By Trevor Manners, John Marker and Emily Maclean, Deloitte

The Public-Private Partnership landscape is evolving, presenting opportunities across various sectors, including education, justice and transport. 

The New Zealand Government has recently introduced significant updates to the public-private partnership (PPP) framework, aiming to attract more private sector capital, expertise and innovation by addressing key challenges that have historically impeded PPP projects. These changes respond to market feedback, agency input, and end-user demands, with the goal of delivering better outcomes from future PPPs.

The government’s primary objectives include integrating new policy settings with fiscal strategy and national infrastructure priorities, revising the PPP model and contractual agreements to accommodate a broader range of projects, and enhancing procurement processes to foster collaboration and reduce project risks. For the private sector, these updates present substantial opportunities for success, provided they focus on avoiding past mistakes and critically evaluate the robustness of the new framework, recognising that its existence alone does not guarantee flawless execution.

Key shifts and changes to New Zealand’s PPP framework

The proposed changes to Aotearoa New Zealand’s PPP framework focus on several critical improvements to optimise project outcomes and stakeholder engagement. A key element is a renewed focus on the approach to risk transfer, and ensuring that risks are assigned to the parties best able to manage them, thus leveraging private sector expertise and enhancing efficiency. The private sector must also learn from past PPPs, identifying where issues arose and developing informed, detailed strategies for identifying and responding to risk allocation. For example, if a company cannot conduct geotechnical assessments itself, then it should not assume that risk. Consortiums should dedicate more time to evaluating technical risks, forming robust positions based on both local and international lessons learnt regarding optimal risk allocation.

The framework also recognises the high costs associated with bidding and introduces measures to mitigate these expenses by streamlining the process and providing clearer guidelines. This should lower financial barriers for participants. Given the possibility of recovering verified bid costs, the private sector should invest appropriately in understanding its risks and conducting the necessary due diligence to generate strong, well-considered bids.

Adjustments to affordability thresholds aim to maintain financial viability and competitiveness, ensuring that projects deliver value without compromising quality. It is important that these thresholds are not only set, but are also periodically updated at predetermined milestones throughout the procurement process, as required. This will help to ensure project deliverability against an appropriate affordability threshold. Bidders should engage in robust, open dialogue with Crown agencies about affordability thresholds and project viability, including what is included and excluded, and how these factors align with risk. This prevents bids on financially unviable projects.

Emphasising Crown resourcing and capability, the framework seeks to ensure that government agencies are adequately equipped throughout the project life cycle through investments in training and development. This strengthens their capacity to manage and oversee PPP projects effectively. Bidders should confidently conduct due diligence on the client, their advisers and teams to appropriately assess risks tied to government decision‑making before responding. Verifying that the client has a robust decision-making structure and controls ensures greater confidence in a reliable partnership for the duration of the contract.

Additionally, improvements in claims and dispute resolution mechanisms, coupled with enhancements in the collaborative tendering process, establish clear procedures by defining roles, responsibilities and timelines for addressing disputes. This clarity reduces ambiguity and accelerates issue resolution. Promoting early engagement allows stakeholders to identify and mitigate potential problems before they escalate, fostering a proactive approach. Addressing past concerns about insufficient interaction and probity processes ensures that all parties are adequately informed and involved, enhancing transparency and trust. This holistic approach strengthens the overall framework, making project execution more efficient and cooperative.

The framework briefly mentions the possibility of separately competing debt financing, which introduces several risk considerations for the private sector. Early bank-initiated due diligence provides reassurance for all stakeholders, including the Crown, by allowing banks to thoroughly assess project risks, structures and agreements from the outset. This early engagement helps to identify and address potential issues before they escalate, ensuring smoother progression through later stages; however, conducting all bank due diligence activities at later stages can create significant overhead and logistical challenges. The compressed timeline may lead to rushed assessments and an increased workload for all parties involved, heightening pressure to resolve issues swiftly, and potentially compromising the thoroughness and quality of the due diligence process.

Additionally, there is a risk that key project agreements might need to be revisited or renegotiated as bank due diligence outcomes emerge, which introduces uncertainty and potential delays. Such revisions may affect the project’s overall risk profile and financial structuring, requiring careful management to maintain project integrity. Furthermore, some banks or financiers might not see value in participating at the suggested stage due to perceived deal economics around lead advisory roles. If key financiers do opt out, the competitive landscape could be adversely affected, reducing the number of potential lenders and possibly leading to less‑competitive financing terms.

The evolution of New Zealand’s PPP framework signals a promising future for infrastructure development across key sectors. By addressing previous challenges and introducing strategic improvements, the government is seeking to create a more conducive environment for collaboration between the public and private sectors. These changes not only enhance the efficiency and transparency of project delivery, but also encourage innovation and investment from private partners.

For the private sector, these changes offer valuable opportunities to apply expertise and innovation within a supportive framework. Success now depends on effective risk management, thorough due diligence and proactive collaboration with government agencies.