure construction in Tangshan Donghu Area.

 

“In terms of inventory projects, the projects in Hebei’s included in the Database cover the provincial level, 13 cities and 142 counties, a 73% coverage of the county level. The number of commercial closed projects has seen steady increase, private enterprises have been further energized, performance management has been improved, and information has become more open and transparent. In terms of the trend, the PPP model promotes a virtuous cycle of fiscal and economic development, and the “new infrastructure, new urbanization initiatives and major projects” included in the Database account for the largest proportion in the city and county level. It has become a powerful boost to rural revitalization, ecological environmental protection and new-type urbanization, and a powerful driver to promote local economic and social development,” said Mr. Jin.

 

Improve the quality of projects throughout their life cycle through performance management

 

PPP performance management is an important part of financial budget performance management, which is of great significance in comprehensively deepening financial budget management, promoting the quality and efficiency of public services, and strengthening the project life cycle management. At the level of project management, PPP model implements financial performance management through value-for-money evaluation, financial affordability demonstration, risk allocation, life cycle management and other tools, so as to achieve the goal of achieving more with less cost, further optimize the financial budget management, and solve the problems that can hardly be solved by the traditional decentralized governance mode, such as the difficulties in project budget control, quality control and result control.

 

Jiao Xiaoping believes that performance management is the core of PPP whole life cycle management. The performance result works as the final verification, to test whether the project quality is good or not. The government should adhere to the principle of goal oriented and result oriented, strengthen the pay-for-performance mechanism, effectively encourage the social capital to innovate management and optimize operation, and constantly improve the quality and efficiency of public services.

 

“We should strengthen the whole life cycle management of the project, bring performance management and control into the whole process from implementation plan preparation in the preparation stage, contract signing in the procurement stage to the operation management in the implementation stage, and take performance management as an important means to promote the quality and efficiency of public service supply,” said Jiao Xiaoping.

 

Liu Baojun, a three-level researcher of the Inclusive Finance Division of the Finance Department of the Ministry of Finance, said that PPP is a emerging model, and also a good mechanism. It should neither be deified nor demonized, and standardization is for better development. After the standardized management in recent years, the current PPP market is characterized by reduced number, higher quality, sound system, stronger supervision and more transparent information disclosure. “On the whole, market players have gradually returned to rationality and the market environment has been further optimized, laying a solid foundation for the standardized and orderly development of PPP.” According to Liu, Ministry of Finance will continue to improve the PPP system, optimize the development environment and promote the sound development of the PPP.”

 

Then, how to carry out PPP project performance management? How to construct the performance target and indicator system of PPP project?

Li Lei, director of Risk Performance Department of China PPP Center, elaborated the importance of performance management and the connotation of PPP project performance management, introduced the background, purpose, main contents and key issues of the Operational Guidelines for Performance Management of PPP Projects, and came up with the next step of PPP performance management undertaking. She said that PPP performance management should be based on the Guidelines; we need to actively facilitate the construction indicator system for sub industries, promote the application of online system and accelerate the pilot operation of intelligent supervision; carry out frontier research and strengthen the publicity of good practice of PPP performance management; strengthen capacity building and give full play to the demonstration role of advanced provinces.

 

Zhao Shikun, an expert in PPP Expert Database of the Ministry of Finance, focused on the management requirements, mutual relationship, formation approach and ideas of PPP project performance objectives and performance indicators, and explained the construction method of performance indicators combined with practical cases. He pointed out that the performance objectives and indicators are the basis for the whole process of performance management of PPP projects. According to the requirements of the Operational Guidelines for Performance Management of PPP Projects, the performance objectives and indicators need to be formulated in the preparation stage of project identification, and gradually improved in the follow-up review, procurement, contract negotiation and other links, which will be finally specified in the PPP project contract.

 

Zhang Han, another expert in PPP Expert Database, elaborated the preparation of performance evaluation, formulation of performance evaluation work plan, organization and implementation of performance evaluation, compiling of performance evaluation report, material archiving and evaluation results feedback from the perspective of practical operation combined with typical cases. According to Zhang, a large number of projects have entered the implementation stage so far, and performance management will have a great impact on all parties involved in the project. Relevant departments should attach great importance to it and start performance evaluation as soon as possible.

