Using public‐private partnerships (PPPs) to procure social infrastructure in Australia

Abstract

Purpose Owing to increasing demands for new infrastructure and a reduction in public sector investment, Australian governments are increasingly turning to the private sector to form partnerships in the design, construction, ownership and operation of public sector projects. This paper aims to focus on the use of public‐private partnerships (PPPs) to procure “social infrastructure projects”, such as schools, hospitals and prisons. The research seeks to map the current extent of PPPs and to present some preliminary findings on the cost of bidding. Design/methodology/approach The research traces the origins of social infrastructure PPPs in Australia and gives an up‐to‐date account by mapping projects that are either completed to date or in the pipeline. The research also describes preliminary findings on additional costs likely to be incurred in bidding for social infrastructure PPPs. A semi‐structured interview process involving senior managers from private sector PPP stakeholders was used in conjunction with a review of project documentation. Findings Social infrastructure projects are characterised as generally being smaller in scale than economic infrastructure projects (motorways, bridges, tunnels, etc.) and, by their very nature, also tend to be complex, particularly in terms of ongoing involvement with the community. Thus, private‐sector bidders for social infrastructure PPP projects are often presented with a situation where the financial rewards are less and the operational demands are more complex than for hard economic PPP projects. The private sector would welcome increased risk transfer from the public sector and subsequently greater involvement in the operational stages of social infrastructure PPPs. Originality/value The outcome of the research project is of assistance to decision takers in both the public and private sectors by making explicit factors which are currently accepted as being implicit in PPP bidding and project evaluation. Ongoing research into PPPs is vital to ensure the development of sustainable procurements methods, the continued funding of a nation's infrastructure, successful operational viability, fair risk distribution and subsequent financial success and that greater rewards are provided for all stakeholders, particularly the community at large.

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