Authors: Andrew Schein
Addresses: Netanya Academic College, 1 University Street, Netanya, 4223587, Israel
Abstract: This paper reviews the benefits and costs of public-private partnerships (PPPs), and argues that there exists a basic problem with PPPs that government officials have a short run perspective, while the private companies have a long run perspective. This problem contributes to PPPs being more costly than traditional government projects but PPPs have a much better record of completing projects on schedule as compared to traditionally procured projects, and have led to increases in innovation. Accordingly, government should continue to use PPPs to improve the infrastructure in their countries, but ways must be found to reduce the costs of PPPs. In this paper, we suggest two ways to improve the outcomes of PPPs. One, PPPs should not include up-front payments from the private company to the government and, two, more importantly, the PPP contracts should be shortened to a maximum of 20 years.
Keywords: public-private partnerships; PPPs; PFI; private finance initiative; P3; PPI; PFP; government projects; Chicago parking meters; PPP benefits; PPP costs; infrastructure improvement; cost reduction; up-front payments; contract length.
Global Business and Economics Review, 2016 Vol.18 No.3/4, pp.297 - 309
Received: 14 Jan 2014
Accepted: 25 Sep 2014
Published online: 28 Apr 2016 *