 

Focus should be placed on four aspects

 

According to Jiao Xiaoping, in the next step, the China PPP Center of the Ministry of Finance will thoroughly comply with the relevant requirements of the State Council on further deepening the reform of the budget management system, and promote the PPP reform to a new level by taking the  new development stage into consideration, implementing the new development concept, building a new development pattern, and serving high-quality development.

 

First, we should pay close attention to standardized development. The “entrance” of projects should be well regulated, and the hidden debt risk of local governments should be strictly prevented. We should enhance the dynamic management of the whole life cycle of fiscal expenditure responsibility, refine the management methods incorporated into the local government’s annual budget and medium-term financial planning, strengthen the coordination with the financial debt platform, and forestall the risks caused by breaking the fiscal expenditure responsibility limit. We will use the latest technology to better play the role of PPP Integrated Information Platform in supervision and service, and accelerate the construction of a unified, standardized, transparent and orderly market.

 

Second, comprehensively promote high-quality development. Focusing on the “new infrastructure, new urbanization initiatives and major projects”, projects of pollution prevention and control, carbon neutralization, rural revitalization, regional development and basic public services, efforts should be made to address weaknesses of public services and facilitate the domestic circulation. Give full play to the foundation and important pillar role of finance in national governance, improve the efficiency of capital use, implement the performance management of the whole life cycle, set up the performance objectives and indicator system of PPP projects by industries and fields, guarantee the quality of public service supply, and implement the concept of “expenditure must be effective, while ineffectiveness shall be held accountable”.

 

Third, give full play to the guiding role of budget management. In accordance with the law and regulations, the financial expenditure responsibility of PPP projects will be fully incorporated into the budget management, and the binding effect and coordination function of the budget will be given full play. The government takes the lead in performing the contract in good faith, stabilizing market expectations and creating a sound business environment. At present, a number of PPP projects have entered the period of operation by payment. Those who comply with the law and whose social capital reaches the performance evaluation standard according to the contract must be paid by the implementing agencies according to the contract.

 

Four, support the international cooperation under “Belt and Road Initiative”. We will make good use of resources in both domestic and international resources, encourage the synergy formed jointly by government, enterprises and financial institutions, so as to enhance the overall strength of “going global” and promote the high quality development of “Belt and Road Initiative”. We will promote multi-bilateral cooperation in public services and infrastructure globally, set up a better project reserve, and establish an international PPP project database. We need to summarize the Chinese project cases, strengthen international exchanges and sharing, make contribution to infrastructure interconnection among the “Belt and Road” countries with Chinese solutions, and participate in the formulation of PPP international standards.

 

Source: China Financial and Economic News

It is a major decision made by the CPC Central Committee and the State Council to promote the application of PPP model in the field of public services. It is mentioned in the 14th Five Year Plan and the 2035 Long-term Goal Outline that the Public-Private Partnership (PPP) should be promoted in a standardized and orderly manner. Zou Jiayi, member of the Party group and vice minister of the Ministry of Finance, pointed out during her recent visit to China Public Private Partnership Co., Ltd. that it is necessary to correctly understand the significance of innovation of PPP, and PPP will face new development opportunities in the future. She stressed that we should treat the PPP model dialectically. One the one hand, we should see that PPP is a good model with a great significance of innovation, and we should not deny PPP completely due to the risks; On the other hand, we should also see that PPP is not omnipotent. It is not the fact that PPP model is suitable for all projects, and we need to define the scope of PPP application.


Recently, Jiao Xiaoping, director of the China PPP Center of the Ministry of Finance, said at the 2021 National Conference on Performance Management of PPP Projects for the Financial System that China’s PPP reform has achieved phased progress and outcomes. The current PPP market is characterized by deepening and refining the system reform, rational and stable recovery, powerful regulatory norms and more transparent information disclosure. China has become the largest regional PPP market in the world. The ideas and practices of value-for-money and financial affordability put forward by China’s PPP reform have been absorbed and utilized by the United Nations “PPP Legislation Guide”.

 

China’s PPP reform has achieved phased progress and outcomes

 

After seven years of practice and exploration, PPP model has become one of the important drivers China to stabilize growth, promote reform, adjust structure and benefit people's livelihood. At present, the National PPP Integrated Information Platform Project Management Database has included 10,094 projects with an investment of 15.6 trillion yuan, covering 19 industries, among which 7,286 projects have reached commercial close, with an investment of 11.9 trillion yuan, making the commercial close rate of 72.2%; 4,423 projects entered construction stage, with an investment of 6.8 trillion yuan, and the construction commencement rate was 60.7%.

