Public Private Partnerships
Definitions and Trends
Reto Fausch, lic.rer.publ.HSG,
dipl. Hdl.
reto.fausch@zhaw.ch
Building Competence. Crossing Borders.
Outline
 Defining Public Private Partnerships (PPPs/3Ps)
 Developments and trends
 A Swiss point of view
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Projected infrastructure investment
Source: Deloitte (2006) Closing the Infrastructure Gap.
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Reasons for implementing PPPs
 Infrastructure gap
 Fiscal crisis of the public sector
 Need of new financial instruments
 Off balance sheet financing (Maastricht Criteria)
 Improving efficiency
 Increased complexity of government tasks (overlap
between the public and private sector)
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PPPs by country and sector (1)
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PPPs by country and sector (2)
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Definitions (1)
PPP is a form of cooperation between public authorities and
the world of business which aim to ensure the funding,
construction, renovation, management or maintenance of an
infrastructure or the provision of a service. (European Union: Green
Paper on Public-private Partnerships and Community Law on Public Contracts and Concessions)
A PPP is an agreement between government and a private
partner(s) (that may include the operators and financiers)
according to which the private partner(s) delivers the
service in such a manner that the service delivery objectives
of government are aligned with the profit objectives of the
private partner(s) and where the effectiveness of the
alignment depends on a sufficient transfer of risk to the
private partner(s). (OECD)
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Definitions (2)
PPPs refer to arrangements where the private sector supplies
infrastructure assets and services that traditionally have been provided
by the government. In addition to private execution and financing of
public investment, PPPs have two other important characteristics: there
is an emphasis on service provision, as well as investment, by the
private sector; and significant risk is transferred from the government to
the private sector. PPPs are involved in a wide range of social and
economic infrastructure projects, but they are mainly used to build and
operate hospitals, schools, prisons, roads, bridges and tunnels, light rail
networks, air traffic control systems and water and sanitation plants.
(IMF)
Any scenario … under which the private sector assumes a greater role
in the planning, financing, … of a transportation facility compared to
traditional procurement methods. (United States Federal Highway Administration
Public-Private Partnerships Website)
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Definitions (3)
Criteria of PPPs
 Public service
 At least one private and one public partner
 Provision of an economic service / output
 Shared accountability
 Bundling of resources (synergies)
 Shared risk
 Long-term, process oriented cooperation
 Increase of efficiency
Source: BOLZ et al. (2005)
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Defintions (4)
Source: Bennett et.al.(2000) in Bult-Spiering-Dewulf (2006)
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Definitions (5)
General characteristics of PPP
 Involves two or more actors (government + business)
 Partners are principals who can act on their own
 Continuity of relations (contracts based on trust,
negotiation and dialogue)
 Willingness to invest in partnership (material/non-material)
 Establish separate organisational structures, define
objectives, tasks, financial platform and responsibilities.
 Shared responsibility for outcome
Source: Peters (1997) and Andersen (2004) in Bult-Spiering-Dewulf (2006)
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Trends in PPP discussion (1)
 Institutionalisation
 Expansion to other sectors
 From project to portfolio management
 From single-function to integrated project PPPs
 From project to more policy-based partnerships
 Public sector needs the skills to develop successful
relationships and to deal with changes (long term VFM)
 Efficient selection procedures
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Trends in PPP discussion (2)
 Contract management: public sector needs to be an
intelligent client
 Contract evaluation tools
 Performance monitoring and sanctioning
 Contractual changes, re-negotiation of contracts
 Refinancing issues
 Contingency planning
 Contract termination threat
 Ensuring efficiency throughout project life time
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Trends in PPP discussion (3)
 Research on functioning of partnerships, partnership
development; communication; cultural differences
 Value for money appraisal (improved methodologies?)
 Studies on new forms of arrangements / credit guarantee
financing (UK) / public public partnerships (?)
 Empirical studies on performance of PPPs
 Accounting and reporting of PPPs (see presentation Prof. Andreas
Bergmann)
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„The Swiss Case“
 Tradition of public private cooperation / partnerships in
policy making
 PPPs following international definitions are hardly known
 Transfer from other countries (D,F) and adaptation
 Reasons slowing PPP implementation
• Low financial pressure, highly developed infrastructure
• Fear of loosing independence
• Complexity of legislation/political system, small size public
sector entities
• Attitude towards “service public” and debts
• Institutional and cultural framework (high private participation)
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References
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Bolz, U. (2005) Public Private Partnerships in der Schweiz.
Bult-Spiering, M., Dewulf, G. (2006) Strategic issues in Public-Private Partnerships. An
international perspective.
Deloitte (2006) Closing the Infrastructure Gap. The Role of Public Private
Partnerships.
Ehrensperger, M (2008) Erfolgsvoraussetzungen von Public Private Partnership im
öffentlichen Hochbau.
European Investment Bank (2005, Vol. 10, no. 2) Innovative financing of infrastructure
– the role of public-private partnerships: Lessons from the early movers.
Gremsey, D., Lewis, M.K (2005) The Economics of Public Private Partnerships
PricewaterhouseCoopers (2005) Delivering the PPP promise. A review of PPP issues
and activity.
Institute for Public Policy Research/Commission on Public-Private Partnerships
(2001) Building better partnerships.
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