Not all Public-Private Partnerships have proven to be successful or properly managed. This is often due to issues involving ambiguous contracts, a lack of communication between partners, uninformed stakeholders, and poor decision-making processes on one end or another.
However, several governments and private companies have also successfully overseen PPPs that have positively impacted both the public and private sectors. They have done so by establishing specific guidelines and goals that incorporate the interests of both groups and have allowed room for innovation and collaboration throughout the lifetime of the project.
Some of the most successful public-private partnerships in the past few decades have been…
1. The Cross Israel Highway in Israel
Realizing that the government does not have the funds necessary for improving all infrastructure, the Israeli government has utilized public-private partnerships for financing, operating, and constructing new infrastructure.
This includes roads, railways, schools, hospitals and more. One of their most successful PPPs is the Cross Israel Highway that spans from Hadera to Gedera in Israel.
For the Cross Israel Highway, the Israeli government chose the Build-Operate-Transfer (BOT) model to construct the 86 kilometer highway that would operate from northern to southern Israel with electronic tolls throughout. The period of gestation for the project was 8 years long (1990-1998) and the construction period for the project ended in 2004, with the concession (contract) valid until 2029.
This public-private partnership received broad political support from the Israeli government, with the Israeli Parliament establishing the basic terms of the contract and establishing a special purpose state-owned corporation to monitor the project. The state chose DEC, a foreign private contractor, to fund and execute the project in which DEC assumed all of the risk involved. The partnership was successful in developing the modernized infrastructure and utilizing innovative technology.
2. Melbourne CityLink in Australia
Another successful PPP is the Melbourne CityLink in Australia. In 1992, the Australian government invited private contractors to bid on building, owning and operating the highway infrastructure, otherwise known as the CityLink, in Melbourne.
Under the government’s concession, a private company, Transurban, was given the authority to take over the infrastructure under a build-own-operate-transfer (BOOT) model. Transurban will own, operate and maintain the highway until 2034, after which CityLink’s ownership will be transferred back to the State Government.
Construction of the CityLink took place between 1996 and 2000. It was the largest BOOT project in Australia and eight times larger than any other project in Melbourne at that time. This project was the first time in which the private sector had owned and managed road infrastructure. Innovation was also considered in the project as CityLink is Australia’s first highway to utilize electronic tolls and overhead structures that reduce noise in residential areas.
CityLink has proven to be an exemplary PPP in Australia in that its development and operation have greatly reduced traffic congestion and improved environmental conditions. During the construction phase of the project, between 6,000 and 8,000 jobs were created in Victoria and industrial processes were maximized for efficiency.
In Australia, CityLink’s success has demonstrated the full capabilities of a successful PPP in that its impacts on the economy and environment have sparked more interest in innovative solutions that can be delivered by public-private partnerships.
Both PPPs abroad and within the United States have proven to be successful when the public and private sectors come to a consensus on what they want and maximize their resources to achieve their goals. Support from political and governmental entities is crucial to achieving successful PPPs as the private sector cannot fully contribute to improving infrastructure if the government is not completely on board.
Foreign governments in Israel and Australia have witnessed the success of public-private partnerships in creating innovative solutions that are both financially and economically sustainable. In the United States, the private and public sectors are still wary of the effectiveness of PPPs as most of the risk is transferred to the private sector but with proven success nationally and internationally, the risk is worth it for the outcomes and opportunities that derive from successful public-private partnerships.
To learn more, visit www.teamrg.com for some additional reading and information about the services we provide to federal and commercial businesses.