A crisis for public-private partnerships (PPPs)?

The credit squeeze and recession are combining to make PPPs almost impossible to finance, anywhere in the world. Traditional government borrowing and procurement can still be used to implement infrastructure programmes.

Public Private Partnerships (PPPs) summary paper

The summary of three reports on PPPs in Europe, including a critical overview, a study of alternatives, and a study on the protection of working conditions, in the context of EU law on procurement and other subjects.

Implementation of safety based incentives in Public Private Partnerships (PPPs): an empirical analysis for the case of Spain

Public Private Partnerships (PPPs) are mostly implemented to circumvent budgetary constraints, and to encourage efficiency and quality in the provision of public infrastructure in order to reach social welfare. One of the ways of reaching the latter objective is by the introduction of performance based standards tied to bonuses and penalties to reward or punish the performance of the contractor. This paper focuses on the implementation of safety based incentives in PPPs in such a way that the better the safety outcome the greater larger will be the economic reward to the contractor. The main aim of this paper is to identify whether the incentives to improve road safety in PPPs are ultimately effective in improving safety ratios in Spain. To that end, Poisson and negative binomial regression models have been applied using information of motorways of the Spanish network of 2006. The findings indicate that even though road safety is highly influenced by variables that are not much controllable by the contractor such as the Average Annual Daily Traffic and the percentage of heavy vehicles, the implementation of safety incentives in PPPs has a positive influence in the reduction of fatalities, injuries and accidents.

Legal risk impact in Public Private Partnerships (PPPs): the case of the Chinese water sector

China is currently experiencing a rising demand for water, combined with limited funding availability for water project procurement. Consequently, local Chinese governments have sought procurement solutions by experimenting with public private partnerships (PPPs). However, the legal risk in PPPs, particularly in the water sector, remains high. Legal risk refers to risk arising from the legal and regulatory systems surrounding PPPs. Past research have identified legal risk in PPP projects in China as critical, however the stages at which they are significant have not been studied. This paper examines the legal risk associated with PPPs in the water sector in China and measures the degree of risk across three key stages; 1) Procurement, 2) Construction and 3) Operation. The interrelationship between legal risk at these three stages is also investigated. The significance of the risk was measured by determining the probability and severity of the risk. Correlation analysis was used to investigate the relationship between legal risks across the three stages. Our findings are that legal risk is present at all three stages, at close to moderate levels, with risk significance greatest at the operational stage. Moreover, while no correlation was identified for legal risk at the operational stage with those of earlier stages, it was found that legal issues arising during the procurement stage significantly exacerbated any further legal issues that emerged during the construction stage of water projects. The findings from this study will be significant in providing practitioners with the information to manage this risk at different stages of PPP projects.

The effect of procurement on competition and flexibility : determining the suitability of public-private partnerships in major infrastructure projects

A procurement decision-making model is developed based on a novel integration of leading-edge microeconomic theory and empirically tested in major road and health projects. The model provides a more reliable approach to identifying projects suited to Public-Private-Partnerships (PPPs) and it is expected that the model will enable government to deliver improved value-for-money from their portfolio of PPP projects.

Public-private partnerships in information and communication technology for education

Public-private partnerships (PPPs) have generated a lot of interest from governments around the world for leveraging private sector involvement in developing and sustaining public infrastructure and services. Initially, PPPs were favoured by transport, energy, and other large infrastructure-intensive sectors. More recently, the concept has been expanded to include social sectors such as education.

Public-private partnerships and efficiency in public procurement of primary healthcare infrastructure: a qualitative research in the NHS UK

Aim There is growing interest in the contribution of public-private partnerships (PPPs) bridging the shortage of financial resources and management expertise in developing public healthcare infrastructure. However, few studies have evidenced PPPs’ ability in increasing efficiency in public procurement of primary healthcare infrastructure. The aim of this study was to assess to what extent PPPs would increase efficiency in public procurement of primary healthcare facilities. Subject and Methods A qualitative analysis, adopting a realistic research evaluation method, used data collected from a purposive sample of public (n=23) and private sector staff (n=2) directly involved in the UK National Health Service Local Improvement Finance Trust (LIFT). Results We find a positive association of LIFT helping to bridge public sector capital shortages for developing primary care surgeries. LIFT is negatively associated with inefficient procurement because it borrows finance from private banks, leaving public agencies paying high interest rates. The study shows that some contextual factors and mechanisms in LIFT play a major part in obstructing public staff from increasing procurement efficiency. Conclusion PPP’s ability to increase efficiency may be determined by contextual factors and mechanisms that restrict discretion over critical decisions by frontline public sector staff. Developing their capacity in monitoring PPP activities may make partnerships more efficient.

Concessionary nature of public-private partnerships in Russia and Kazakhstan: a critical review

This article provides a critical overview of Public-Private Partnerships (PPPs) in Russia and Kazakhstan and examines the rationale underpinning such partnerships. The analysis discusses the reasons why governments in Russia and Kazakhstan focus principally on concessions as a form of PPP and goes on to provide a critical assessment of the key approaches and situational factors relating to concessions in these two countries. The article finds that external globalization impulses pressed Russia and Kazakhstan to align their policies and institutions with western orthodoxy and perceived international best practice. An ever-increasing emphasis on use of PPPs has been a key feature of this alignment. However, the governments of Russia and Kazakhstan have increasingly resorted to concessions as progress with the development and implementation of Western style PPP models has stalled. This article concludes that the governments of Russia and Kazakhstan have demonstrated an overly optimistic approach to PPP and as a result may have substantially understated their overall concessional risks and costs. Features of Russian and Kazakhstani PPP arrangements such as ambiguity in output specification and extensive reliance on government subsidies, combined with lack of expertise of private partners, may significantly decrease concession benefits.

