LARGE scale infrastructure projects are undoubtedly the biggest challenge of our time, but they present a big opportunity for public and private sector entities to align their interests around a common goal.
Public sector officials charged with shepherding the use of public funds are increasingly looking for better ways to deploy resources in the most productive way possible.
Taxpayers have got a finite willingness to bear taxes and fees to support increased public infrastructure development projects. This has generally forced many governments to look elsewhere for alternative sources of funding.
An increasing number of governments are turning to the private sector for the provision of services hitherto delivered by the public sector.
The rationale for pursuing public-private partnerships varies from fiscal opportunism, or simply seeking to take advantage of private sector finance availability or simply through a genuine desire to seek lower costs both for taxpayers and the ultimate beneficiaries of the services in question.
Often-times, public-private partnerships are used for large-scale infrastructure projects such as the construction of major highways, bridges, power plants, airport facilities and hospitals.
Tripple Ps are generally highly regarded because they happen to serve the public’s interests by spurring capacity-building efforts and creating a conducive environment for partnerships in major infrastructure projects.
Such partnerships are generally regarded as value-addition vehicles for blending public and private capital investment expertise. The models will ordinarily share the technical know-how, skills and professional management systems synonymous with the private sector combining such with the public sector’s vast experience in regulatory actions which seek to protect the public interest.
- Triple Ps: Catalyst for development
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Partnerships of this nature will allow each sector to do what it does best.
It would also appear that most debt-ridden countries often see Tripple Ps as a viable option to provide public utility services and still be able to channel its tight budget to other pressing public service project requirements.
Tripple Ps have often been regarded as vehicles for the creation of social value projects by poor governments through joining hands with cash-rich private sector partners with a view to achieve on-time and on-cost service deliverables.
Such partnerships will often generate innovation in project design from private players. Apart from that, Tripple Ps are generally most appropriate at harnessing global reach and expertise from international partners, who in most cases, have access to new sources of affordable capital funds for high-value projects.
With Tripple Ps, in the grand scheme of things, the government retains ownership of the project facilities, while the private partner does almost everything else, from construction to maintenance, to revenue collection.
The public-private partnerships are beneficial to both parties in that it brings the opportunity to mobilise resources together while taking advantage of combined expertise and strengths of both sectors to address complex challenges and deliver projects and services within budget and on time.
The idea is to combine the efficiency, innovation and financial resources of the private sector with the public sector’s experience in regulatory authority, public interest focus and administration of public assets.
In a Triple P arrangement, the strengths of both sectors are leveraged to address societal needs and overcome resource constraints. Private companies would ordinarily bring a wealth of expertise and experience in their respective domains.
This allows them to contribute valuable insights, technical know-how and efficient management practices.
Given that the private sector will be generally given the entire responsibility to run and manage the facilities, there is also the possibility that the private sector is incentivised to deliver infrastructure projects within the shortest period of construction. Such incentives will spur the private sector to meet deliverables within the specified contractual frameworks. The private sector technical partners, who will be entrusted with the responsibility for operating and maintaining the project over the contract’s life will ensure that the project output is of high-quality design.
They will also be entrusted with ensuring good workmanship since poor quality work can increase maintenance costs and could create challenges later in the project’s life cycle.
The public-private partnerships are also often touted as vehicles for institutional investors, such as public pension funds to meet their fiduciary obligations by investing in high value, high return investment projects for the benefit of their members.
Pension funds, in joint partnership with the public sector, have over the years been able to maintain enviable quality standards in the project management space, delivering viable project outcomes at the barest minimum costs.
Public-private partnership projects are generally capital intensive, and the partnership approach is intended to alleviate pressure on the government’s funding structures.
Triple Ps can easily spread a project’s cost over a more extended period, leading to the freeing up of public funding facilities. As Tripple Ps seek to leverage private sector financing, the private party will be typically expected to recoup its investment through the operation and maintenance of public infrastructure with the collection of user fees being part of the terms and conditions, bringing operational collection efficiencies.
