One question, eight experts, part seven: Robert Puentes

To gain a better understanding of how innovation in public-private partnerships (PPPs) builds on genuine learning, we reached out to PPP infrastructure experts around the world, posing the same question to each. Their honest answers redefine what works — and provide new insights into the PPP process. This is the question we posed: How can mistakes be absorbed into the learning process, and when can failure function as a step toward a PPP’s long-term success?

Our seventh response in this eight-part series comes from Robert Puentes, Senior Fellow with the Brookings Institution's Metropolitan Policy Program. 

In the U.S., one of the best learning tools for places wishing to engage in PPPs for infrastructure has been past mistakes. From the parking meter deal in Chicago, to Virginia’s Pocahontas Parkway, and a handful of others, American cities and states pay close attention to one another and are loathe to repeat previous problems.

But going forward, institutionalizing such learnings requires a dedicated team. Indeed, assembling a group with the right mix of finance, legal, policy, and communications experience is critical to the success of any PPP project. Public sector agencies looking to procure a limited number of PPP projects or engaging in their first, often use outside advisors for most of these services. This can be a successful strategy as long as public sector decision makers remain in control of the process.

However, to truly embed learning, a dedicated PPP unit is necessary to increase the public sector’s in-house capacity and expertise. These teams can live inside a department, such as a transportation office, or may be generalists under a mayor or governor’s office. Examples of these types of PPP units can be found at both the state level, notably in Virginia, and at the city level in places like Los Angeles and Chicago. The Obama administration is also creating the Build America Transportation Investment Center, a coordination unit at the U.S. Department of Transportation that will help localities with innovative finance tools like PPPs.

While the exact mission of each of these offices varies, PPP units have five distinct roles in the procurement process: policy formulation and coordination, quality control, technical assistance, standardization, and promotion. By bringing this expertise in-house, states and localities are able to develop both the formal and informal processes that underpin smooth transactions. Finance expertise in these units is especially important, as it decreases transaction costs over time by cutting down on the need to hire outside consultants and builds greater market certainty for leading private sector partners.

Editor's note: this article originally appeared in the World Bank Group's Handshake journal.