Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Public-private partnerships may not always be the best solution

04.03.2005


Recently, there has been a massive growth, in many countries, in public-private partnerships for the provision of public service infrastructure, such as, roads and health care facilities. Research funded by the Economic and Social Research Council confirms the potential benefits of partnerships, but also identifies circumstances under which more traditional forms of procurement are preferable.



The project, conducted by Professor John Bennett and Professor Elisabetta Iossa, Brunel Business School, Brunel University, examined the case for using public-private partnerships (PPPs), and especially the Private Finance Initiative - in which a consortium owns the assets for a period of time.

“We wanted to evaluate the current case for using PPPs, so we compared them to other forms of procurement, looked at alternative PPP models and specified the best circumstances for using the Private Finance Initiative,” said Professor John Bennett. “PPP contracts involve an element of ‘crystal ball gazing’ as they can last for decades and unforeseeable developments will inevitably occur. We used an ‘incomplete contract’ methodology in our work to account for this longevity and uncertainty.”


A major argument used to justify Private Finance Initiative projects has been that bundling allows the exploitation of synergies between different phases of a project, e.g. design, build and service delivery, that induce more innovative and cost-effective solutions. However, the research found that under some circumstances this may not necessarily be the case.

“We’ve shown that bundling phases of a project doesn’t always work in favour of a Private Finance Initiative,” said Professor John Bennett. “As a case in point, newly introduced safety features to a building may raise social benefits, but will generally result in increased operational costs for the skilled labour needed to operate them. In such circumstances, the case for bundling, and therefore Private Finance Initiatives, may be weakened.”

The research also showed that the market value of a facility at the end of a contract is critical to Private Finance Initiatives. If, for example, a building has little residual value despite the contractor’s actions, then it may be preferable for control rights to stay with government - as would be the case under traditional procurement arrangements. But the argument for a Private Finance Initiative is stronger if the residual value of the facility is significant higher than it was in the first place.

The research covers the recent developments of reliance on commercial not-for-profit firms to provide public services and the delegation to a private consortium of long-term management of service provision. A crucial role in determining the desirability of the inclusion of not-for-profit firms in PPPs is played by the links between the effect of investment on social benefit and profit. For example, a negative correlation between the two favours not-for-profit firms.

The case for public-private partnerships apparently depends on partnership structure, operational decisions, residual values and, because of the longevity of contracts, a substantial element of fate.

Becky Gammon | alfa
Further information:
http://www.esrc.ac.uk

More articles from Business and Finance:

nachricht Frugal Innovations: when less is more
19.04.2017 | Fraunhofer-Institut für Arbeitswirtschaft und Organisation IAO

nachricht Europe's microtechnology industry is attuned to growth
10.03.2017 | IVAM Fachverband für Mikrotechnik

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Can the immune system be boosted against Staphylococcus aureus by delivery of messenger RNA?

Staphylococcus aureus is a feared pathogen (MRSA, multi-resistant S. aureus) due to frequent resistances against many antibiotics, especially in hospital infections. Researchers at the Paul-Ehrlich-Institut have identified immunological processes that prevent a successful immune response directed against the pathogenic agent. The delivery of bacterial proteins with RNA adjuvant or messenger RNA (mRNA) into immune cells allows the re-direction of the immune response towards an active defense against S. aureus. This could be of significant importance for the development of an effective vaccine. PLOS Pathogens has published these research results online on 25 May 2017.

Staphylococcus aureus (S. aureus) is a bacterium that colonizes by far more than half of the skin and the mucosa of adults, usually without causing infections....

Im Focus: A quantum walk of photons

Physicists from the University of Würzburg are capable of generating identical looking single light particles at the push of a button. Two new studies now demonstrate the potential this method holds.

The quantum computer has fuelled the imagination of scientists for decades: It is based on fundamentally different phenomena than a conventional computer....

Im Focus: Turmoil in sluggish electrons’ existence

An international team of physicists has monitored the scattering behaviour of electrons in a non-conducting material in real-time. Their insights could be beneficial for radiotherapy.

We can refer to electrons in non-conducting materials as ‘sluggish’. Typically, they remain fixed in a location, deep inside an atomic composite. It is hence...

Im Focus: Wafer-thin Magnetic Materials Developed for Future Quantum Technologies

Two-dimensional magnetic structures are regarded as a promising material for new types of data storage, since the magnetic properties of individual molecular building blocks can be investigated and modified. For the first time, researchers have now produced a wafer-thin ferrimagnet, in which molecules with different magnetic centers arrange themselves on a gold surface to form a checkerboard pattern. Scientists at the Swiss Nanoscience Institute at the University of Basel and the Paul Scherrer Institute published their findings in the journal Nature Communications.

Ferrimagnets are composed of two centers which are magnetized at different strengths and point in opposing directions. Two-dimensional, quasi-flat ferrimagnets...

Im Focus: World's thinnest hologram paves path to new 3-D world

Nano-hologram paves way for integration of 3-D holography into everyday electronics

An Australian-Chinese research team has created the world's thinnest hologram, paving the way towards the integration of 3D holography into everyday...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

Marine Conservation: IASS Contributes to UN Ocean Conference in New York on 5-9 June

24.05.2017 | Event News

AWK Aachen Machine Tool Colloquium 2017: Internet of Production for Agile Enterprises

23.05.2017 | Event News

Dortmund MST Conference presents Individualized Healthcare Solutions with micro and nanotechnology

22.05.2017 | Event News

 
Latest News

How herpesviruses win the footrace against the immune system

26.05.2017 | Life Sciences

Water forms 'spine of hydration' around DNA, group finds

26.05.2017 | Life Sciences

First Juno science results supported by University of Leicester's Jupiter 'forecast'

26.05.2017 | Physics and Astronomy

VideoLinks
B2B-VideoLinks
More VideoLinks >>>