Public sector
Availability payment
A regular payment from government to a PPP partner for keeping an asset open and up to standard.
Last reviewedWhat does Availability payment mean?
An availability payment is a fixed, regular fee a government pays a private partner in a PPP as long as the asset, such as a road, hospital or school, is available for use and meets agreed standards. Deductions apply when parts are unavailable or below standard, but the fee does not depend on how many people use the asset, so the government keeps the demand risk. Example: a road PPP earns 40 million a year; if one lane is closed for 10 days longer than the contract allows, a deduction of, say, 0.5 million applies. Investors like the steady income, while the government must budget for the payments for decades.
Where does it come up in case interview prep?
- Service delivery, KPIs and public-private partnershipsLesson in Government, public sector and non-profits
- How construction and real estate work: who builds, who owns, who paysLesson in Construction, real estate and infrastructure
- Real estate economics and project delivery: margins, cap rates, overruns and PPPsLesson in Construction, real estate and infrastructure
- Construction and real estate players, trends 2024 to 2026, and how to crack the casesLesson in Construction, real estate and infrastructure
- How water and waste services work, and who pays for themLesson in Water, waste and utilities
Related terms
- Public-private partnership (PPP)A long-term contract in which a private company builds, finances or runs public infrastructure or services.
- Net present value (NPV)Today's value of all future cash flows, minus the upfront investment.
- Fixed costA cost that stays the same when volume changes, within a normal range.
- Logic modelA chain from inputs to activities, outputs, outcomes and impact that shows how a program is meant to work.
- AdditionalityThe part of an outcome that would not have happened without the program or investment.