Public Private Partnerships - Coursework Example

 Public Private Partnerships Public private partnership (PPP) basically is a joint business venture which is financed and managed through a partnership between the government and one or more private sector companies. Public private partnership is a contract between a private party and public sector authority. The private party comes up with an idea of a project or some kind of public service and presumes significant financial, operational and technical risk of the proposed project. There are some types of public private partnership where the cost of using the particular service provided by the PPP is assumed solely by those who are using the service and not by the taxpayers in the community. In some other types of public private partnerships, the capital investment is contributed by the private sector and the cost of providing the services is borne wholly or at least in greater part by the government. Government sometimes contribute to a PPP in form other than cash or capital, it can transfer some of the already existing assets to the PPP. In certain types of PPP where the projects involve creation of public goods for example in the infrastructure or say educational sector, the government sometimes provide capital subsidy to the PPP in the shape of a one-time grant or something similar to make the PPP more attractive to private investors. The government support in some cases may be in the form revenue subsidies provision which includes tax breaks or removal of guaranteed annual revenues for a particular time period[Zhe08]. In the previous 2 decades, over 1400 PPP deals have been signed in the European Union which represent approximately €260 billion estimated capital value [Kap10]. However the number of PPP deals has fallen by 40% since the beginning of the financial crisis in 2008[Bar10]. The reduction in the number of public private partnerships placed significant economic and financial strains on the respective governments which have come to heavily rely on PPPs as a significant mean for the delivery of long-term assets such as infrastructure and associated services [10]. Moreover, these reductions in PPPs have come at a time when investment in public-sector infrastructure is seen as an essential way of sustaining economic activity during the time of crisis [11]. In today’s world, the public-private partnerships provide a distinctive perspective on the mutual and network aspects of public management. The advancement of PPPs, both as an impression as well as a practice, is an outcome of public management, globalization pressures and the beginning of a state that is more strategic than bureaucratic. In the 21st century, partnering where different parties come up with different core competencies to form a completely new business or service is the new form of governance which is continuously evolving to deal with the ever changing social and economic dynamics[13]. The above argument makes it pretty clear that not only are PPPs an emerging new trend which is extremely successful but is extremely beneficial to the government as well as the community where the business transactions are occurring. Hence, this project is about public private partnerships for a community college in Southern New Jersey. We have a recently emptied building(s) on our college campus that can be utilized for public private partnerships that would be beneficial for both the students and the bottom-line of the college. I propose a business incubator program, which has the potential to generate income as well as establish a link between small emerging businesses in the community with our college’s business department. Business incubators are basically programs that are designed to provide support for the successful development of entrepreneurial companies through a variety of support resources and services that are developed and coordinated by the incubator management. This project has a lot of potential for business owners and entrepreneurs need opportunities like these to be successful in the highly competitive market. New businesses often have a lot of potential but do not do well because they simply cannot manage to stand on their own feet in the extreme cutthroat aggression in the business world. There is a variety of different Incubators and they differ because of the services they provide, because of their organizational structure, and because of the clientele they serve. The completion of a business incubation program boosts the likelihood success of a startup company in terms that the company has a longer chance of staying in business. Studies have found that 87% of businesses that start from business incubators stay in business[Mol97]. Incubators are somewhat different from research and technology parks because of their dedication to companies that have recently started and are at their early stage. They often tend to be about businesses that are not large scale. They offer business assistance services. According to a report, the North American incubation programs helped more than 27,000 companies that were providing employment to more than 100,000 workers in the year 2005. These companies together generated annual revenues of $17 billion[Lin07]. The opportunity that lies in this sector is hence unlimited. A business incubator is a joint office space facility at affordable rates[Zab07] seeking to provide its incubates/client with a system that is tactical and value-adding. This system provides business assistance as well as monitoring services. This system is responsible for controlling and linking resources to facilitate the success of a new venture and development of the incubates. The incubator in many instances also share the potential failure cost. It is important to remember that an incubator is not merely a shared office space between different businesses, it is much more than that. At the smallest level, the incubator has a management that is providing assisting services. The clients within an incubator are not only benefitting from the expertise of the management but also from each other. The network of individuals and organizations including the incubator manager, staff, the advisory board, client companies, employees, local universities, university community members, industry contacts and professional services providers such as marketing specialists, accountants, lawyers, consultants, angel investors, venture capitalists, and volunteers all have a helping hand in the overall success of the business[Hac04]. The first step to incubator development is the feasibility study. Feasibility study helps to merge the agreement between key