The definitions presented above can lead to a number of conclusions about PPP, some of which are briefly presented here but explained further later on in the chapter. In the first instance, PPP can be seen as a different method of procuring public services by combining the best of the public and the private sector with an emphasis on value for money and delivery of quality services to the public. Secondly, PPP is a formal partnership between public sector organisations and the private sector. Through this arrangement, government works directly with the private sector to jointly pursue common goals that should benefit the general populace as well as the participating organisations. A PPP is therefore an institutionalised form of co-operation between the public and private sector organisations. This co-operation involves a joint definition of specific targets and a clear allocation of responsibilities as well as the determination of areas of competence between the public and private sector
organisations in pursuit of common goals. The co-operation is an enduring and stable relationship between the partners. So the partnerships conceived in this context discount many one-off transactions between the private and public sector organisations even if such transactions are repeated over time. For example, the Department of Secondary Education in Botswana purchases text books for secondary school students from various publishing companies every year. This relationship falls outside the remit of PPPs considered in this thesis. The partners share the risks and rewards of the partnership in proportion to their level of investment in the project being undertaken by the partnership. In these partnerships, there is some shared responsibility and, to some extent, authority in activities and outcomes thereof. From the definitions, it can further be inferred that there are basically three significant components of a public- private partnership, namely a public organisation, a private provider, and a partnership agreement that regulates the partnership. The private sector is however not monolithic in nature and therefore includes organisations with different motives and resources within and without the frontiers of a country. The partnership agreement will invariably culminate in a particular model of public-private partnership. Some of the important models are briefly explained later in this chapter (see section 3.3.5).
Moreover, PPP is a long term collaborative relationship between the organisations in the public and private sector. Such a relationship is often of a long term contractual nature and designed to last as long as up to 20 to 40 years or even longer. In this contractual arrangement, resources from the aforementioned organisations are pooled and the responsibilities shared so that the partners’ efforts complement each other in developing public infrastructure and/or delivering improved public services. It must be emphasized that, in the main, PPPs are conceived of as providing asset-based public services, where assets could be in the form of infrastructure like school buildings or equipment such as computers.
According to the traditional procurement system, governments depended on their revenue to finance the development of public infrastructure and the delivery of the concomitant services (Pongsiri 2002:487; Hanss 2001:393). However, due to budgetary limitations in some countries governments have had recourse to PPPs in order to bring more private finance into the provision of public infrastructure and the attendant services (Blake 2004:15). This long term contractual relationship between the organisations in question is, among other things, designed to enhance the capacity of public service delivery so that more public infrastructure can be developed and improved and public services delivered. What normally happens in some PPP projects is that the government does not actually own the infrastructure instead, it contracts to purchase both the infrastructure and the concomitant services over time. By engaging the private sector through PPPs, the public sector incurs little or no upfront capital expenditure unlike in the traditional procurement approach where the government would be expected to meet large upfront capital funding (Grimsey 2002:2; Jones 2002:24; Blake200415).
PPPs are collaborative arrangements that are designed to facilitate the leveraging of any strengths or competitive advantage that may exist between partnering organisations so that they can obtain an increased amount of return for a given level of risk taken in the context of these partnerships (Gorrod 2004:10). Such return can be in monetary terms particularly for the private sector and it could be in the form of improved services to the public sector. A PPP can also be viewed as a form of a trust relationship in which each partner is, to a large extent, a principal in its own right and therefore does not have to refer to other sources of authority (Akintoye, Beck & Hardcastle 2003:6). The partnership is nevertheless facilitated by means of a contract which spells out the rules which govern the relationship and provide the partners with some assurance of the basic outcomes. For example, the private sector needs some assurance concerning returns on investment and/or risks taken.
From the definitions given above, it would appear that one of the enduring features of PPPs is the recognition of the need for commercial expertise in the
implementation of the political agenda which hitherto was the exclusive province of the public sector. Furthermore, new organisational arrangements for the implementation of public policy are emerging in which both the private sector and public organisations jointly deliver public services.
To shed more light on the concept of PPP, further analysis is undertaken below by way of explaining the nature of PPPs.