 

China’s PPP reform practice has also been highly recognized by the international community, with a number of indicators among the top, ranking above the global average. According to the Procuring Infrastructure PPPs released by the World Bank, China’s PPP system and practice are at the top level among 135 countries in the world; in the InfraCompass 2020 by Global Infrastructure Hub, China ranks high in terms of various indicators pertaining infrastructure; the 2020 Technical Report of Digital Infrastructure Investment Platform by the BRICS and the 2020 Fiscal Risks and PPP Report by IMF have drawn on the good practices of PPP system of China, including mechanism, information platform and fiscal expenditure responsibility management.

In addition, the service of information supervision and disclosure of the China PPP Center has been significantly improved, and an Integrated PPP Information Platform has been set up, running vertically through the central government, the province, the city and the county, which horizontally connects the financial departments and industry authorities, so as to realize a supervision pattern described as “vertical to the end and horizontal to the side”. According to reporters, so far, the information platform has more than 3,600 financial users, with more than 6,400 industry authorities/implementing agencies, more than 7,000 private capital, more than 2,200 financial institutions, more than 5,400 project companies, more than 1,700 consulting institutions and more than 10,200 experts. There are more than 2.89 million information indicators and more than 1 million documents, among which, there are nearly 1,200 information indicators and more than 100 documents in the whole life cycle of a single project.

 

“We will use the latest technologies such as big data, Artificial Intelligence, cloud computing and blockchain to comprehensively upgrade and transform the information platform, continuously improve the functions, realize the examination of the project entry into the Database through Artificial Intelligence, make the intelligent performance management system go live, and comprehensively improve the government’s capacity in supervision, service and information disclosure, thus protecting the public’s right to know, participation and supervision,” said Jiao Xiaoping. Since 2014, with reform and innovation as the main task and high-quality development as the goal, the Ministry of Finance of China has standardized and orderly promoted the top-level design, optimized the market environment, and prevented financial risks. The economic and social benefits of PPP reform have gradually emerged, which have been seen in the PPP practice of Hebei Province.

 

Jin Haizeng, member of the Party Leadership Group and deputy director of Hebei Provincial Finance Department, said in his speech at the conference that as of the end of March this year, Hebei had 448 projects included in the Database with a total investment of 693.6 billion yuan. 335 projects reached commercial close in accordance with regulations, with an investment of 536.8 billion yuan. 236 projects entered construction stage, with an investment of 409.9 billion yuan. The PPP development in Hebei Province follows a steady trend: Taihang Mountain Expressway has become the first tourist expressway in China; a number of high-quality PPP projects are in good operation, including the ecological restoration project of Hutuo River in Shijiazhuang City, Shijiazhuang International Exhibition Center, Tangshan Grand Theater, and ecological restoration and infrastructure construction in Tangshan Donghu Area.

 

“In terms of inventory projects, the projects in Hebei’s included in the Database cover the provincial level, 13 cities and 142 counties, a 73% coverage of the county level. The number of commercial closed projects has seen steady increase, private enterprises have been further energized, performance management has been improved, and information has become more open and transparent. In terms of the trend, the PPP model promotes a virtuous cycle of fiscal and economic development, and the “new infrastructure, new urbanization initiatives and major projects” included in the Database account for the largest proportion in the city and county level. It has become a powerful boost to rural revitalization, ecological environmental protection and new-type urbanization, and a powerful driver to promote local economic and social development,” said Mr. Jin.

 

Improve the quality of projects throughout their life cycle through performance management

 

PPP performance management is an important part of financial budget performance management, which is of great significance in comprehensively deepening financial budget management, promoting the quality and efficiency of public services, and strengthening the project life cycle management. At the level of project management, PPP model implements financial performance management through value-for-money evaluation, financial affordability demonstration, risk allocation, life cycle management and other tools, so as to achieve the goal of achieving more with less cost, further optimize the financial budget management, and solve the problems that can hardly be solved by the traditional decentralized governance mode, such as the difficulties in project budget control, quality control and result control.

