Public‐private partnerships in Canada: Theory and evidence

Abstract

This article develops some theory on and examines the implementation and performance of Canadian public-private partnerships (P3s). It focuses primarily on infrastructure projects and addresses three questions: 1) What goals do governments expect to achieve through P3s? 2) How effective are P3s likely to be at delivering value to governments and citizens? 3) What lessons can be derived from the use of P3s? The article reviews the government's intended social goals for P3s and evaluates how effective P3s have been in fulfilling them. It then formulates a more comprehensive framework and outlines a ''positive theory'' perspective of P3s that takes into account the divergent goals of the partners -profit maximization goals of private-sector participants and the political goals of the public sector. The article evaluates and summarizes the findings and implications of ten Canadian P3s. The appropriate test of success, from a social (normative) perspective, is whether P3s have lower total social costs, including production costs and all of the transaction costs and externalities associated with the project. The ten case studies indicate that the potential benefits of P3s are often outweighed by high contracting costs due to opportunism generated by goal conflict. These costs are particularly high when construction or operating complexity is high, revenue uncertainty (use-risk) is high, both of these risks have been transferred to the private-sector partner, and contract management effectiveness is poor. In infrastructure projects, it rarely makes sense to try to transfer large amounts of risk to the private sector.Sommaire: Le présent article élabore une théorie et examine la mise en oeuvre et la performance de partenariats des secteurs public/privé canadiens (P3). Il se penche essentiellement sur des projets d'infrastructure et aborde quatre questions : 1) quels objectifs les gouvernements prévoient-ils atteindre en ayant recours aux P3 ? 2) Dans quelle mesure les P3 seront efficaces à fournir de la valeur aux gouvernements et aux

Performance of public private partnerships: An evolutionary perspective

“…Procurement is significantly more complex than construction academics would wish it to be -the variability is such, it is argued, that it is virtually impossible to classify procurement by any sort of rational positivistic approach". This finding also holds for PPPs, as once the underlying characteristics of PPPs are taken into consideration, wide variations can be seen to exist when they are compared to each other [3]. Traditional approaches to procurement, which attempt to link different types of infrastructure procurement (such as PPPs or alliances) do not take into account the complexity and variation possible between projects, and this failure to take into account the all of the variables involved in projects results in considerable difficulties in assessing and comparing the performance of different projects.…”

“…[19], [20] and [3] have already identified several key elements of any type of procurement project which will be used to analyse PPPs. These elements of PPPs are set out in Table 1 below, together with the various options available in each 'gene', and an explanation of each element follows.…”

“…There is considerable variety within the procurement models relating to infrastructure, which has led to confusion, and a realisation that simple high level correlation techniques between PPP and success does not hold [3], particularly when success is viewed as more than on time and on budget. New analytical approaches need to be developed which can cope with the variability evident in procurement projects, and yet which can still provide some framework fo r analysing performance.…”

Policymakers' Decisions on Public-Private Partnership Use: The Role of Institutions and Fiscal Constraints

“…is the government's debt. Though there is some disagreement on whether PPPs are more cost-efficient in the short run (Vining and Boardman, 2008), we assume that PPPs are more efficient over time given high institutional quality and incorporate as a cost multiplier on PPPs, representing the effects of institutional quality. As such, 1 < represents higher institutional quality while < 1 represents lower institutional quality.…”

Managing risk and regulation within new local ‘health economies’: The case of NHS LIFT (Local Improvement Finance Trust)

“…The borough in question is notorious for its poor transport links within the area and a number of residents' campaigns have begun campaigning against plans to close local GP surgeries. Vining and Boardman (2006) found that P3 (PPP in Canada) often involved high transaction costs, which were aggravated by complexity and by firms attempting to transfer risk (e.g. through setting up specialised companies and through maintaining high debt-to-equity ratios).…”