The case for public-private partnerships in infrastructure

Much of the public debate about public-private partnerships (P3s) has occurred through the lens of those who either oppose or support this increasingly popular method of delivering public infrastructure assets. Despite some scepticism in the academic literature, an analysis of the key arguments for and against Pas concludes that the P3 model can successfully deliver public infrastructure goods and services, provided that certain key thresholds are met. Lessons learned from early experiments in P3s and from the experience of the newer government P3 procurement agencies suggest that P3s can provide value for money if risk is allocated to the party best able to manage it. An appropriate risk allocation requires that governments have the expertise to identify all of the relevant risks before entering into the partnership contract. Governments must also have the contract management skills to ensure that those risks are in fact borne by the private sector. To maintain public confidence in the P3 model, governments must live up to their own obligations of transparency and accountability and not succumb to private-sector demands for confidentiality. The article recognizes that not all government goods and services can meet the threshold but that, if they do, it argues strongly for the efficiency and effectiveness of the P3 model.