MANAGING IN A MIXED ECONOMY - Essay Example

?Managing In a Mixed Economy Table of Contents Introduction 3 A Brief Overview of London Underground 5 Seminar Topic 5 Why Is It Argued That PublicServices Need To Be More Innovative? 5 Examples of the Innovative Practices and Issues of PPP 7 Seminar Topic 2 8 Why Has Partnership Working Become So Important In Public Service Delivery? 8 What Implications Has It For The Management Of Services And The Skills Required Of Managers? 10 Conclusion 12 References 13 Introduction One of the inconsistencies of present day’s economy has been viewed to be continuity along with progression of public private partnership (PPP). PPP is regarded as a predetermined contract between government and private segment which covers the mode for distributing public facilities such as electricity, water supply, transportation, education and healthcare. In today’s mixed economy, governments belonging to diverse nations have been dealing with private organisations through PPP as it provides three major facilities. First, PPP is quite efficient in assisting government to react with increasing demand of infrastructure based services. The second facility is that PPP assists government to exploit the public resources that would be utilised for making infrastructure development, hence shifting the liability of capital outlay to the private segment. PPP permits government to allocate resources for other admirable improvement related expenditures. And the third facility is that PPP supports government in terms of effective supply of services. The corporate pattern of private segment provides improved effectiveness and also offers higher returns on investment in comparison to government possession (Abonyi & Slyke, 2010). The root of so called PPP is considered to be originated from the United States and the United Kingdom correspondingly. Denationalisation of public services and deregulation are few key aspects which has characterised the new era of management reorganisation and restructure of governmental activities (Bovaird & Loffler, 2009). With respect to PPP, the UK is considered as the leader. UK has first presented large scale PPPs in the economy. From the years 1987 to 2004, the government of the UK has contracted about 677 PPPs that valued nearly about ?43 billion. The amount of PPPs in the UK has increased considerably from the year 2000 due to increased pressure from the citizens to provide as well as to develop essential infrastructures for them (McQuaid & Scherrer, 2008). PPP is the tag for standard modification in public management which is applied mainly for innovative improvements. PPP has its derivation from established business administration concept which is overwhelming the incompetent distribution of resources in public authorities and delivery of public services. Public establishments are found to suffer from several economic disasters because of inherent faults in functional and operational management. PPP therefore attempts to gain substantial profit from the improvement of public segments by a greater level (Richards & Smith, 2002). It has been apparently observed that the governments belonging to dissimilar nations established PPP in order to encourage privatisation and support private entrepreneurs. However, it is worth mentioning that PPP is basically regarded as a set of institutional association between government and several actors of private segment. PPP is viewed to be neither an improvement strategy nor an unattached collaboration between different representatives; rather it is continuing set of dealings to accomplish certain predetermined objectives (McCartney & Stittle, 2008). The government of the UK believes PPP as a variety of business structures and partnership arrangements. The government of the UK has developed three major types of PPP which are proprietorship, endowment of services and sales of public services. Furthermore, PPP has corresponding role in allowing organisations to provide mutual basis between public and private segment in order to encourage economic and social improvement strategies. The first type of PPP is related with institution of private sector proprietorship and government owned business. The second type of PPP is concerned with delivery and process of infrastructure development. In this type, public segment contracts with private segment purchase the services on long- run basis in order to exploit the managerial abilities of private organisations. The third type of PPP is characterised by producing commercial worth from public assets such as marketing the services of government to the extensive market segment (Finn & et. al., 2007). A Brief Overview of London Underground One significant example of PPP in the UK is London Underground PPP. London Underground PPP was established through business partnership between government and three infrastructure organisations. It is regarded as one of the most high profile dealings between public and private organisations. The key objective of establishment of London Underground PPP is to provide safe and sound transport operations. Initially the government of London expected to enhance the customer service, develop the convenience of travelling and ensuring cleanness in the underground transportation system. The key concept behind the PPP was that private segments are much efficient and innovative than public segment and thus is better suited for satisfying the growing demand of citizens (Finn & et. al., 2007). Seminar Topic 1 Why Is It Argued That