ABSTRACT
However, very little attention is given to the fiscal sustainability of 3Ps from the private section’s opinion, even within the subject of ‘risk management and fiscal evaluation.’ Successful 3Ps must be sustainable from the aspect of the different stakeholders involved in this process. This means that 3Ps generate social value. This value is shared with the different players through a correct alignment – to be addressed not only by structures and contracts but also by administration procedure and practices. The public sector utilizes an evaluation that we call ‘value for money’ to determine if the 3Ps strategy is better suited for a particular project than more traditional alternatives, like engineering procurement construction (EPC) contracting. In other words, the private sector is mainly considered as a financial return suggested by the project. Concerning the analysis of the fiscal sustainability of a 3Ps, there is a broad usage of strategies that mix the return and the risk of a particular project to determine if it makes sense as an investment project. One such indicator is the internal rate of return (IRR), an indicator utilized in capital budgeting to approximate and compare the profitability of potential investment projects. It can be considered a discount rate that makes the net present value (NPV) of all cash flows from an investment equal to zero.
