Partnership formation stage

During the formation stage, a large amount of uncertainty exists between the partners, who are trying to learn about and adjust to each other, such that developing the understanding of the partnership goals is important at the formation stage of the partnership. The political, legal, and economic environments in which a partnership is

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formed needs to be adequately understood, as the PPP models must be careful selected to adapt to local context situations (Tang, Shen and Cheng, 2010; Bazzoli et al., 1997). The partners must also be able to form modest expectations about desired outcomes, the more modest the desired outcomes expected and the lower the level of risk, the greater the chance that expectations will be met (Huxham and Vangen, 2005; Das and Teng, 1998).

• Consensus building through clarity and agreement of goals

The starting point in any partnership is to develop consensus among members, these may be expressed through a broad vision that allows for clarity around agreed values and principles (Slater et al., 2006) or negotiated and agreed sets of objectives by the partners (Huxham and Vangen, 2004). International organisations sometimes act as broker organisations that bring different stakeholders together for a particular PPP. According to Stadtler and Probst (2012, p.38), these organisations could act as mediators such that they “talk to the stakeholders to understand their positions and figure out how and where an overlapping interest might emerge”. In some national contexts, they serve as initiators of PPPs, and serve by identifying specific public problems, making potential private organisations aware of these public problems, identifying resource needed, providing funding, while also facilitating strong ties between potential partners through the encouragement of participation, open communication, information and resource sharing. Consequently, partnerships have to be meaningful for the individual partners involved, as this would contribute to the capacity of the different partners to collaborate towards maintaining sustainable development of regeneration projects. Charlier, Glover and Robertson (2009), argue that with a basis of trust and transparency, partners will be more willing to exercise the tolerance and perseverance necessary to see the partnership through difficult times.

• Formation of the partnership

This begins from the signing of the concession agreement between the public and the private sector and indicates the span of time from which the private sector is responsible for the construction phase to the delivery phase and then the ultimate transfer to the public sector. The length of the concession period is a key decision variable that needs to be made during negotiation of the partnership arrangement. This is especially so because the outcome of the decision the project would be transferred

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from the private organisation to the government. In some partnership arrangements, the contract plays a more crucial role in governing the relationship among the partners, as there is little room for initial trust (Tomkins, 2001).

In these contexts, contract acts as a governance tool as prescribed by law and it focuses on the technical and easily measurable aspects of the partnership (Laing and Lian, 2005). Formal contracts represent legally binding agreements or obligations of particular actions in the future and constrain opportunistic behaviours; hence they also include terms which specify clearly rules and standards, to resolve disputes as well as statements of termination of partnership (Ping et al., 2015). The length of concession period is usually for recovery of investment and return required by the concessionaires. The general principle for determining its length is that the concession period should be long enough to allow the concessionaire to recoup investment costs and earn reasonable profits within that period. It is also important that concessionaires are guaranteed an appropriate internal rate of return to recover investments, and risks are allocated fairly among partner organisations. The concession period could either be fixed or variable and is dependent on the risk factors, for instance completion time, market demand and product price (Carbonara, Costantino and Pellegrino 2014).

Important elements of successful contracting include an appropriate procurement framework, clear specifications of the intended objectives, a well-structured tendering process, transparency in the negotiation process and goals, and a set of specific evaluation criteria (Forrer et al., 2010; Kwak, Chih and Ibbs, 2009; Bloomfield, 2006). In essence, contracts legally bind partner organisations to specific inputs and performance expectations in the partnership working, but they have been criticised for their tendency to lead to bureaucratic procedures, with partners seeking to protect their organisations from any future legal ramifications (McQuaid, 1994).

The selection of an appropriate partner is therefore significant to the potential success of a partnership and the contracts should bind the partners to carry out the activities needed to achieve the intended goals, and enable mutual rules for the partnership to be established. However, Bloomfield (2006) and Poppo and Zenger (2002) are of the opinion that contracts alone are insufficient to guide PPP arrangements and do not guarantee successful collaboration; this is because they are unable to identify or to resolve every future contingency (Broadbent et al., 2003). In this regard, safeguards

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such as performance guarantees are advocated for inclusion into long-term contracts, specifically to minimise risk to the public sector (Bloomfield, 2006). Furthermore, the contracting process may be used decisively to increase mutual interdependence and commitment as well as to initiate trust. They are also of the opinion that, trust complements contracts in a way that it corrects the adaptive and execution restrictions of PPP contracts and in addition facilitates continuity and flexibility when contingencies and conflicts arise (Poppo and Zenger, 2002).

• Inclusion of local community

The public are an important element of a partnership’s stakeholder, either as individuals or as community groups that affect or are affected by the decisions of the partner organisations and operations of the partnership. It then becomes significant to capture their inputs, opinion and concerns as an important component of the partnership formation and implementation stages in meeting the needs of the public (El-Gohary, Osman and El-Diraby, 2006). It is suggested that neglecting perspectives of the public could lead to solutions that are not well suited for public use, leading to public dissatisfaction and to huge financial losses to the partner organisations. The public user value potential does not rest only with creating individual user value, but also with increasing e.g. the public service's social, environmental and political value (Torvinen and Ulkuniemi, 2016).

Opposition from the public tend to arise more often in the involvement of the private sector in the provision of basic infrastructure like roads and water supply than in their involvement in the provision of services like schools, due to the profit making ambitions of private infrastructure providers (El-Gohary, Osman and El-Diraby, 2006). The early recognition of public concerns or needs could guide the partnership initiative towards better planning, efficiency and innovativeness. However, the types of partnership would have implications on the types of community involvement, as these have implications for both the processes and the extent of inclusiveness or not. In other words, the extent of community involvement would vary at different structural levels of local regeneration partnerships, while they might be interested in the outcomes of strategic discussions, representatives do lack the skills to be adequately involved at such levels of deliberations (Osborne, Beattie and Williamson, 2006).

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Figure 4: Conceptual framework depicting the influence of the collaboration elements on the collaboration processes

Antecedents to PPP policy implementation

• Budgetary restraints

• Economic reforms favouring the PPP policy

• Willingness of interest groups to participate in PPP initiatives

Collaboration Elements in a Partnership Working Context

• Mutual interdependence of the partnership arrangement

• Trust among partners throughout the partnership working

• Transparency in the decision-making processes

• Accountability of the partners in the partnership working to each other and to the local communities

Lifecycle of the partnership - Formation stage - Implementation stage formation Performance / Evaluation of partnership working - Extent to which goals are met - Extent to which partners implement agreed actions - Survival of the partnership - The perceived effectiveness of the partnership Termination of the local regeneration partnership Collaborativ e advantage from the partnership working - Sustainability of partnership agreements - Improved interaction between partners - Provision of services Delivery of local regeneration partnership goals End of partnership working process

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Public opposition usually emerge when there is a perceived gap between the expectations of different actors involved in PPPs on the desired process or outcome of the project (De Schepper, Dooms and Haezendonck, 2014).