organizations and civic leaders, catalyze the participation of different organizations that can provide different resources like facilities, equipment, human resources and most importantly funding. Feasibility studies help secure government funding and aids in educating public and private sector about business incubation so that any confusion and misunderstandings can be avoided. Also it is with the help of feasibility analysis that critical errors like funding arrangements, site selection, structure of the governing board, income assumptions, or the nature of the business assistance program made with respect to other incubator programs are revealed. It has been suggested that feasibility analysis help avoid two major mistakes: poor selection of location and poor selection of management[Zab07]. The next step to incubation formation is building support. A core group that is committed to starting a business incubator must start to gain support for their idea. Without proper support, an incubator has no chance of success as it represents an important community investment and requires broad-based community support to be feasible. In Forging the Incubator, Meeder suggests that meetings with community leaders can achieve several objectives. Having the community engage in the incubator formation steps simplify the prospects for starting an incubator. This process helps identify funding sources, potential sites and sources of assistance and support from individuals as well as organizations[Zab07]. The next step is to identify and secure stakeholders. Every incubator looks to include local and state governments and a variety of public and private sector organizations such as universities and major corporations in its list of stakeholders.. Stakeholders can also comprise of economic development organizations that fund facility rehabilitation or the functioning of the incubator. Support from stakeholders is vital to initiating an incubator program. Stakeholders need to be not only identified but secured as well. To secure commitment, stakeholders with maximum interest in the project need to be identified. After the stakeholders have been finalized, the organizational structure needs to be formalized. A governing body consisting of a board of directors is typically responsible for maintaining, building, and strengthening the incubator program. Incubator managers should continuously seek to expand the number of their stakeholders. As long as a stakeholder has something tangible to contribute, he should be welcomed. Tenant participation in the board of directors often creates conflicts and should be avoided. Incubator managers should be well aware of external conditions that affect the commitment of stakeholders. The next step in incubator formulation is identification of a market niche. To be accepted by the society, the incubator must have a distinctive purpose. It is important to target a niche so that the incubator can modify its their market position with changing customer preferences. The next step is to clearly identify the services that the incubator is going to offer. These services could include a mix of strategic planning, office services external debt financing, external equity financing loan assistance, financial management, educational programs, employment assistance sales and marketing, lab equipment access, government procurement, book keeping, R&D and product development, international trade, legal services etc. The final and most important step is strategic planning. The integration of different elements into a coherent plan is the most important part. Strategic planning helps deal with tough issues concerning operations, funding, revenues etc. Strategic planning helps determines what needs to be done and when it needs to be done. Before a structure for the incubator is developed, some important factors need to be taken into account. It has been often observed that business that take start from incubators often have a very hard time surviving in the years the move out of the incubators. Critics argue that it is because of incubators and the extremely safe environment they provide to their clients like sharing cost of failures that leads these businesses to have a hard time in surviving in the real world for they have no idea what the real world is like. Another problem that has been noticed is that sometimes the incubators management is just too strict. Instead of nourishing a business, the management at times enforces their beliefs and administration styles on a business hence ensuring that the true business idea of the entrepreneur never come to light. On the other hand, if the management is too weak, it can lead to problems like unfair distribution of resources between the different clients. Another problem with incubators at time is the fact that they at time support hopeless cases and ideas which unfortunately have no chance of success[Flo10]. Hence, the selection of management is perhaps the most difficult task. A management that is experienced yet comfortable enough to let the business operate in the way they want and not exerting their experience over others is extremely hard to find. The right combination between a management that nourishes and not enforces as well as a management that can deal fairly and effectively with all its clients need to be formed. After the incubator has been set up, businesses need to be properly screened before the incubator management decide to support the particular business. Clients need to be chosen not only on the basis of the tangible value they can provide but also on the basis of what type of clients would be able to peacefully co exist. any client that is to become a part of the incubator must be strictly told to follow the management rules to ensure equal and jus division of resources between clients. Another major task of the management will be to develop performance indicators for their clients. These indicators will help measure performance of the clients not to mention aid in deciding which particular business is ready to leave the incubator. This step is extremely important because assistance programs are not only expensive but an incubator can offer chance to other feasible businesses if old businesses move out of their facilities. Indicators should include financial pointers as well as the tenant growth rate[Van]. References Zhe08: , (Zheng, 2008), Kap10: , (Kappeler & Nemoz, 2010), Bar10: , (Barlow, Roehrich, & Wright, 2010), Mol97: , (Molnar, et al., 1997), Lin07: , (Knopp, 2007), Zab07: , (Zablocki, 2007), Hac04: , (Hackett & Dilts, 2004), Flo10: , (Flowers, 2010), Van: , (Vanderstraeten & Matthyssens), Read More