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Public private partnerships no panacea, report says

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A report on public private partnerships says they are not a simple solution to improving government assets.

Public private partnerships (PPPs) are being hindered by unproven ICT systems and specification changes, which disregard time or budget implications, according to a survey of PPP specialists by financial market intelligence provider Standard & Poor's.

The government is increasingly using PPPs to build public sector assets, including hospitals and schools. Building Schools for the Future, a PPP programme to renovate secondary schools in England is expected to be worth £20bn, some 10 per cent of which will be invested in ICT. BT's PPP contract with the Ministry of Defence for the Defence Fixed Telecommunications Systems is valued at £3bn over 15 years.

The reports says although 91 per cent of respondents said PPPs have a better track record of delivery than conventional procurement methods, the detailed findings of the report reveal more mixed views.

"The most frequently reported causes of PPP construction distress in the survey were associated with the public sector itself," said Standard & Poor's credit analyst Robert Bain. "These include inexperience, lack of commitment, lack of engagement, bureaucracy, interference, and associated scope changes and enforced delays.

"Other major causes of distress included delays with permits and approvals, unforeseen ground conditions, and aggressively tight construction budgets."

Some respondents said it was too soon to say whether PPPs offered a better track record of delivery that conventional approaches. Globally, many PPPs remain in the planning or construction phase.

There was a consensus, however, that without highly skilled and experienced individuals on both the public and private sector sides, projects could go badly wrong. Government needs to know the contractors have a track record of successful delivery.

Standard & Poor's findings are based on 161 replies from PPP participants in 22 different countries. The responses came from ICT advisers, procuring agencies, financial advisers, insurers and construction contractors.

This article was originally published at Kablenet.

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