How can we smooth the path for public and private companies to work together?

Public-private partnerships have delivered successful regeneration projects for many years across the UK. As it appears that we are heading towards an era of more, rather than fewer PPPs, making sure you are equipped to deliver a successful partnership is essential. There are five key ways to do this. 1. Know the rules of the game The public sector is required to comply with public procurement, state aid and public law when conducting activities, and both parties must be mindful of this when setting up PPPs. If this is not considered at the outset of a potential PPP, it can present serious issues further down the road. Public bodies have a duty to comply with this legal framework, and do not have the same freedoms as private bodies – so a clear legal framework, structure and route should be established so both parties are comfortable as to the legal foundation (and future) of the partnership. These issues can all be dealt with provided that they are considered at the right time and the right actions taken. 2. Purpose and objectives of the PPP Both parties need to be clear about what they are getting themselves into, ensuring they establish the aims and objectives for the PPP and each parties’ obligations, commitments, and financial/non-financial returns. By working together to develop a business plan for the partnership, the parties can establish clear objectives and indicators for what the PPP is being set up to achieve. If the parties do not establish this at the outset of a partnership, they run risks to the future productivity and effectiveness of the PPP. In addition, the legal form of the PPP is important. Is it to be a joint venture company or a contractual arrangement? Both approaches have their benefits and limitations, but the right legal structure for a particular partnership will ultimately depend on the parties’ objectives. 3. Clarity on each party’s contribution to the PPP Both parties must be clear on what they will bring to the partnership. Will the public sector contribute land? Financial or human resources? Opportunities for development? Similarly, what is the private sector partner contributing? It is important that this is agreed from the outset, and will often factor into the discussions on the viability and returns from a PPP. Part of this discussion will also involve a consideration of risk transfer with the parties ensuring that risk is transferred to the party that is best able to manage each risk. 4. Governance As important as establishing the purpose and objectives of the PPP itself is the relationship between the partners. The parties need certainty as to their responsibilities in relation to the PPP and its future performance. Effective governance of the PPP is essential to its success and both parties should be accountable for the operation of the PPP. 5. Right people As with any successful partnership, it is imperative that the right people work within the PPP. The private and public sectors bring unique experiences and skills to a partnership, but once the vision and objectives of the PPP are established, the parties must identify the right people to ensure delivery. If a PPP is resourced and driven by the right people, it will stand a much better chance of success. PPPs can be rewarding and deliver significantly more than going it alone. The direction of travel, across the UK, is an increasing number of these partnerships, and we wish you all the best in your endeavours. Colin Murray is partner, head of local government at DWF