 

Jiao Xiaoping believes that performance management is the core of PPP whole life cycle management. The performance result works as the final verification, to test whether the project quality is good or not. The government should adhere to the principle of goal oriented and result oriented, strengthen the pay-for-performance mechanism, effectively encourage the social capital to innovate management and optimize operation, and constantly improve the quality and efficiency of public services.

 

“We should strengthen the whole life cycle management of the project, bring performance management and control into the whole process from implementation plan preparation in the preparation stage, contract signing in the procurement stage to the operation management in the implementation stage, and take performance management as an important means to promote the quality and efficiency of public service supply,” said Jiao Xiaoping.

 

Liu Baojun, a three-level researcher of the Inclusive Finance Division of the Finance Department of the Ministry of Finance, said that PPP is a emerging model, and also a good mechanism. It should neither be deified nor demonized, and standardization is for better development. After the standardized management in recent years, the current PPP market is characterized by reduced number, higher quality, sound system, stronger supervision and more transparent information disclosure. “On the whole, market players have gradually returned to rationality and the market environment has been further optimized, laying a solid foundation for the standardized and orderly development of PPP.” According to Liu, Ministry of Finance will continue to improve the PPP system, optimize the development environment and promote the sound development of the PPP.”

 

Then, how to carry out PPP project performance management? How to construct the performance target and indicator system of PPP project?

Li Lei, director of Risk Performance Department of China PPP Center, elaborated the importance of performance management and the connotation of PPP project performance management, introduced the background, purpose, main contents and key issues of the Operational Guidelines for Performance Management of PPP Projects, and came up with the next step of PPP performance management undertaking. She said that PPP performance management should be based on the Guidelines; we need to actively facilitate the construction indicator system for sub industries, promote the application of online system and accelerate the pilot operation of intelligent supervision; carry out frontier research and strengthen the publicity of good practice of PPP performance management; strengthen capacity building and give full play to the demonstration role of advanced provinces.

 

Zhao Shikun, an expert in PPP Expert Database of the Ministry of Finance, focused on the management requirements, mutual relationship, formation approach and ideas of PPP project performance objectives and performance indicators, and explained the construction method of performance indicators combined with practical cases. He pointed out that the performance objectives and indicators are the basis for the whole process of performance management of PPP projects. According to the requirements of the Operational Guidelines for Performance Management of PPP Projects, the performance objectives and indicators need to be formulated in the preparation stage of project identification, and gradually improved in the follow-up review, procurement, contract negotiation and other links, which will be finally specified in the PPP project contract.

 

Zhang Han, another expert in PPP Expert Database, elaborated the preparation of performance evaluation, formulation of performance evaluation work plan, organization and implementation of performance evaluation, compiling of performance evaluation report, material archiving and evaluation results feedback from the perspective of practical operation combined with typical cases. According to Zhang, a large number of projects have entered the implementation stage so far, and performance management will have a great impact on all parties involved in the project. Relevant departments should attach great importance to it and start performance evaluation as soon as possible.

 

Focus should be placed on four aspects

 

According to Jiao Xiaoping, in the next step, the China PPP Center of the Ministry of Finance will thoroughly comply with the relevant requirements of the State Council on further deepening the reform of the budget management system, and promote the PPP reform to a new level by taking the  new development stage into consideration, implementing the new development concept, building a new development pattern, and serving high-quality development.

 

First, we should pay close attention to standardized development. The “entrance” of projects should be well regulated, and the hidden debt risk of local governments should be strictly prevented. We should enhance the dynamic management of the whole life cycle of fiscal expenditure responsibility, refine the management methods incorporated into the local government’s annual budget and medium-term financial planning, strengthen the coordination with the financial debt platform, and forestall the risks caused by breaking the fiscal expenditure responsibility limit. We will use the latest technology to better play the role of PPP Integrated Information Platform in supervision and service, and accelerate the construction of a unified, standardized, transparent and orderly market.

 

Second, comprehensively promote high-quality development. Focusing on the “new infrastructure, new urbanization initiatives and major projects”, projects of pollution prevention and control, carbon neutralization, rural revitalization, regional development and basic public services, efforts should be made to address weaknesses of public services and facilitate the domestic circulation. Give full play to the foundation and important pillar role of finance in national governance, improve the efficiency of capital use, implement the performance management of the whole life cycle, set up the performance objectives and indicator system of PPP projects by industries and fields, guarantee the quality of public service supply, and implement the concept of “expenditure must be effective, while ineffectiveness shall be held accountable”.

