Public-Private Partnership

A public–private partnership (PPP, 3P or P3) is a cooperative arrangement between one or more public and private sectors, typically of a long term nature. Governments have used such a mix of public and private endeavors throughout history. However, the past few decades has seen a clear trend towards governments across the globe making greater use of various PPP arrangements.

There is no consensus about how to define a PPP. PPPs can be understood of both as a governance mechanism and a language game. When understood as a language game, or brand, the PPP phrase can cover hundreds of different types of long term contracts with a wide range of risk allocations, funding arrangements and transparency requirements. And as a brand, the PPP concept is also closely related to concepts such as privatization and the contracting out of government services. When understood as a governance mechanism the PPP concept encompasses at least five families of potential arrangements, one of which is the long term infrastructure contract in the model of the UK's Private Finance Initiative (PFI). Particular types of arrangements have been favored in different countries at different times.

Infrastructure PPPs as a phenomenon can be understood at five different levels: as a particular project or activity, as a form of project delivery, as a statement of government policy, as a tool of government or as a wider cultural phenomena. Different disciplines commonly emphasize different aspects of the PPP phenomena. The engineering and economics professions primarily take a utilitarian, functional focus emphasising concerns such as project delivery and relative value- for-money (VfM) compared to the traditional ways of delivering large infrastructure projects. In contrast, public administrators and political scientists tend to view PPPs more as a policy brand, and as a useful tool for governments to achieve their objectives.

Common themes of PPPs are the sharing of risk and the development of innovative, long term relationships between the public and private sectors. The use of private finance is another key dimension of many PPPs, particularly those influenced by the UK PFI model, although this has aspect has waned since the global financial crisis of 2008. The PPP phenomenon has been controversial. The lack of a shared understanding of what a PPP is makes the process of evaluating whether PPPs have been successful complex. Evidence of PPP performance in terms of VfM and efficiency, for example, is mixed and often unavailable.

According to Weimer and Vining, "A P3 typically involves a private entity financing, constructing, or managing a project in return for a promised steam of payments directly from government or indirectly from users over the projected life of the project or some other specified period of time". Because P3's are directly responsible for a variety of activities, as indicated by Weimer and Vining, P3's can evolve into monopolies motivated by rent-seeking behavior(s).

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