Development of PPPs

The PPP model has evolved as an alternative to purely hierarchical and market-oriented forms of organisations (Davies & Hentschke, 2006), marrying the two global economic development trends of empowering the market and local communities that emerged following the end of the Cold War. When mediated by the government, this third trend offers a synergy that overcomes the shortcomings of the other two trends, producing a win-win situation (Miraftab, 2004).

PPPs tend to be misrepresented as a relatively new phenomenon, originating from the privatisation movement which emerged in the 1980s. However, PPPs are not new, nor do they comprise privatisation (Davies & Hentschke, 2005). Although the PPP model as a concept is relatively new, in reality it has a long history of practice in public policy in numerous countries around the world (Davies & Hentschke, 2005; Hofmeister & Borchert, 2004; Sadran, 2004). Furthermore, the two terms ‘PPP’ and ‘privatisation’ are not synonymous. PPPs retain a high level of public oversight and control, ostensibly to avoid the negative consequences associated with privatisation (NCPPP, 2012). The PPP model combines the strengths of the public sector, the private sector and other not-for- profit sectors. Above all, it is a viable alternative for governments to overcome

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economic challenges without cutting spending, increasing taxes or increasing borrowing from other agencies (NCPPP, 2012).

PPPs have enjoyed a global resurgence; they are commonly employed in spheres as diverse as urban planning, transportation, health, telecommunications and education. Governments engage in PPPs for a number of reasons, ranging from philosophical issues to beliefs about managerial efficiency, or even certain political pressures to initiate structural adjustment programmes and empower civil society (Rosenbaum, 2006). A lack of state resources, government inefficiency in service provision and top- down strategies and rigid hierarchical structures are among the most prevalent arguments in the literature for the involvement of private and non-state providers in the delivery of public services (LaRocque, 2008; Rondinelli, 2003; Teamey, 2007). Although adopting a PPP policy has always been context-specific with several factors in play, the key two PPP drivers in many countries tend to be governments’ fiscal problems, which necessitate the mobilisation of private funding, and increased interest in e-government and technology, compelling governments and the ICT private sector to exchange expertise for public capital (Bovaird, 2004; Robertson, 2002). PPPs have become a widely used economic tool due to their perceived positive impact on organisational capacity, their less hierarchical and more flexible structures, their cost- effectiveness and resource mobilisation, as well as the way in which they foster people’s participation and ensure public accountability (Draxler, 2008; Shamsul-Haque, 2004; Teamey, 2007).

The term PPP has been described as ‘plastic’ due to the multiple and heterogeneous forms it can take (Sadran, 2004, p. 233). It encompasses numerous arrangements, ranging from voluntary collaborations to contractual agreements and formalised strategic coalitions. There is no consensus on the meaning of partnership (Shamsul-

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Haque, 2004), its definition differs across sectors (Genevois, 2008) and according to the scope and formality of arrangements (Barrera-Osorio et al, 2009). Also, the nature and roles of PPPs are interpreted differently from one context to another (Bovaird, 2004). Nevertheless, the diversity of meanings of PPP does not necessarily mean that there is a need for standardisation. Rather, PPPs need to be explored and defined in their specific contexts (Bovaird, 2004). However, it is useful to review some common definitions to highlight their features and limitations. The definition of the term ranges between simple coordination to extremely formal contracting arrangements (Shamsul-Haque, 2004). Typical definitions of PPP capitalise on aspects of collaboration and mutuality between the public sector and the private sector in their joint pursuit of a public service. Some of these definitions distinguish between the private for-profit sector (businesses) and the private not-for-profit sector (non-governmental organisations (NGOs) and civil society). Others highlight the benefits of partnering with either local or international partners (Hammons, 2010). However, any definition of PPP needs to consider some essential components: reciprocity in obligations, mutual accountability, the sharing of investment and risks, and joint responsibility in design and execution (Shamsul-Haque, 2004; WEF, 2005).

In their broadest sense, PPPs are defined as ‘co-operative institutional arrangements between public and private sector actors’ (Hodge & Greve, 2009, p. 33), conflating for- profit and not-for-profit actors. Other more narrow definitions, particularly those used by economists, represent PPPs as formal contracting: Taylor (2003, cited by Barrera- Osorio et al, 2009, pp. 3–4) defines a PPP as ‘a contracting mechanism used to acquire a specific service, of a defined quantity and quality, at an agreed-on price, from a specific provider, for a specific period’. This definition includes three key aspects of alliance between the public and the private sectors: an optimal level of risk sharing,

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complementary roles of partners and an outcome-focused agreement between the public and private sectors (Barrera-Osorio et al, 2009; LaRocque, 2008). However, it is limited in scope and does not address the dynamic nature of PPP processes (LaRocque, 2008), restricting the role of the public sector to that of financier and the role of the private sector to that of service provider (Robertson et al, 2012).

The definition of PPP should recognise both the voluntary and commercial private sectors as partners and reflect the long-term relationship between partners. A UK Commission (cited by LaRocque, 2008, p. 8) suggests that:

[A PPP is] a risk-sharing relationship based upon an agreed aspiration between the public and private (including voluntary) sectors to bring about a desired public policy outcome. More often than not this takes the form of a long-term and flexible relationship, usually underpinned by contract, for the delivery of a publicly funded service.

Despite their diverse and broad scope, PPPs share a number of features: they are formal, outcome-focused, develop long-term collaborations between partners who fulfil complementary roles, entail risk-sharing among partners and involve both voluntary and commercial sectors as partners (Barrera-Osorio et al, 2009; Bennett et al, 2004; Latham, 2009; World Bank, 2001).