PPP Development Stage – Establishing Partnership Processes
10.2 Who is involved in establishing partnership processes?
PPP brings together three broad categories of partners: the public
and private sectors and the community (or private, not-for-profit
sector). Each type of organisation brings along some processes
it “always” uses [Tool 10-1]. Understating these processes
helps to avoid many misunderstandings in the process of building
A. Public sector – government
The two processes that govern the public sector’s role in
the PPP are: regulation and procurement/contracting.
Regulation is designed to set and apply standards of performance.
For this, the government uses instruments such as licensing;
subsidies; performance standards; property rights; price, rate
and quantity restrictions; and so on [see Tool
Contracting/procurement is the arrangement made by government
whereby it pays other parties to provide a good or service.
In order to avoid corruption problems, the rules of the public
procurement are very strict and are designed to ensure transparency
and that the government pays the lowest price for requested service
[see Tool 16].
B. Private sector – due diligence
Due diligence is an important process for the private sector.
This term reflects the necessity of the private partner’s
assessment of the past performance, reputation and future
plans of a prospective alliance partner with regard to its various
business practices and principles. The purpose of due diligence
is to evaluate whether the project is attractive enough for
the private partner to take on the risks involved.
The due diligence process must identify, in advance: a planned
schedule of events; processes to be followed; activities
to be carried out; considerations; evaluation criteria and so
on. For all projects, a comprehensive “reference case” must
also be developed independently and in advance of the evaluation
process. This must be used in the evaluation process, which
must be transparent and objective.
A good process with regard to due diligence requires significant
resources. The size of the project does not influence the
extent of the due diligence significantly. Thus, the share
of the due diligence-attributed transaction costs will
be higher for smaller projects.
Because the process of due diligence is such an important
part of private sector involvement, it often makes inexperienced
government bodies uneasy when they have to become part
C. Community – participatory decision-making
Participatory decision-making is a process which broadly characterises
the way the public can affect the decisions taken by government.
Public participation is not a monolithic concept. There are
general and specific methods through which the public can have
a voice in the decision-making process. These methods include
comments, testimonials, lawsuits, publicity campaigns and protests,
Besides the fact that the public has the right to know, to
express its opinion and to affect decisions, the government
should realise that involving civil society in the PPP building
process will influence the sustainability and efficiency
of the PPP itself. The government needs to envision the community
participation that there will be in decision-making processes
such as: development of policies, legislation, standards; issuance
of permits; planning decisions; privatisation awards; enforcement
of laws and so on.
The participatory process also has implications for the processes
typical of the other two sectors. For the government, it
means a grassroots-up approach to decision-making and the
presence of a watchdog, which provides an additional level
of corruption control. For the private player, it implies that
its customers will have better knowledge of the services they
pay for, as well as the presence of monitoring for fair (rather
than excessive) profits.
Processes used by the three sectors differ to such an extent
that those actors inexperienced in partnerships might be
anxious at least, if not discouraged altogether from the
consequent activities. What needs to be kept in mind is that
in order to achieve the results expected from the PPP, each
of the players will not only have to show tolerance and mutual
respect, but will also have to adapt themselves to understanding
the other party’s formal processes.
Who is involved?
◊ Public sector
◊ Private sector