The WhatIf Group has been working successfully with a few equitable Public & Private sectors sharing the risk and the reward, unfortunately that cannot be said for many PPPs.
It is common knowledge that Local Authorities (LA’s)are facing a financial crisis with more than 100 currently in debt. Many authorities are living hand to mouth and will need to totally rethink their financial strategies or face bankruptcy, as in the case of Birmingham City Council. According to a Guardian report, Local Government Association (LGA) estimates that councils face a £3 billion funding gap ever the next 2 years to maintain services at current levels.
How Can they break free from the debt trap?
LA’s will need to think differently to survive and to be able to continue to invest in their communities and growing their economies. Some councils’ have seen opportunities to invest in their own services to achieve strategic cost savings. At Whatif Group we see equitable Public, Private Partnerships (PPP’s), is a solution to help them to prosper, so why don’t more LAs investigate the option? These must be based on a shared risk and reward basis from both the private and public sectors; too often in the past the public sector has carried too much of the risk. “A sign of madness is to keep doing the thing you have always done and expect the result to change”.
There are differences in the way councils and the private sector work, both having different skillsets. Councils are bound by Government policy and those polices can change depending on which political party is in power. They are nervous of working to long term strategies as the political agenda can change with every 4-year local election and will therefore, always err on the side of caution. The private sector is aware of the risks of political change and the uncertainty this can bring to investment strategies. It is incumbent on local government to find mechanisms to de-risk longer term investment approaches.
The public sector also has their hands tied financially and have strict budgets to adhere to. Funding options have become more difficult to access due to Government austerity measures, separation from Europe and the recent cost of living crisis. However, private enterprise has money to invest in projects that sit in line with their own business strategies and ethos and more importantly they are used to taking calculated risks.
Private Enterprise also brings its own specialist skillset, providing experienced project management; ability to deliver quickly and can bring a lot to the table in terms of commercial know how, raising capital and creating profit, which can be used to put back in as investment.
The private sector work to set budgets within specific timescales, have learnt from past mistakes, bringing to the table proven ways of working that has brought similar success elsewhere, a sort of best practice. Most of all they have a collaborative team that thinks outside the box and works throughout to achieve the set task. They assess the risks in advance and determine contingencies that can be implemented should things go off course. Private Enterprises work with long term partners who because of their relationship, understand fully what is expected from them in respect of achieving a specific goal, within a specific budget and within the specified time scale.
What can get in the way of a successful Public Private Partnership?
Both the public and private sectors usually want to achieve the same result but have totally different methods of working and different measures of success. However, this is an excellent starting point; sharing aims and objectives.
The public sector has had a specific way of working which has held them in good stead for many years. They have had many specialist departments working to their own targeted priorities and budgets and although some of their targets cross over, the time it takes for a major project to get through to the approval stage can take time. However, with the cutbacks in the public sector its now more challenging to employ specialists and generic ‘project managers’ are becoming increasingly common in many organisations.
Local authorities also have many projects on the go at one time involving all departments providing different services. They use public money for which they are responsible and accountable. rightly so, however the world is vastly changing with austerity and a cost-of-living crisis, the public purse is getting smaller and smaller. The money is not as forthcoming, and they are literally living from hand to mouth with some projects either being put to one side or left unfinished.
Investment in most capital projects considered by many to be ‘regeneration’ are discretionary and as money gets tight there is also a risk that they are not going to be prioritised over other pressing needs, such as social care.
The private sector on the other hand can quickly pull together specialists in every field collaborating from day one, working within specific timescales and reporting back regularly. They know the financial risks from the start, which drives them to get the job done and they have total control. They too will have more than one finger in the pie of projects but will employ the resources to see those projects through, whereas, LAs could be restricted by the lack of funding to recruit. If private enterprise come across a hurdle, they can quickly meet to solve the problem or rely on past experience to implement a solution. Most of all they have such a vast knowledge of what works and can see “ahead.” helping to make those solutions run smoothly.
At Whatif Group we have seen on a daily basis the huge pressure the public sector is under. Getting an appointment with senior officers in local government to discuss projects can take weeks to arrange. If the pressure is that great, then it is in the local authorities’ best interests to work with partners collaboratively who can ease the strain.
How can they work together to bring success and mostly to improve local. Towns and cities
Equitable PPPs can create social value through on-time and on-cost delivery, generating efficiency gains and offering innovation in project design, incorporation of global expertise, and accessing new sources of capital. All sides want to encourage economic growth; addressing a shortage in housing regeneration, fuel poverty and climate crisis to name but a few should be their common goal.
This partnership should offer the potential for a genuine focus on local priority outcomes founded in broader measures of success aligned with the council’s corporate priorities. Longer-term partnerships, where the private partner takes a long-term stake in the success of an area, can enable broader measures for successful places to be established and offer greater influence over long-term local employment planning and community benefit.
Source: https://www.local.gov.uk/publications/public-private-partnerships-driving-growth-building-resilience)
Establishing this partnership is not easy however, once everyone is in agreement, they can determine a portfolio of projects which needs to be clearly defined, with transparency of procurement being a key factor, and due diligence throughout the process of finding the right partners paramount to its success.
However, the public sector does need to resolve quicker ways in which to address procurement. Even PPP’s can be slowed down by the risk adversity of needing to cross all the T’s and dot all the I’s in a long-winded procurement process.
So which Partner do you choose to bring it all together?
A radical approach is required, replacing the focus from the built environment to one that focuses on communities and place, with a consultant that sees the bigger picture.
The Whatif Group is that consultant. Their DNA is based on ethical capitalism, people and place, circular economies, sustainability and the built environment. They have substantial expertise in both the public and private sectors and understand the nuances needed to create more trusting, impactful and sustainable partnerships, championing the need for closer and more equitable relationship between public and private sectors.
The Whatif Group can help navigate the critical pathways to achieve the vision for change, including development consultancy or direct development and help occupiers that want to generate social impact.(Source: https://reverent-kirch.91-238-163-161.plesk.page/)
Photograph courtesy of Cytonn Photography (Unsplash)