Impact of externalities on sustainable development: evidence from public-private partnerships in Kazakhstan and Russia

Purpose – This paper aims to investigate the influence of public-private partnerships (PPPs) on social and economic conditions in Kazakhstan and Russia from a public economics perspective, namely, through the lens of a market failure and PPPs’ negative externalities. Design/methodology/approach – Drawing on the concept of a market failure and using the externalities perspective, the paper investigates whether partnerships are instrumental in solving market problems, which is illustrated by the evidence from ongoing PPP projects in Kazakhstan and Russia. Findings – Results show that citizens face expansion of monopolistic trends in the service provision and decreased availability of public services. Additionally, the government support to partnerships recreates a negative externality in the form of a higher risk premium on loan interest rates that banks use to finance PPPs. The partnerships’ impact on sustainable development often appears detrimental, as they significantly intensify the struggle between sub-national governments for increased transfers from the national budget. Practical implications – The government agencies must incorporate the appraisal of the PPP externalities and their effects on the society in the decision-making regarding the PPP formation. Originality/value – The authors suggest that, although government is interested in PPPs’ positive externalities, in reality many negative externalities may offset the positive spillover effects. As a result, the partnerships’ contributions to economic and social sustainability remain controversial. Extending the value-for-money concept to incorporate the assessment of PPP externalities might significantly enhance the partnership conceptualisation by more comprehensive and accurate assessment of PPPs’ economic and social value.

EU support mechanisms to promote public private partnerships for financing Trans-European transport infrastructure

Since the mid 80ies the Trans ‐European Transport Network (TEN‐T) policy has been setting the framework for the development of infrastructure for the smooth functioning of the internal market within the European Union (EU). Public Private Partnerships (PPPs) have always been regarded by the EU as a key instrument to promote the TEN‐T.

Do Public Private Partnerships Improve Road Safety? The Case of Toll Concessions in Spain

El Transportation Research Board es un congreso de reconocido prestigio internacional en el ámbito de la investigación del transporte. Aunque las actas publicadas están en formato digital y sin ISSN ni ISBN, lo consideramos lo suficientemente importante como para que se considere en los indicadores. This paper focuses on the implementation of safety based incentives in Public Private Partnerships (PPPs). The aim of this paper is twofold. First, to evaluate whether PPPs lead to an improvement in road safety, when compared with other infrastructure management systems. Second, is to analyze whether the incentives to improve road safety in PPP contracts in Spain have been effective at improving safety performance. To this end, negative binomial regression models have been applied using information from the Spanish high-capacity network covering years 2007-2009. The results showed that even though road safety is highly influenced by variables that are not manageable by the private concessionaire such as the average annual daily traffic, the implementation of safety incentives in PPPs has a positive influence in the reduction of accidents.

Performance of public private partnerships : an evolutionary perspective

PPPs are held to be a powerful way of mobilising private finance and resources to deliver public infrastructure. Theoretically, research into procurement has begun to acknowledge difficulties with the classification and assessment of different types of procurement, particularly those which do not sufficiently acknowledge variety within specific types of procurement methods. This paper advances a theoretical framework based on an evolutionary economic conceptualisation of a routine, which can accommodate the variety evident in procurement projects, in particular PPPs. The paper tests how the various elements of a PPP, as advanced in the theoretical framework, affect performance across 10 case studies. It concludes, that a limited number of elements of a PPP affect their performance, and provides strong evidence for the theoretical model advanced in this paper.

An evaluation of viability of public private partnerships in social infrastructure procurement projects in Queensland, Australia

Public private partnerships (PPP) have been widely used as a method for public infrastructure project delivery not only locally and internationally, however the adoption of PPPs in social infrastructure procurement has still been very limited. The objective of this paper is to investigate the potential of implementation of current PPP framework in social affordable housing projects in South East Queensland. Data were collected from 22 interviewees with rich experiences in the industry. The findings of this study show that affordable housing investment have been considered by the industry practitioners as a risky business in comparison to other private rental housing investment. The main determents of the adoption of PPPs in social infrastructure project are the tenant-related factors, such as the inability of paying rent and the inability of caring the property. The study also suggests the importance of seeking strategic partnership with community-based organisation that has experiences in managing similar tenants’ profiles. Current PPP guideline is also viewed as inappropriate for the affordable housing projects, but the principle of VFM framework and risk allocation in PPPs still be applied to the affordable housing projects. This study helps to understand the viability of PPP in social housing procurement projects, and point out the importance of developing guideline for multi-stakeholder partnership and the expansion of the current VFM and PPPs guidelines.

Conflict Management in Public-Private Partnerships: The Case of the London Underground

Public–private partnerships (PPPs) have become common inter-organizational arrangements associated with “new public management.” Discussion about their effective operation has often focused on successful management methods, with less discussion about how these arrangements specifically overcome obstacles and problems. In this article, we seek to address this deficiency in the literature by analyzing the conflict management system employed within the London Underground PPP (when it was still in operation). We conclude by identifying several lessons from this case that we believe should inform the design of such systems, one of which is the role of knowledge management.