 

Third, give full play to the guiding role of budget management. In accordance with the law and regulations, the financial expenditure responsibility of PPP projects will be fully incorporated into the budget management, and the binding effect and coordination function of the budget will be given full play. The government takes the lead in performing the contract in good faith, stabilizing market expectations and creating a sound business environment. At present, a number of PPP projects have entered the period of operation by payment. Those who comply with the law and whose social capital reaches the performance evaluation standard according to the contract must be paid by the implementing agencies according to the contract.

 

Four, support the international cooperation under “Belt and Road Initiative”. We will make good use of resources in both domestic and international resources, encourage the synergy formed jointly by government, enterprises and financial institutions, so as to enhance the overall strength of “going global” and promote the high quality development of “Belt and Road Initiative”. We will promote multi-bilateral cooperation in public services and infrastructure globally, set up a better project reserve, and establish an international PPP project database. We need to summarize the Chinese project cases, strengthen international exchanges and sharing, make contribution to infrastructure interconnection among the “Belt and Road” countries with Chinese solutions, and participate in the formulation of PPP international standards.

 

Source: China Financial and Economic News

It is a major decision made by the CPC Central Committee and the State Council to promote the application of PPP model in the field of public services. It is mentioned in the 14th Five Year Plan and the 2035 Long-term Goal Outline that the Public-Private Partnership (PPP) should be promoted in a standardized and orderly manner. Zou Jiayi, member of the Party group and vice minister of the Ministry of Finance, pointed out during her recent visit to China Public Private Partnership Co., Ltd. that it is necessary to correctly understand the significance of innovation of PPP, and PPP will face new development opportunities in the future. She stressed that we should treat the PPP model dialectically. One the one hand, we should see that PPP is a good model with a great significance of innovation, and we should not deny PPP completely due to the risks; On the other hand, we should also see that PPP is not omnipotent. It is not the fact that PPP model is suitable for all projects, and we need to define the scope of PPP application.


Recently, Jiao Xiaoping, director of the China PPP Center of the Ministry of Finance, said at the 2021 National Conference on Performance Management of PPP Projects for the Financial System that China’s PPP reform has achieved phased progress and outcomes. The current PPP market is characterized by deepening and refining the system reform, rational and stable recovery, powerful regulatory norms and more transparent information disclosure. China has become the largest regional PPP market in the world. The ideas and practices of value-for-money and financial affordability put forward by China’s PPP reform have been absorbed and utilized by the United Nations “PPP Legislation Guide”.

 

China’s PPP reform has achieved phased progress and outcomes

 

After seven years of practice and exploration, PPP model has become one of the important drivers China to stabilize growth, promote reform, adjust structure and benefit people's livelihood. At present, the National PPP Integrated Information Platform Project Management Database has included 10,094 projects with an investment of 15.6 trillion yuan, covering 19 industries, among which 7,286 projects have reached commercial close, with an investment of 11.9 trillion yuan, making the commercial close rate of 72.2%; 4,423 projects entered construction stage, with an investment of 6.8 trillion yuan, and the construction commencement rate was 60.7%.

 

China’s PPP reform practice has also been highly recognized by the international community, with a number of indicators among the top, ranking above the global average. According to the Procuring Infrastructure PPPs released by the World Bank, China’s PPP system and practice are at the top level among 135 countries in the world; in the InfraCompass 2020 by Global Infrastructure Hub, China ranks high in terms of various indicators pertaining infrastructure; the 2020 Technical Report of Digital Infrastructure Investment Platform by the BRICS and the 2020 Fiscal Risks and PPP Report by IMF have drawn on the good practices of PPP system of China, including mechanism, information platform and fiscal expenditure responsibility management.

In addition, the service of information supervision and disclosure of the China PPP Center has been significantly improved, and an Integrated PPP Information Platform has been set up, running vertically through the central government, the province, the city and the county, which horizontally connects the financial departments and industry authorities, so as to realize a supervision pattern described as “vertical to the end and horizontal to the side”. According to reporters, so far, the information platform has more than 3,600 financial users, with more than 6,400 industry authorities/implementing agencies, more than 7,000 private capital, more than 2,200 financial institutions, more than 5,400 project companies, more than 1,700 consulting institutions and more than 10,200 experts. There are more than 2.89 million information indicators and more than 1 million documents, among which, there are nearly 1,200 information indicators and more than 100 documents in the whole life cycle of a single project.

