6 keys to public-private partnerships
The National Council on Public-Private Partnerships identifies the following as critical components of any successful public-private partnership (PPP):
1. Statutory and political environment
The most senior public officials must be actively involved in supporting the concept of PPPs and taking a leadership role in developing each given partnership. A well-informed political leader can play a critical role in minimizing misperceptions about the value to the public of an effectively developed partnership. Equally important, there should be a statutory foundation for the implementation of each partnership.
2. Public sector’s organized structure
Once a partnership has been established, the public sector must remain involved in the project or program. Ongoing monitoring of the performance of the partnership is important in assuring its success. Monitoring should be done daily, weekly, monthly or quarterly for different aspects of each partnership (the frequency is often defined in the business plan and/or contract).
3. Detailed business plan (contract)
A carefully developed plan will substantially increase the probability of success of the partnership. The plan most often will take the form of an extensive, detailed contract, clearly describing the responsibilities of the public and private partners. In addition, a good plan or contract will include a clearly defined method of dispute resolution.
4. Guaranteed revenue stream
While the private partner may provide the initial funding for capital improvements, there must be a means of repayment of the investment over the long term of the partnership. The income stream can be generated by a variety and combination of sources (fees, tolls, shadow tolls, tax increment financing, etc.), but must be assured for the length of the partnership.
5. Stakeholder support
More people will be affected by a partnership than just the public officials and the private-sector partner. Employees, the portions of the public receiving the service, the press, labor unions and relevant interest groups will all have opinions about a partnership and its value. It is important to communicate openly and candidly to minimize potential resistance to a partnership.
6. Pick your partner carefully
The best value in a partner (not just a low bid) is critical in a long-term relationship that is central to a successful partnership. A candidate’s experience in the specific area of partnership is an important factor in identifying the right partner.
- Read the “Bridging the gap: When to call on private partners” feature to learn more about public-private partnerships.