These same governments are recognizing that while they are the best (often the only) bodies to set public policy and regulate performance, they are not often the most efficient when it comes to project management. Governments can spend money strategically, and with the assistance of private expertise, the results achieved provide greater efficiencies. This is the growing global trend – partnering with the private sector through public private partnerships in the development and maintenance of public infrastructure.
Defining Public Private Partnerships
A public private partnership is a partnership arrangement in the form of a long-term performance-based contract between the public sector (any level of government) and the private sector (usually a team of private sector companies working together) to deliver public infrastructure for citizens. A public private partnership could be any kind of infrastructure or service such as a new hospital or bridge or highway, a new type of technology that delivers services in a faster and more efficient manner, or a new federal government building – anything that citizens typically expect their governments to provide.
Public Private Partnerships and BIG Solutions
BIG Solutions can provide the expertise and know how to successfully and efficiently help governments move resources from the public to the private sector while maintaining those linkages necessary to ensure transparency, accountability and continued public service. Through our tested strategies we can transform existing public services into a public-private hybrid and help federal and local governments attain the following advantages:
Timely Delivery: By taking advantage of private sector financing, government can build the infrastructure it needs more quickly, avoiding up-front capital costs and paying for infrastructure only when it is ready to be used.
Risk Transfer: In conventional government construction projects, contractors regularly pass along cost increases from schedule delays and overruns on materials and labour. Government must also pay to repair problems with ongoing operations and maintenance. Under public private partnerships – especially those in which the private sector commits to operate a new facility for a fixed period – the contractor, not government, is liable for those cost risks. And if the contractors don’t deliver, they don’t get paid.
Innovation: Private companies that are fully responsible for overruns have a greater incentive to innovate at every stage: through design, financing, construction methodology, and in operations and maintenance. That innovation accounts for a good part of the overall savings to government and results in better products and services.
International Investment: These projects attract international financial investment into the economy, again freeing up domestic tax dollars for other priorities.
Job Creation: Private sector investment creates jobs for your citizens. Further, building infrastructure – such as roads and bridges – sets the stage for even more growth and opportunity. In all projects, government retains ownership, control and responsibility. By setting standards through contracts and legislation, and by closely monitoring product service and delivery, government ensures that the public’s needs are met – and that the public interest is served.
Serving the Public Interest
Prior to considering a partnership option, a detailed business case is prepared to consider life-cycle costs of the various procurement options. Life-cycle costs include not only the capital costs of building and constructing an asset, but also the on-going operations and maintenance costs, the costs of major upgrades and rehabilitation over time, and the costs associated with decommissioning or disposing the asset at the end of its useful life. Undertaking a life-cycle cost analysis presents an accurate picture of project costs. The detailed business case enables up-front decision-making for a project. Unlike privatization, government enters into a long-term business relationship with a private partner and oversees the public’s interest for quality, safety and certainty. Government can enforce service delivery standards through the performance-based provisions of the partnership contract. In a partnership, the government role changes from that of directing and managing infrastructure to one of oversight and maintenance of quality service outcomes.