Contract management is a crucial factor in the provision of joint services,[57] and services that are more difficult to monitor or fully record in the language of the contract often remain under municipal control. In the 2007 survey of U.S. city executives, hospital operation and management were ranked as the most difficult service and the least difficult cleaning of roads and parking lots. The study found that municipalities often do not adequately monitor cooperation agreements or other forms of service delivery: “In 2002, for example, only 47.3% of managers who dealt with private companies as procurement partners reported that they evaluated this service delivery. By 2007, that figure had fallen to 45.4 per cent. Performance monitoring is a general concern of these investigations and the scientific critique of these arrangements. [13] [14] In traditional public projects, the public body (owner) retains most of the risk, while in P3s, some or all of the risk is contractually transferred to the private partner. Understanding how to assess risk factors and determine which risks are best managed by the public or private partner is a key success factor for any P3, but not a skill in which most public sector employees are trained. Fortunately, there is an emerging center of excellence among a number of consulting firms that can help guide the process of identifying these risks and determine whether they are better managed by the public entity or transferred to the private partner. An important concept that all public entities on P3s need to understand is that all risks entail costs and that the purpose of a P3 is to attribute those risks to the party that can own them in the most cost-effective manner. Public-private partnerships (PPPs) take a wide range of forms, which differ in the extent of participation and the risk taken by the private party. The terms of a PPP are usually set out in a contract or agreement to describe each party`s responsibilities and clearly assign the risk. The following graph shows the range of PPP agreements*.

While well-designed P3s can generally be implemented faster than traditional, publicly controlled developments, they are often delayed in the preparation and approval process if not properly planned. In a P3, it is very important to assess the time it takes for the public institution to define the project requirements and define the governance structure and all the permits required to launch the project. It is in the pre-planning and approval process that we most often see timing discrepancies on P3s. This is particularly the case if it is the first time that a public institution has been carried out by an agency. When private companies take over a PFI project, they are considered risks that the State would otherwise have borne. These risks have a price that responds remarkably to the desired result. An article in the British Medical Journal shows that before the risk was calculated, the hospital systems studied would have been built much cheaper with public funds. Once the risk was calculated, they all switched the other way; in several cases, less than 0.1%. [66] Public-private partnerships involve cooperation between a government agency and a private company that can be used to finance, build and operate projects such as public transport networks, parks and convention centres. Funding a project through a public-private partnership can allow a project to be completed earlier or make it possible in the first place.

Public-private partnerships often involve concessions on taxes or other operating revenues, protection against liability or partial ownership of nominally public services, and ownership of private for-profit entities. The motivation of U.S. city managers to provide public-private services varies. According to a 2007 survey, two main reasons were cited: cost reduction (86.7%) and external budgetary pressures, including tax restrictions (50.3%). No other motivation expressed exceeded 16%. However, in the 2012 survey, interest shifted to the need to improve processes (69%), build relationships (77%), achieve better results (81%), use resources (84%) and believe that collaborative service delivery is “the right thing” (86%). Among respondents, the provision of public services through contracts with private companies peaked at 18% in 1977 and has declined since then. The most common form of joint service delivery today includes government-to-government contracts, which increased from 17 per cent in 2002 to 20 per cent in 2007. “At the same time, about 22 percent of local governments surveyed said they had returned at least one service they had previously provided through another private arrangement internally.” [13] Typically, a private sector consortium forms a special company called a Special Purpose Vehicle (SPV) to develop, build, maintain and operate the asset during the contract period. [30] [31] In cases where the government has invested in the project, it is usually (but not always) awarded a stake in the VPS. [32] The consortium usually consists of a contractor, a maintenance company and one or more investors.

The first two are usually project shareholders who make decisions but are not repaid until the debts are repaid, while the latter are the project`s creditors (debt holders). [8] Public-private partnerships are generally found in transport infrastructure such as motorways, airports, railways, bridges and tunnels. Examples of municipal and ecological infrastructure are water and wastewater treatment plants. Public housing includes school buildings, prisons, student residences, and entertainment or sports facilities. Public-private partnerships are generally found in municipal or green transport and infrastructure, as well as in public service housing. Public-private partnerships with nonprofits and private partners have grown significantly over the years, in part because local and state governments rely heavily on the growing number of nonprofits to provide many public services. [88] Neighbourhood organizations or small and local non-profit organizations saw a large source of funding in the early years, but more recently, there was a shift in funding that reduced overall funding and saw more of it go to larger agencies focused on large grants. [Citation needed] The effectiveness of PPPs as projects to reduce costs or improve innovation has been questioned by numerous studies. .