Public Private Partnerships in a time of economic crisis

A waste of time or a calculated risk?
Source: RISK Management & Governance, Edition 6, Summer 2010

On Thursday June 10 2010 PRIMO Europe organized its own round table. The meeting was very well attended. Over 50 people from not just the public but also the private sector attended the meeting. The private sector was well and widely represented by representatives from insurance companies, banks, building companies, law firms, knowledge institutes and more. The topic of this round table was Public Private Partnerships (or PPP). The importance of this topic is very actual, especially because risk analysis before contracting within the context of the financial and economic crisis is pretty new in the public sector. The focus point for the discussion was what measures governments have to take in order to improve the success of PPP.

The topic was introduced and the further discussion was lead by Tom Wustenberghs. Different angles on the subject of PPP were introduced and presented by a wide range of speakers. We has the pleasure to welcome several specialists from the private sector, the private constructing sector (Besix international group), the insurance sector (Infrassure), the insurance brokers (Marsh), the bank sector (Dexia) as well as a law expert (DLA Piper). We also had the pleasure to welcome the responsible PPPexpert from the French government (MAPPP).

The first speaker was Patrice Moura, from the French centre of knowledge on PPP. Secondly came Kim Moric, a lawyer and chairman of a centre of knowledge in Brussels and Wallonia. The introductions on the theme was completed by Rudi Cnudde, PPP-manager for internationally known building company the Besix group. Byron Davies from UDiTE presented for the assembly a case study on PPP in the city of Cardiff.

After that came the debate. Together with the very good atmosphere perhaps also because of the subject the debate was lively and there was a people were keen to join the discussion based on the introduction by the before mentioned speakers. It became clear that the subject of PPP can stir up a lot of reactions. It also became obvious by the various reactions that not every stakeholder is working on risks or risk analysis at this moment. The discussions were lively because there was a commonly shared awareness on the use and benefits of PPP projects. The sometimes contradictory interests of on the one hand the government and secondly the private sector made resulted in an interesting debate. The government wants to realize projects, but is confronted with private partners who aren’t always willing to sign up for PPP based projects.

In ongoing projects, mainly maintenance projects, the governments sees a decline in income. Despite that, governments are willing to invest in new projects with the purpose of creating jobs and stimulate investments. On the other hand private partners are confronted with financial institutions who are less willing to hand out credits and with fluctuating interests. Banks have also become cautious. So taking on new loans for investments have become more risky and difficult.

The consequence of this is that private partners tend to work more together. Consortia are formed. The negative consequence of this is that the government has to negotiate with several more partners. At the end of the day a several conclusion can be drawn. Firstly, the concept of PPP is certainly not dead and still very actual. This form of realizing projects remains to be a very important instrument for governments to realize projects. The most valuable asset of PPP is that you can use the knowledge and knowhow of the private sector. Another conclusion that was drawn, was that PPP can take up more time because there have to be negotiations with several partners. More often government guarantees are asked, which leads to more risk for the public sector. Also the mechanism of competitive dialogue is a very valuable instrument to realize a successful project with respect for the different positions of all parties. And last but not least, there is great and clear need to further professionalize the public sector.

Looking back the round table was clearly a success. The board of PRIMO Europe was very glad with the presence of so many guests with expertise on the topic. We were happy to present ourselves as a knowledge platform, as a forum for exchanging experience on risk related topics. We hope to keep in touch with the speakers and to build a professional relationship with them in the future when it comes to PPP-related activities. last but not least, we noticed strong interest from the European Commission to join our efforts. PRIMO Europe needs to get in touch with the European policy makers in order to create a link between the local or regional level on the rapidly growing importance of public risk management!

The next PRIMO Europe round table and workshop will be held in Strasbourg on Saturday the 30th of October 2010.