The larger the equity project funds invested by the private sector partners implies more skin in the game, which will ultimately lead to a deeper commitment to project success.
The collaborative nature of public-private partnerships facilitates knowledge transfer that is bound to benefit both the public and private sectors.
The sharing of notes will foster a learning environment where both parties can benefit from each other’s expertise. It is on record that private sector companies often have a strong focus and bias towards research and development, bringing forward new ideas, processes and technologies to the table. The private sector is also associated with efficiencies arising from technological innovation and the whole-of-life benefits achieved through the provision of back-up support services. The purpose of this collaborative relationship will facilitate the establishment of shared goals for the benefit of the public sector beneficiaries.
Public-private partnerships are increasingly gaining popularity because they are generally regarded as reliable vehicles for achieving on-time and within budget public sector project deliverables.
This is largely because private sector organisations answer to shareholders, and they are required to earn a solid return on their invested equity in projects.
They will always have a vested interest in successful project completion of projects, given that their profitability targets are often tied to stipulated performance indicators and achieving predetermined milestones is a sworn requirement.
On the other side of the coin, the public sector ownership will remain with the local community, and with it, the pride and history of having participated in their own development.
As a result of the above, public-private partnerships are often built on clear contractual terms and conditions that specifically outline stringent performance indicators, benchmarks, and service level expectations on both parties.
The public sector organisation’s orientation towards accountability fosters a culture of collective responsibility towards the national purse.
Through the combined focus on meeting project milestones and delivering results within predetermined timelines can create an enabling environment for attracting further investments, both domestic and foreign, leading to sustained economic growth and development.
The combined initiatives between the public and private sectors offer a high degree of flexibility and agility in responding to changing circumstances and evolving national public sector responsibilities.
As societal needs, technologies, or economic conditions evolve, PPPs can adapt to accommodate these changes more efficiently than traditional public sector approaches of doing business.
Private sector organisations are renowned for their preference of market-driven approaches and their ability to pivot quickly through the mobilisation of the required funding facilities with a view to respond timeously to emerging challenges and or business opportunities.
The private sector has got the capability to mobilise financial resources through options such private capital, loans, bonds and revenue sharing arrangements with the public sector.
The financial flexibility provided by the provision of innovative financial structures will significantly reduce financial burden on public budgets.
The private sector companies are often renowned for implementing efficient management practices, leveraging their experience and knowledge to streamline processes with a view to maximise project outcomes.
Tripple Ps can bring increased efficiency, access to private sector innovation, cost effective implementation models, risk reduction and mitigation project methodologies, improved service provision delivery outcomes, accelerated infrastructure development initiatives coupled with operational flexibility and expertise.
This will ultimately result in the adoption of low-cost implementation process flows ensuring that low-cost structures are maintained throughout the project life cycle realised with maximum leap of benefits to the private and public parties. With improved efficiency come reduced budget deficits.
Tripple Ps represent the collective thinking of public sector officials and private sector experts resulting in shared goals for the benefit of the civil society. Most industry experts point to collaboration as the decisive metric in the implementation of public-private sector partnership models in infrastructural development.
It has been acknowledged over the years that collaboration has long since replaced individual genius as the principal source of creativity.
Tripple Ps are seemingly structured and formalised platforms that were designed to amplify the collective use of joint resources in a world of finite resources.
Hindsight, they say, is a great thing. The landscape of corporate history is littered with abundant examples for us to learn from.
History has taught us to make change our default settings. It is increasingly becoming a default approach to get things moving.
Even today, the economic ground remains subject to rapid shifts, making it difficult for the public sector to do more without more. Many governments are working their tails off to deliver public service offerings under very difficult circumstances. There are certainly no easy answers in government and civil servants are grappling with hard choices.
Days of no surprises are no more. It will always call for the devotion of time, effort and personal capital to achieve public sector results, better suited to today’s realities. The chances of success will revolve around how well the basics are carried out.
- Nyika is a supply chain practitioner based in Harare. — charlesnyika70@gmail.com.