Public Services Need To Be More Innovative? In growing competitive economic atmosphere, governments throughout the globe are concentrating more upon introducing as well as developing new methods of building dynamic infrastructures and providing quality services to the citizens. Nowadays, governments all over the globe have to face challenging tasks due to increased level of globalisation along with internationalisation and needs to safeguard the interest of people by a significant level. The expectations of citizens continue to increase as they request for enhanced public services at low expenses. Additionally, the confidence of citizens on the government and on the political leaders relies on the service quality. The governments throughout the globe are constantly confronted for delivering different public services in a quicker and an economical way in order to develop innovative services. Providing innovative public services are vital for the governments because this would help to make social progress and also to support affluence for every citizen (Bovaird, 2007). The public segment services are generated from necessity of citizens. Presently, the technological progress acts as an enabler for citizens to enjoy better and faster public services. The rapidly changing technological atmosphere also requires new thinking and innovative approaches for governments in order to obtain the advantages and to deliver better facilities for citizens. Innovation in public services not only helps to enhance the economy, but also improves the lifestyle of people by a greater level (NASCIO, 2006). It has often been argued that public services need to be innovative because it can help to take the society to the next level. Innovative public services deliver value to the citizens and also help them to grow. History demonstrates that innovation in public services can enhance the urban living experience and also encourage new ways of thinking (Witters & et. al., 2012). Due to the mounting importance of innovative public services, governments are forcing PPP which posses the capability to enhance the existing services. PPP is becoming a common tool for governments to utilise the strengths of both public and private segments. Ideally, PPP deliver better value for money and integrate innovative design in the planning procedure. Most importantly, PPP allows government with effective risk sharing. A well-developed PPP shares the risk with greater inducement and capability (Qiu, 2010). PPP provides valuable framework for public organisations and contribute their unique strengths in order to enhance the quality of life of the individuals or people. It can open up new potentials for creating solutions to deep-rooted problems. PPP bring innovative ideas and support the governmental strategies (Ref.). Examples of the Innovative Practices and Issues of PPP In case of transportation, innovation is also imperative for governments because it can help the cities to solve difficult problems relating to transportation and also help to serve the citizens in better way. Innovation provides new solutions to the existing problems and often creates employment opportunities for people enhancing the operational effectiveness at large (Siemiatycki, 2012). One example of innovative practices of public services through PPP is London Underground. It was established as public establishment in order to bring the underground transportation system under one authority. However, London Underground faced considerable problems because of unbalanced and insufficient investments. Besides, the London government also supported the PPP due to lack of confidence on public authorities to provide safe and effective transportation services. Numerous hazardous incidents caused massive rethinking of government to operate London Underground in innovative way. Thus, following the public establishment, London Underground has restructured through PPP (Finn & et. al., 2007). Under PPP, three private organisations had undertaken the maintenance and renewal of transportation infrastructure. The private segment had brought new disciplines, assistances, knowledge and innovation to London Underground services which were driven by concentration on customers’ requirements. PPP practices helped to modernise the London Underground facilities by improving different infrastructures like tracking system, signalling system, communication framework and tunnel structures among others (Finn & et. al., 2007). Although PPP helped in innovative practices for London Underground, it also raised several contractual issues. For instance, PPP raises several issues with respect to legislative requirements. Any kind of legal obstruction and doubt about PPP practices can impact on both public and private segment. The doubts can exist with respect to explanation of procurement law, complex necessities for tendering and variations in membership of command confederation among others. Apart from these, PPP practices can also raise accounting issues, procurement issues, risk issues and affordability issues among others. Procurement practices in PPP can take several forms and different procurement regulations apply to different forms of PPP. It makes quite challenging for public segment to fulfil the requirements of different projects. Risks have been recognised to be common problems in PPP. As the risk of defect in entire transportation network was hinged on private segment, it required detailed technical assessment. Besides, affordability issues also may arise