Public Private Partnerships: A licence to print money … or value for money?
The first objective in this initial research paper is to clarify what the value of a public asset such as a PPP infrastructure is? In order to address this question, the author will present fundamental definitions. What is a PPP? What is an asset? What is value? The second objective is to clearly explain what value means from the perspectives of the different stakeholders To illustrate this a graphic model is used to show what ‘value’ means to each stakeholder. The third objective is to review some of the current methodologies that are applied in the decision making with respect to PPPs and different evaluation techniques. The fourth object is to critique the use of some of techniques and tools. Finally, the author will review the concept of Value for Money (VfM) for a PPP and present his conclusion to the question: Are PPPs a licence to print money?
To put the question into the context of current thinking, the author has reviewed the following literature. Grimsey and Lewis (2005) ask the question do PPPs offer value for money and they seek to provoke debate between academia and practitioners. The author wishes to take this debate further by illustrating that value means different things to different stakeholders. This is aside from the fact that there are clearly defined accounting rules and economic definitions of what value is. It is more a question as to where the asset appears on the balance sheet: on the asset side (private consortium) or the liabilities side (the public agency)?
In approaching this topic of what is ‘value’, a number of fundamental definitions and concepts are presented such as what is a PPP; what is an asset; what does ownership mean; how is value defined and measured? The different evaluation methodologies are reviewed such as accounting, market, societal and personal value.
The concept of the ‘Polygon of perceived value of a public asset’ is presented as a way of illustrating how the same asset can represent a different value to the various stakeholders.