 

“We will use the latest technologies such as big data, Artificial Intelligence, cloud computing and blockchain to comprehensively upgrade and transform the information platform, continuously improve the functions, realize the examination of the project entry into the Database through Artificial Intelligence, make the intelligent performance management system go live, and comprehensively improve the government’s capacity in supervision, service and information disclosure, thus protecting the public’s right to know, participation and supervision,” said Jiao Xiaoping. Since 2014, with reform and innovation as the main task and high-quality development as the goal, the Ministry of Finance of China has standardized and orderly promoted the top-level design, optimized the market environment, and prevented financial risks. The economic and social benefits of PPP reform have gradually emerged, which have been seen in the PPP practice of Hebei Province.

 

Jin Haizeng, member of the Party Leadership Group and deputy director of Hebei Provincial Finance Department, said in his speech at the conference that as of the end of March this year, Hebei had 448 projects included in the Database with a total investment of 693.6 billion yuan. 335 projects reached commercial close in accordance with regulations, with an investment of 536.8 billion yuan. 236 projects entered construction stage, with an investment of 409.9 billion yuan. The PPP development in Hebei Province follows a steady trend: Taihang Mountain Expressway has become the first tourist expressway in China; a number of high-quality PPP projects are in good operation, including the ecological restoration project of Hutuo River in Shijiazhuang City, Shijiazhuang International Exhibition Center, Tangshan Grand Theater, and ecological restoration and infrastructure construction in Tangshan Donghu Area.

 

“In terms of inventory projects, the projects in Hebei’s included in the Database cover the provincial level, 13 cities and 142 counties, a 73% coverage of the county level. The number of commercial closed projects has seen steady increase, private enterprises have been further energized, performance management has been improved, and information has become more open and transparent. In terms of the trend, the PPP model promotes a virtuous cycle of fiscal and economic development, and the “new infrastructure, new urbanization initiatives and major projects” included in the Database account for the largest proportion in the city and county level. It has become a powerful boost to rural revitalization, ecological environmental protection and new-type urbanization, and a powerful driver to promote local economic and social development,” said Mr. Jin.

 

Improve the quality of projects throughout their life cycle through performance management

 

PPP performance management is an important part of financial budget performance management, which is of great significance in comprehensively deepening financial budget management, promoting the quality and efficiency of public services, and strengthening the project life cycle management. At the level of project management, PPP model implements financial performance management through value-for-money evaluation, financial affordability demonstration, risk allocation, life cycle management and other tools, so as to achieve the goal of achieving more with less cost, further optimize the financial budget management, and solve the problems that can hardly be solved by the traditional decentralized governance mode, such as the difficulties in project budget control, quality control and result control.

 

Jiao Xiaoping believes that performance management is the core of PPP whole life cycle management. The performance result works as the final verification, to test whether the project quality is good or not. The government should adhere to the principle of goal oriented and result oriented, strengthen the pay-for-performance mechanism, effectively encourage the social capital to innovate management and optimize operation, and constantly improve the quality and efficiency of public services.

 

“We should strengthen the whole life cycle management of the project, bring performance management and control into the whole process from implementation plan preparation in the preparation stage, contract signing in the procurement stage to the operation management in the implementation stage, and take performance management as an important means to promote the quality and efficiency of public service supply,” said Jiao Xiaoping.

 

Liu Baojun, a three-level researcher of the Inclusive Finance Division of the Finance Department of the Ministry of Finance, said that PPP is a emerging model, and also a good mechanism. It should neither be deified nor demonized, and standardization is for better development. After the standardized management in recent years, the current PPP market is characterized by reduced number, higher quality, sound system, stronger supervision and more transparent information disclosure. “On the whole, market players have gradually returned to rationality and the market environment has been further optimized, laying a solid foundation for the standardized and orderly development of PPP.” According to Liu, Ministry of Finance will continue to improve the PPP system, optimize the development environment and promote the sound development of the PPP.”

 

Then, how to carry out PPP project performance management? How to construct the performance target and indicator system of PPP project?

