Magazine article Public Finance

Pre-Nuptial Rows Threaten to End the PPP Honeymoon

Magazine article Public Finance

Pre-Nuptial Rows Threaten to End the PPP Honeymoon

Article excerpt

'It'll never last,' tends to be the not-so-cynical reaction when we read of apparently loved-up celebrities jealously guarding their wealth and status by drawing up complex prenuptial agreements. How can love and trust flourish when it is hidebound by such rigid contracts?

While public-private partnerships might be far removed from Hollywood gossip and glitz, research suggests that the same problems apply: the focus most PPP partners give to contractual issues around decision-making and control could be counterproductive and more effort needs to be placed on building up trust and good working relationships.

The research is timely. As CIPFA members prepare to gather for their annual conference in Bournemouth next week public sector minds will once again be focused on what strategies can be deployed to make tricky crosssector relationships succeed.

The poll, commissioned by partnership consultancy Socia and seen exclusively by Public Finance, draws out the views of senior managers on both sides of the divide on just what they think are the key ingredients to a successful partnership, be it formal or informal. Senior executives from across government and the commercial world gathered at the Royal Society of Arts in London last week to discuss its findings and share experiences.

PPPs may have attracted their fair share of bad publicity, but the vast majority of executives believe that partnership activities will continue to be a permanent feature of the public sector landscape. According to the poll, two-thirds of managers expect partnering activities to increase over the next five years and more than 90% agree that collaboration is a vital foundation for long-term success in a globalised economy.

Socia director Alex Cameron says: 'The Treasury tell us that these partnerships are here to stay, consuming 10%-15% of total public sector investment. We need to listen to the business leaders whose experience can help us avoid the mistakes of the past.'

Ipsos Mori researchers interviewed 92 board-level directors from a wide range of public sector and commercial organisations, and their report reveals some notable consistency of opinion on just what is required to make partnerships work

The majority of respondents (59%) cited a common purpose and the development of common goals as the most important factor in building a successful partnership.

But there was also a disconnection between the factors identified as vital to success and where attention and resources were actually deployed. The survey found that the greatest effort went into governance and operational issues, with significantly less on behaviour. More than a third of those surveyed said 'just a little' or no effort at all had been put into behavioural issues.

Socia concludes that partnerships are often doomed from the outset because the methods of working and the objectives of senior management on both sides are incompatible. Put simply, the two sectors just don't speak the same language and a lot of effort has to be put in to make one side understand the needs of the other.

John Yard, former chief information officer at the Inland Revenue, has a wealth of first-hand experience of PPPs. Now a consultant, Yard oversaw the original outsourcing of the revenue's IT services to EDS and the renegotiation of the contract when services were awarded to Cap Gemini ten years later. He agrees wholeheartedly with the survey's chief conclusion.

He told PF the trick is to put yourself in the other persons shoes: 'Unless you can understand why they're coming at the issue in the way that they are, you're going to struggle to have a conversation.

'Essentially, all that sounds like motherhood and apple pie but it's very difficult in practice to do it in the commercial environment. …

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