Effective Public Private Partnerships (PPP)

Effective Public Private Partnerships (PPP)

Quasi-alchemical, the Public Private Partnerships, PPP or P3, is an ultimate formula that brings together two organizations with complimenting qualities. The private sector lending its entrepreneurial and creative skills, while the public sector that provides its vast resources to create the perfect blend. A win-win situation for both the parties is created allowing ample opportunities to grow.

Politics plays a huge role in getting the swarm of stakeholders to either come together in consensus or get into conflicts.
Mechanics of PPP

These complex long-term contracts spanning anywhere between 15 years to 25 years or even more have been around for decades, but it does not always yield positive results for both the private and the public entities. Normally, PPP’s are created for infrastructures such as roadways, tunnels, airports, bridges, water facilities, schools, etc. When a PPP is formed, the private sector company has to invest a large amount of funds, time, resources, and skills.

Policies changes, governments change, now, that is a big risk that the private party has to take in order to complete the project and get the payout from the government. On the contrary, if the project fails or the private partner is not able to deliver the project according to the guidelines then the government suffers losses in terms of time, efforts to locate a private entity, as well as financing.

Another aspect that needs to be considered is that creating PPPs itself is a time-consuming task, often takes years and is most certainly expensive. It needs the involvements of many skilled people belonging to different disciplines – finance, legal, economics, engineering, accounting, etc. Politics plays a huge role in getting the swarm of stakeholders to either come together in consensus or get into conflicts.

Speed of the project also has an impact on the risks that either of the parties involved might have to bear. Since governments change as often as four or five years, it might become challenging to sustain a project without the help from the newly formed government. For example, when roads are to be built strong support from powerful ministers or even the President in some cases are required. The land acquisition process itself can take a long time, convincing and reinstating the families whose lands are to be used for the project requires a backing from the government or powerful people.

Examples of successful Public Private Partnerships

Singapore’s biggest desalination project is the perfect example of PPP, it made the nation self-sufficient as far as water is concerned. The private firm earned well though it had to give concessions on the design, operation, building, and financing of the facility, it could later charge tariff on water per cubic metre.

Another instance is of Seattle. To keep up with newer technological developments such as high-speed internet, the city of Seattle made a contract with Gigabit Squared. This allowed both residential and commercial spaces access to ultra-high-speed internet and benefit from the latest and modern technology.

Policies changes, governments change, now, that is a big risk that the private party has to take in order to complete the project and get the payout from the government.
Future for PPP

PPP’s have made world-class infrastructure possible that has made the life of citizens and governments easier. Strategically created PPPs have the power to address major urban and rural problems. Like in every business deal, even PPP has its set of constraints, risks, and limitations but when it works it creates development for the whole nation.

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