Sample Essay on Factors Affecting Public Private Partnership

Sample Essay on Factors Affecting Public Private Partnership

Public Private Partnership [PPP or P3] is a government service or private business venture which is funded and operated through a partnership of one or more private sector companies and the government. It involves a combination of the deployment of the private sector capital and public sector capital to chiefly enhance public services through matchless management of public resources. It also involves a significant transfer of all forms of project life-cycle risk to the private sector making the partnership project successful. Nevertheless, there are some factors affecting P3 to be well-conversant with before any partnership.

Different types of Public Private partnerships exist in countries worldwide. Four general types of PPP exist. The first type includes the transfer of ownership of state assets in their original form to private sectors. The second type involves the aid of the private-owned entities in the restructuring of the state-owned enterprises that may be sold within a set future date. The third one involves the transfer of management of public services and operations to the private sector. While the fourth type delegates the product or service delivery to the private sector or NGOs.

Public Private Partnership does not involve the outsourcing of roles where significant financial, technical and operational risk is reserved by an institution. More so, it does not involve transactions involving donations, privatization of state-owned assets, and state borrowing. A key element of Public Private Partnership is that public organizations should import helpful business techniques from the private sector in order to improve their productivity. Despite all these, there are factors affecting Public Private Partnership, and they include;

  1. Management and control- It is a wise undertaking for governments globally to exercise some kind of ownership rights and control over the nature and pricing of public services offered by privately owned entities. The public supervisory should exercise proper control over the supply of the public service being rendered by the Public Private Partnership.
  2. Risk-sharing- Governments should spread risks among countries as it a great way of ensuring value-for-money benefits in the core PPPs. Hence, risk-sharing is the key factor inefficient delivery of services.
  3. Regulatory agenda- All the PPPs in a country should comply to detail an open and accountable pre-qualification process and competitive bidding criterion and go for the most valuable bids.

In Public Private Partnership, the government has the responsibility for providing specific services. However, it lacks resources, political will, and technology to meet this need. In a sense, if the public markets are able to meet the needs of customers, the private sector should also be able to do the same. Private companies help make a lot of profits which aid streamline the flow of revenues. Allocation of liability is one of the crucial parts of the PPPs agreement. It helps deal with workmanship, natural disasters, revenue shortages, cost overruns, and any other related issues.

The common problem with PPPs is that private investors obtain a rate of return that is higher than the government’s bond rate even though most of the income risk is undertaken by the public sector. Essentially, governments should consider Public-Private Partnership as a way of accumulating new resources of financing the funding the public infrastructure and many service needs like water, health, and economical projects.

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