Li Lei, director of Risk Performance Department of China PPP Center, elaborated the importance of performance management and the connotation of PPP project performance management, introduced the background, purpose, main contents and key issues of the Operational Guidelines for Performance Management of PPP Projects, and came up with the next step of PPP performance management undertaking. She said that PPP performance management should be based on the Guidelines; we need to actively facilitate the construction indicator system for sub industries, promote the application of online system and accelerate the pilot operation of intelligent supervision; carry out frontier research and strengthen the publicity of good practice of PPP performance management; strengthen capacity building and give full play to the demonstration role of advanced provinces.

 

Zhao Shikun, an expert in PPP Expert Database of the Ministry of Finance, focused on the management requirements, mutual relationship, formation approach and ideas of PPP project performance objectives and performance indicators, and explained the construction method of performance indicators combined with practical cases. He pointed out that the performance objectives and indicators are the basis for the whole process of performance management of PPP projects. According to the requirements of the Operational Guidelines for Performance Management of PPP Projects, the performance objectives and indicators need to be formulated in the preparation stage of project identification, and gradually improved in the follow-up review, procurement, contract negotiation and other links, which will be finally specified in the PPP project contract.

 

Zhang Han, another expert in PPP Expert Database, elaborated the preparation of performance evaluation, formulation of performance evaluation work plan, organization and implementation of performance evaluation, compiling of performance evaluation report, material archiving and evaluation results feedback from the perspective of practical operation combined with typical cases. According to Zhang, a large number of projects have entered the implementation stage so far, and performance management will have a great impact on all parties involved in the project. Relevant departments should attach great importance to it and start performance evaluation as soon as possible.

 

Focus should be placed on four aspects

 

According to Jiao Xiaoping, in the next step, the China PPP Center of the Ministry of Finance will thoroughly comply with the relevant requirements of the State Council on further deepening the reform of the budget management system, and promote the PPP reform to a new level by taking the  new development stage into consideration, implementing the new development concept, building a new development pattern, and serving high-quality development.

 

First, we should pay close attention to standardized development. The “entrance” of projects should be well regulated, and the hidden debt risk of local governments should be strictly prevented. We should enhance the dynamic management of the whole life cycle of fiscal expenditure responsibility, refine the management methods incorporated into the local government’s annual budget and medium-term financial planning, strengthen the coordination with the financial debt platform, and forestall the risks caused by breaking the fiscal expenditure responsibility limit. We will use the latest technology to better play the role of PPP Integrated Information Platform in supervision and service, and accelerate the construction of a unified, standardized, transparent and orderly market.

 

Second, comprehensively promote high-quality development. Focusing on the “new infrastructure, new urbanization initiatives and major projects”, projects of pollution prevention and control, carbon neutralization, rural revitalization, regional development and basic public services, efforts should be made to address weaknesses of public services and facilitate the domestic circulation. Give full play to the foundation and important pillar role of finance in national governance, improve the efficiency of capital use, implement the performance management of the whole life cycle, set up the performance objectives and indicator system of PPP projects by industries and fields, guarantee the quality of public service supply, and implement the concept of “expenditure must be effective, while ineffectiveness shall be held accountable”.

 

Third, give full play to the guiding role of budget management. In accordance with the law and regulations, the financial expenditure responsibility of PPP projects will be fully incorporated into the budget management, and the binding effect and coordination function of the budget will be given full play. The government takes the lead in performing the contract in good faith, stabilizing market expectations and creating a sound business environment. At present, a number of PPP projects have entered the period of operation by payment. Those who comply with the law and whose social capital reaches the performance evaluation standard according to the contract must be paid by the implementing agencies according to the contract.

 

Four, support the international cooperation under “Belt and Road Initiative”. We will make good use of resources in both domestic and international resources, encourage the synergy formed jointly by government, enterprises and financial institutions, so as to enhance the overall strength of “going global” and promote the high quality development of “Belt and Road Initiative”. We will promote multi-bilateral cooperation in public services and infrastructure globally, set up a better project reserve, and establish an international PPP project database. We need to summarize the Chinese project cases, strengthen international exchanges and sharing, make contribution to infrastructure interconnection among the “Belt and Road” countries with Chinese solutions, and participate in the formulation of PPP international standards.

 

Source: China Financial and Economic News

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