Due to the need to increase and improve infrastructure and other services for citizens, the government offers construction and operations concessions (or tenders) as a long-term instrument of collaboration with the private sector, given its experience and management skills in the development of certain projects. Thus, the "concession” can be understood as the adjudication of a tender awarded to a provider on behalf of the government to finance, build, renovate, manage or maintain an infrastructural project or render a service, during a certain period of time, in return for a collection, either directly from the government or from the end user of the infrastructure.
The use of this formula allows the government to defer the initial investment for the life of the infrastructure project, bringing it budgetary security as it transfers most of the risks to the private sector – among them, the fixed price and the duration of the construction time. This way, the private sector makes progress in the commissioning of the infrastructure and maintains and runs its operations to the highest quality standards to be able to recover its investment in the shortest time period possible.
Due to this and the aim of promoting private investment, the government entrusts the private sector with the execution (construction, improvement and/or renovation) of public works and the operations of certain infrastructure for a certain period of time. By allocating the concession for infrastructure to the private sector, it is possible to avoid some of the problems that used to obstruct the accomplishment of certain projects, such as the insufficient allocation of resources, or excessive dependence on the budget, etc.
The investments in public infrastructure such as roads, railway transport and social services infrastructure (hospitals, schools, universities, etc.) are of vital importance for the development of a country, so the concession model has to be seen as an efficient instrument that leads to private investment in these projects under the criteria of value for money and appropriate use of public resources.