Posted at 12.21.2018
Keywords: PPP, privatization, Osborne, efficiency
PPP is frequently used as a synonym for privatization, but Osborne (2000) argues that there is clear distinction between these two concepts. The next is a summary of difference between PPP and privatization.
The main difference could be within the following aspects.
Privatization has a kind of principal-agent marriage, while PPP is a partnership based on shared trust and cooperation.
Main idea behind privatization is to improve efficiency, to make service quicker and cheaper. PPP can be involved with efficiency, synergy and quality of the outcome.
Privatization be based upon clear problem, desired end result, defined task and fair types of procedures among others. PPP relies on interweaving of goals, founded procedure for connections and other tailor-made agreements.
Privatization is a form of job management with given project specification. It really is urged when project-like variables could be plainly defined. PPP has a form of process management with joint goals and process focused relationship between actors. It is recommended in an instance when there are no clear idea about solutions, needed service or selected policy. These guidelines should be defined by using different knowledge from both general population and private celebrities/partners.
Contractual transparency is root relationship rule that also defines privatization, while shared trust is main driver of PPP in terms of relationships between public and private actors.
The strategy and treatment of PPP went through different phases as political-economic framework was changing over the time. In a phase within the 50' and 60', political-economic framework was not so advantageous for PPP in Europe and USA. Context at that time was characterized with strong express budgets which allowed wide state interventions in all economic and interpersonal spheres of the population. PPP were at marginal level in those days.
That situation dramatically changed throughout the 70' and 80' after downturn and serious budgetary scale back. The capacity of talk about to intervene and provide typical services shrunk down and it was obviously necessary to find additional capacities. Given reasons supported by the proponents of supply-side economics were accountable for increasing need for PPP in the 70' and 80'. At this point, partnerships with the private sector has been seen as a natural relationship that delivers additional prices to general population sphere issues.
Nowadays, an ideology is irrelevant for PPP in the capitalism. In a few ideologies, such as neoliberalism, PPP is seen as more than compatible with its procedure and plans. While in others is merely seen as neutral or practical.
Most of the reason why for getting into public-private partnerships could be interpreted as strengths or advantages. They are: transfer of technologies in one partner to another, increased financial capacities, access to bigger market, risk sharing or copy of risk, building long-term human relationships, potential lower costs and attaining higher efficiency and success through partnerships.
On other hand, cons, costs and weaknesses could be lost of control of the task, lack of understanding of PPP, minimal partnerships, increased polices, obstacles of democracy, equity and usage of services.
What ought to be the rules for dividing up tasks and roles on the list of celebrities and organizations that form the partnership?
The main concept for dividing up duties and roles amidst the actors and company that form the collaboration is dependant on understanding of "natural" assignments of private and general public side. The general public acting professional could bring to a collaboration political power and affect on public laws, local market knowledge, dependability, networks, funding capabilities, knowledge and understanding into project's feasibility from a politics point of view. The private acting professional could add with market knowledge and experience, promptitude, sites, risk-bearing potential and insight into the job feasibility from a market perspective.
Some of the key conditions for success of PPP will be the following:
- Desire to for mutual added value and a joint goal
- The actor's capability of negotiating independently behalf
- Earnings are shared in accordance with the actor's investments and risk acceptance
- Formalized co-operation arrangements.
2. Select one example of any PPP positioned in the location or region where you live/work, or from a another place you understand.
Branko Lukovic, rukovodilac projekta
Utilizing the available sources of information online or other press, imprinted documents, and/or email or cellphone connections at the PPP, write a 45 page summary description of this PPP. The information will include:
1. what the PPP does (which areas or services)
2. when it started out,
3. the motivations for starting it,
4. the celebrities and organizations that form the partnership,
5. the particular roles and obligations of each actor/organization,
6. the way the PPP is supervised,
7. how it will fit within the larger governance framework of the city/region/land.