Key PPP Terminology: A Glossary for Practitioners

PPPs come with a language of their own. Terms such as SPV, DBFOM, availability payment, financial close and value for money appear in every PPP document, and CP3P candidates need to use them precisely. This PPP glossary explains the key PPP terminology in plain language, in line with the 2026 APMG PPP Certification Guide.

Terms are grouped by theme so you can use the glossary as a reference while reading contracts, policies or exam material.

Core concepts

Public-private partnership (PPP). A long-term contract between a public party and a private party to provide a public asset or service, in which the private party bears significant risk and management responsibility and is paid according to performance. See what a PPP is.

Private finance PPP. A PPP in which the private party also provides a significant portion of the finance at its own risk. The main focus of the PPP Guide.

Infrastructure PPP. A PPP for developing new infrastructure or significantly upgrading existing infrastructure.

Service PPP. A PPP in which the private partner manages existing infrastructure or provides a public service, without major new construction.

Greenfield / brownfield. Greenfield projects create new assets; brownfield projects upgrade or take over existing assets.

Traditional (conventional) procurement. Any public contract for works or services that is not a PPP, typically a build-only or design-build contract funded from the budget.

Private Participation in Infrastructure (PPI). Any form of private investment in or management of infrastructure. Broader than PPP.

Parties

Procuring authority. The public body that tenders, awards and usually signs the PPP contract. Also called the contracting authority, grantor or public partner.

Private partner. The private sector counterparty to the PPP contract, usually a project company.

Sponsor. A company that develops the project and invests equity in the project company, typically a construction firm, operator or investor.

Special purpose vehicle (SPV). A company created solely to sign and deliver the PPP contract. Also called the project company. Not strictly required for a PPP, but used in almost all private finance PPPs.

Consortium. A group of companies that bid together for a PPP and, if successful, form the SPV.

EPC contractor. The engineering, procurement and construction contractor to which the SPV subcontracts design and construction.

O&M contractor. The operations and maintenance contractor to which the SPV subcontracts operation and maintenance.

Lenders. Banks, bond investors or development finance institutions that provide debt to the SPV.

Independent engineer. A technical expert, often appointed jointly, who certifies construction progress and completion.

Contract types

DB / B. Design-Build or Build-only. Traditional procurement; not a PPP.

DBF. Design-Build-Finance. The contractor pre-finances construction against deferred fixed payments. Not regarded as a PPP by the Guide.

DBOM. Design-Build-Operate-Maintain. Bundles construction and maintenance but is publicly financed. A PPP in the broad sense.

DBFOM / DBFM. Design-Build-Finance-Operate-Maintain (DBFM without operations). The typical private finance PPP.

BOT, BOOT, BTO, BOO. Build-Operate-Transfer, Build-Own-Operate-Transfer, Build-Transfer-Operate, Build-Own-Operate. Variants that also describe asset ownership during and after the contract.

Concession. Usually a user-pays PPP in which the private partner collects charges from users. In civil law countries the term can cover a wider range of contracts.

Lease / affermage. Contracts in which a private operator runs an existing asset and collects revenue, typically with limited investment obligations.

PFI (Private Finance Initiative). The UK's former government-pays PPP programme; the name is still used for availability-based PPPs.

Institutional PPP. A PPP in which government co-owns the project company with private investors.

Payment and revenue

User-pays PPP. A PPP funded mainly by charges paid by users (tolls, tariffs, fares).

Government-pays PPP. A PPP funded mainly by payments from government.

Availability payment. A regular government payment for keeping the asset available and performing to the required standard.

Unitary charge. The single periodic payment made by government in an availability-based PPP, before deductions.

Deductions. Reductions in payment when the asset is unavailable or fails performance standards.

Shadow toll. A payment by government to the private partner per user, instead of users paying a toll.

Hybrid PPP. A PPP that combines user charges with government payments or subsidies.

Viability gap funding. A public capital contribution that makes an economically worthwhile but financially unviable project bankable.

Risk and performance

Risk allocation. The assignment of each project risk to the party best able to manage it.

Risk matrix. A table listing project risks and how each is allocated.

Output specification. A requirement that defines what must be achieved, not how. See output vs input specifications.

KPI (key performance indicator). A measurable indicator used to monitor performance.

Force majeure. Extraordinary events beyond either party's control that may relieve obligations.

Handback. The return of the asset to government at the end of the contract in a specified condition.

Finance

Financing vs funding. Financing is the upfront money to build the asset; funding is the long-term source of money to pay for it (users or taxpayers).

Project finance. Finance raised against a project's future cash flows rather than the sponsors' balance sheets. See project finance basics.

Equity. Money invested by shareholders, first to absorb losses.

Senior debt. Loans or bonds that are repaid first from project cash flows.

DSCR (debt service cover ratio). Cash available for debt service divided by debt service due in a period. A key lender metric.

Financial close. The point at which all financing agreements are signed and funds become available.

Bankability. Whether a project can attract finance on acceptable terms.

Appraisal and governance

Value for money (VfM). The optimal combination of whole-life cost and quality to meet the user's requirement. The core test for a PPP.

Public sector comparator (PSC). A benchmark estimate of the cost of delivering the project through traditional procurement.

Affordability. Whether government can pay its PPP commitments within its budget constraints.

Contingent liabilities. Government obligations that arise only if certain events occur, such as guarantees or termination payments.

PPP framework. The laws, policies, institutions and processes that govern PPPs in a jurisdiction.

PPP unit. A specialised government body that supports, promotes or oversees PPPs.

Unsolicited proposal. A PPP project proposed by a private company rather than identified by government.

This article is part of our PPP Fundamentals: The Complete Guide to Public-Private Partnerships.

Key takeaways

• PPP terminology varies between countries, so always check how a document defines its terms.
• Contract acronyms (DBFOM, BOT, DBOM) describe the bundle of responsibilities and sometimes ownership.
• Payment terms (availability payment, unitary charge, deductions) define how performance is rewarded.
• Finance terms (SPV, project finance, DSCR) are essential for understanding bankability.
• Precise use of these terms is expected in the CP3P exams.

Go further

Want a structured grounding in these concepts? The CP3P Foundation course covers PPP definitions, models, the PPP process cycle and the essentials of project finance, aligned with the 2026 PPP Guide, and prepares you for the internationally recognised CP3P Foundation exam.

Related reading

• PPP Fundamentals: The Complete Guide to Public-Private Partnerships
• What Is a Public-Private Partnership (PPP)? A Complete Guide
• PPP Definitions Compared: World Bank, OECD, EU and IMF
• The Essential Features of a PPP Contract
• What Is a Private Finance PPP?
• PPP Nomenclature Around the World: PFI, P3, APP and More
• Project Finance Basics for PPP Practitioners

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