in PPP. As public segment generally limits costs on different activities, any kind of complexity or increase in the number of projects cam impact on the affordability of public segment to ensure the deliverance of quality services (Finn & et. al., 2007). Seminar Topic 2 Why Has Partnership Working Become So Important In Public Service Delivery? It is the duty of every government to provide necessary public services and to enhance them according to the requirements of citizens. However, in reality, government have limited capability to react with the prospects and requirements of citizens due to scarce resources, economic unpredictability, weak infrastructure, managerial ineffectiveness and big skill gap. These aspects result in poor public services delivery (Kinder & Wright, 2009). Overcoming these problems necessitates considerable improvement in infrastructure, development of skill base and increase in amount of investment. Specially mentioning in this similar context, public sector alone is not capable of providing increased amount of investment and to enhance the proficiency of delivering effective services to the citizens. To the worst circumstances, recent economic recession has resulted in immediate prerequisite of government to minimise investment budget which has broadly impacted on the delivery of public services at large (Kinder & Wright, 2009). Both developed and developing economies are under severe pressure to satisfy the significant demand of citizens concerning the deliverance of new and updated infrastructure. Unless the requirements of citizens are fulfilled in cost effective manner and in sustainable way, economic progress of a nation would not occur. In today’s turmoil economic condition, governments around the world are finding much challenging to invest in the improvement of public services at the required level and to maintain proper stability between income and expenditure. Furthermore, governments also facing difficulties in reacting with the increasing expectations of citizens which in turn making them using alternative sources of investment and expertise at large. As a result, public agencies have identified as a way to develop the infrastructure by exploiting the abilities and fund. Thus, governments in developed economies are using private partnership in order to help them in planning, constructing and functioning infrastructure. Through private partnership, governments are enhancing the public service delivery (Kinder & Wright, 2009).In recent days, partnership working has become so important for providing public services as it can help government to provide greater financial support in order to deliver the services effectively. Likewise, private sector also helps to bridge the skill gap which is required in order to provide the public services in an efficient manner. In fact, partnership also helps to reduce the risk of government by ensuring available infrastructure with proper maintenance. Moreover, partnership also helps to share duties and investment that are related with delivery of public services (Kinder & Wright, 2009). For London Underground, partnership working was quite vital because it was difficult for the London government alone to provide safe, cost effective and improved transport services to the public. Development of underground infrastructure requires huge amount of investments along with expertise for development in road infrastructure and for providing secure services to the people that can only be achieved through partnership. In this context, it can be stated that partnership with private organisations helped in stable funding and thus becomes much significant in delivering quality as well as effectual public services (Comptroller and Auditor General, 2004). What Implications Has It For The Management Of Services And The Skills Required Of Managers? Across the UK as well as throughout the globe, partnerships have gained considerable popularity for providing effective and quality public services. UK is considered as amid the international leaders in application of partnership. It represents fundamental shift in the way public infrastructure development projects are planned, financed and carried out. At the core, partnerships are intended to transform the role of government from manager to purchaser of public services. In partnership, design, construction and management activities are bundled to long run concern for government which are allocated to private organisations by competitive tendering procedure (Institute for Public Policy Research, 2001). Irrespective of increasing popularity of partnership in providing public services, it has several implications on management. It is being argued that in partnership working, the engagement of the governments particularly in the management of public services become restricted to a certain extent. Those who oppose the idea of partnership working in providing public services often reveal that partnership working can result in loss of managerial power of government in decision making with respect to financing and delivery of public services. Moreover, successful partnership working requires strong administrative competency for managers in order to effectively manage different activities in partnership settings. As partnership working is different from traditional hierarchical based management structure, managers require different set of skills in order to deal with different activities of providing public services. Arrangement in partnership working is defined as