In my previous blogs I have argued that to realize the potential of Public-Private Partnerships (PPPs), the public sector needs to develop Public to Public Partnerships (P2P Partnerships). The more the public sector can work as P2P Partnerships, the more it can change the economic and social value achievable by PPPs above what the public sector can achieve alone.
As P2P Partnerships develop to create an increased scale and scope of PPP opportunities, so too will the need for the private sector to evolve to enable it to respond to those opportunities. This may be in the form of diversified organizations or consortia of private sector organizations through Private to Private Partnerships (Pr2Pr Partnerships).
A key test of organizations seeking to achieve “joint working” (working collaboratively or in partnership together) whether for PPPs, P2P Partnerships, or Pr2Pr Partnerships, is whether they have PALS. PALS is an acronym for the key activities in joint working that stand for Prioritize, Aggregate, Learn and Share.
Do organizations, internally and externally:
- Prioritize what they do to be consistent with the shared objectives for joint working?
- Aggregate their competencies, organizational capabilities and capacity to achieve the outcomes required from joint working?
- Learn from each other, and others, in their quest for continuous improvement?
- Share their experience and learning to improve the process and outcomes from joint working?
In P2P Partnerships, public sector organizations enter into joint working arrangements to aggregate purchasing power and identify the possible synergies from system-wide thinking/joint working. There is recognition that the needs of communities are not constrained by the artificial organizational and geographical barriers created by public sector governance structures.
Developing P2P Partnerships prepares the public sector to develop a more strategic approach and shared context for PPPs by moving from a project-based approach to a strategic approach (see the blog: Getting beyond PPPs as just projects).
To get there, the public sector should do much more to share competencies, organizational capabilities and capacity, and challenge itself as a whole to develop and generate more value from PPPs. Recognizing the PPP Equation can help:
Private Sector Input
The economic and social value delivered above that achievable by the public sector alone.
The equation illustrates that the economic and social value achieved from both public and private sector input is above that achievable by the public sector alone. A single public sector organization is constrained by the limitations of its responsibilities and resources. Individually and jointly public sector organizations can benefit from the scale and scope of the private sector input to create additional economic and social value.
Pr2Pr Partnerships, as in the case of P2P Partnerships, refer to the joint working within and between organizations to meet the needs of external organizations that are greater than the scale and scope of the partnership members individually. However, large, diversified private sector organisations sometimes struggle with working effectively internally. Where this is the case, the likelihood of them being able to work effectively externally is then significantly diminished!
Their organizational cultures, strategies, performance, resource allocations, decision-making, etc. are sometimes inconsistent internally and not conducive to being an effective intra-organizational Pr2Pr Partnership. To be effective partners with the public sector, it is necessary to address the challenge of creating an effective intra-organizational Pr2Pr Partnership. Those involved in P2P Partnerships should assure themselves that large diversified organizations seeking to enter into a PPP have an effective intra-organizational Pr2Pr Partnership in place.
If intra-organizational Pr2Pr Partnerships are challenging, so too are inter-organizational Pr2Pr Partnerships. Different organizations with different competencies, organizational capabilities, capacity, cultures, priorities, strategies and objectives should build relationships to support joint working and focus on the outcomes required from PPPs. This involves being clear about risk, their contribution to working jointly, choosing acceptable levels of rewards over time, and developing the trust and confidence to enable them to perform together.
As the scale and scope of PPPs increase so too will their complexity and the need for joint working within the private sector in the form of Pr2Pr Partnerships. The relationships within and between private sector organizations will need to move from the transactional through collaboration to true partnership working. If the private sector organizations cannot ascend the Staircase of Relationships (see The Public Private Partnership Handbook: How to Maximize Value from Joint Working) within and between themselves to evolve their collaboration, it is hard to see how they can ascend the Staircase of Relationships with the public sector to achieve effective joint working in PPPs.
As the demands for the scale and scope of PPPs increase so too does the complexity of them and the need to have well developed relationships. If you don’t have PALS the Partnership in PPPs will not develop. This means that PPPs will not deliver their potential to transform economy, efficiency and effectiveness and the Social and Economic Value Equation.
Editor's Note: The content of this blog does not necessarily reflect the views of the World Bank Group, its Board of Executive Directors, staff or the governments it represents. The World Bank Group does not guarantee the accuracy of the data, findings, or analysis in this post.