PPPs (Public Private Partnerships): light at the end of the tunnel?

A recently attended briefing by both the Government side and the private sector side gave a surprisingly positive picture for PPPs in the near future.

Of the three “Ps” in PPP, the term “Partnership” was the area most heavily focused upon and there does seem to be some real steps being made towards changing the culture of all PPP participants so that these projects can thrive rather than languish in the political “too difficult” tray.

So what is really behind the word “Partnership”? It seems to be a common approach from both sides and it comprises a number of elements:

  • Better requirements provided by the public sector. Examples were given of where a vast number of KPIs on one project needed to be focused to four or five actual determinants of performance so that “vendors” (note the new term) can deliver what is really needed.

  • Reducing “friction”: this was needed both during the procurement stage and the operational stage and it was acknowledged that far better training of public sector contract managers is required in order to allow better understanding and more rapid problem solving. There is a commitment from Government to train around 2,500 contract managers and there has already been large scale recruitment from the private sector into this arm of the public sector.

  • PPPs should allow for fair returns to be made by the private sector, so that vendors have an economic incentive to perform the contract, and the public sector should avoid trying to impose inappropriate risk transfer as this is frequently not value for money.

  • Greater transparency from the private sector side. It is acknowledged that the “bad press” for the private sector comes from hiding accounting information down the supply chain and there is a keenness to show much greater transparency of the numbers in order to give confidence to the public sector that it is obtaining value for money.

  • Public profile: CEOs and COOs from the private sector side need to tell their story on how PPP projects have provided real and valuable services to the community. This will build confidence in the public at large as well as in the public sector.

  • Less complicated PPP payment structures: this is required in order to allow SMEs to enter the market and to understand what the payments are for and how they are made.

  • There must be no more “gaming” from the public sector side in terms of manufactured disputes and suppliers must know that within the supply chain there will be payment within a 30 day maximum period: best practice is within five days.

So, in summary, there does seem to be a more positive approach to PPP. It was stated that 90% of PPPs are working fantastically well and, of course, the only ones we hear about in the media are the ones that do not work out. Even the Carillion disaster is mitigated by the fact that there has been no public sector “outage” as a result of the insolvency and of the 20,000 employees within Carillion at the time of its collapse around 18,000 are in employment. The advice is clear: that when discussing future PPPs we should focus upon “Partnership” and express that in a way that mirrors best practice and generates successful outcomes.

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