under ordered, networked and multi structural aspects which require unique management abilities and competencies. Hence, it can be argued that one of the prerequisites of successful partnership working is availability of specific management knowledge and skills for effectively handling different activities (Mistarihi & et. al., 2012). Managers in partnership working environment must be flexible to react with any kind of change throughout the way of partnership. Some important skills which are required for managers to deal with the implications of partnership working are strong relational along with communication skills, conceptual skills, project administration skills and coordination skills. Besides, managers must also bear the knowledge concerning cooperation and adjudication activities. They must be knowledgeable enough to manage the construction, operational and commercial aspects of public services (Mistarihi & et. al., 2012). Conclusion In conclusion, it can be stated that PPP has gained considerable attention in recent days for delivering public services. PPP is being used significantly in order to enhance the infrastructure and to improve the delivery of public services in sustainable manner. Nevertheless, PPP can raise several issues with respect to providing public services to the citizens such as managerial issues and administrative issues among others. Irrespective of different issues, it seems PPP is the best way for the governments to provide effective and improved public services. Thus, fulfilment of citizens’ growing requirements necessitates governments to develop partnership with private corporations. However, while developing partnership with different private organisations, governments need to consider several managerial issues in order to enhance the effectiveness of public services. From the case example of London Underground, it can be observed that the London government has effectively performed partnerships with private organisations in order to enhance the transportation infrastructure of the city. Although the use of PPP in London Underground nurtures several issues with respect to procurement and other financial activities, it also helped to share the risks and responsibilities which are inherent in such huge activities. Innovation is considered as one of the major concern for public segment while providing public services which can be properly addressed with PPP. By nature, PPP is based on long-run relationship between both parties. The core of success of providing public services through PPP is selection of adequate private business partners and to develop a collaborative working atmosphere where every party can support different organisational activities by a greater level. References Abonyi, G. & Slyke, D. M. V., 2010. Governing on the Edges: Globalization of Production and the Challenge to Public Administration in the Twenty-First Century. Public Administration Review, pp. 1-13. Bovaird, T., 2007. Beyond Engagement and Participation: User and Community Coproduction of Public Services. Public Administration Review, pp. 846-860. Bovaird, T. & Loffler, E., 2009. Public Management and Governance. Routledge. Comptroller and Auditor General, 2004. London Underground PPP: Were they Good Deals? National Audit Office. [Online] Available at: http://www.nao.org.uk/wp-content/uploads/2004/06/0304645.pdf [Accessed May 04, 2013]. Finn, R. & et. al., 2007. Down the Tubes: London Underground and the Public-Private Partnership. Transportation Policy, Planning, and Deployment. [Online] Available at: http://nexus.umn.edu/Courses/Cases/CE5212/F2007/CS3/CS3-report.pdf [Accessed May 04, 2013]. Institute for Public Policy Research, 2001. Building Better Partnerships: The Final Report from the Commission on Public Private Partnerships. Institute for Public Policy Research. Kinder, C. & Wright, D., 2009. Better Public Service Delivery through Public-Private Partnerships. Commonwealth Business School. [Online] Available at: http://www.cbs.ac/new_programmes/Better%20Public%20Service%20Delivery%20through%20PPP.PDF [Accessed May 04, 2013]. McQuaid, R. W. & Scherrer, W., 2008. Public Private Partnership in the European Union: Experiences in the UK, Germany and Austria. Uprava, Vol. 6, No. 2, pp. 7-34. McCartney, J. & Stittle, J., 2008. Taken for a Ride’: The Privatization of the UK Railway Rolling Stock Industry. Public Money & Management, Vol. 28, No. 2, pp. 93-100. Mistarihi, A. M. & et. al., 2012. Competency Requirements for Managing Public Private Partnerships (PPPs): The Case of Infrastructure Projects in Jordan. International Journal of Business and Management, Vol. 7, No. 12, pp. 60-73. NASCIO, 2006. Keys to Collaboration: Building Effective Public Private Partnerships. Issue Brief. [Online] Available at: http://www.nascio.org/publications/documents/nascio-keys%20to%20collaboration.pdf [Accessed May 04, 2013]. Qiu, P., 2010. Can Public-Private Partnerships Deliver Better Public Services? Civil Service College. [Online] Available at: http://www.cscollege.gov.sg/Knowledge/Pages/Can-Public-Private-Partnerships-Deliver-Better-Public-Services.aspx [Accessed May 04, 2013]. Richards, D. & Smith, M. J., 2002. Governance and Public Policy in the UK. Oxford University Press. Siemiatycki, M., 2012. The Global Production of Transportation Public–Private Partnerships. International Journal of Urban and Regional Research. Witters, L. & et. al., 2012. The Role of Public-Private Partnerships in Driving Innovation. The Global Innovation Index, pp. 81-87. Read More