The Principles of Public-Private Partnership Procurement - Assignment Example

 One of the key attributes of PPP is that it not only facilitates public-private partnerships during the construction phase but it provides for post-construction services to be managed by a private agency. It has been argued that by taking this approach, the construction design is usually conducted contemplating subsequent services, which ultimately lowers the cost of services. Moreover, the nature and duration of the PPP encourages a relationship of trust and facilitates the free flow of information (Hoppe & Schmitz, 2013).

Likewise, the Private Finance Initiative (PFI), project procurement, a form of PPP, is significant when the public budget is constrained by economic difficulties such as the current economic downturn. PFI is a method by which the public sector secures “value for money” and the private sector “service provider” assumes the risks associated with the project (Akintoye, Hardcastle, Beck, Chinyio, & Asenova, 2003, p. 461). Given that the global economic downturn has impacted the UK government’s ability to deliver and meet the demands for health services, a PFI-PPP procurement route is the more innovative and least costly option over traditional procurement routes. . Traditional procurement routes will also be discussed.

The Principles of Public-Private Partnership Procurement Definition PPP is defined by the OECD as…an agreement between the government and one or more private partners (which may include the operators and the financers) according to which the private partners deliver the service in such a manner that the service delivery objectives of the government are aligned with the profit objectives of the private partners and where the effectiveness of the alignment depends on a sufficient transfer of risk to the private partners (OECD, 2008, p. 17). PPP, therefore, takes the involvement of the private sector to a more proactive level and does not merely involve a limited contractual arrangement.

PPP vs Traditional Procurement Routes Instinctively, the concept of PPP invokes ambivalence over the idea of the private sector becoming involved in the construction and management of public infrastructure. However, as Grimsey and Mervyn (2007) point out: …the public sector's old command and control structures are breaking down. They are being replaced by interrelationships between government and private sector entities (p. 171). PPP is best understood when compared to traditional procurement routes. Although traditional procurement routes use the private sector, PPPs can be distinguished in a significant way.

Traditional procurement routes usually involve private entities constructing roads, hospitals, schools, public buildings, schools, etc. Private companies also manage and maintain the infrastructure. However, with PPPs, rather than use individual agreements, the agreements are combined in a single contract, and one private entity is responsible for the provision of “a flow of infrastructure services over time”, as opposed to the construction of an infrastructure (Grimsey & Mervyn, 2007, p. 171).