The third set of potential benefits is related to the positive externalities of using the PPP model. Positive externalities capture the benefits to persons other than the users of an asset or related service. These benefits can be sub-divided into two categories:
∙ Wider public sector benefits, which refer to the impact of a PPP beyond a specific project to the public sector in general;
∙ Wider macro-economic benefits, which refer to the impact of an investment on the economy and environment20.
The range of wider public sector benefits may be diverse and are particularly difficult to quantify or value. For example, these comprise (i) the benefits accruing to the public sector from a more explicit approach to cost identification and transparency, (ii) the planning benefits of having long-term fixed prices and output certainty under the PPP contract or (iii) the contribution that PPPs make to improving the public sector's ability to procure projects conventionally.
Innovative management practices from the private sector can be learned and replicated in future projects, irrespective of the procurement method. Both the more established PPP sectors in UK and Australia demonstrate the value of "competition by comparison"21. The beneficiaries of innovation are not just the users of a good or asset at present, but are extended to the broader public sector and economy. A further point is that PPPs have provided a very fertile learning environment in which the public sector has been able to draw from best practice and apply this to more conventionally procured projects. In this case, the benefits come from learning by doing, applying new techniques as well as imposed systems and disciplines. These benefits are only partially captured in the evaluation process since they will extend beyond the specific PPP under consideration.
Wider macro-economic benefits, as we consider them here, are likely to be similar for a PPP and non-PPP project. However, where these impacts are substantial and PPP ensures that they are brought forward, the Wider Societal Impact of the PPP option (based on this time differential) should be included in the analysis.
The Generic Benefits Matrix 3 below helps identify some of the potential additional NFBs associated with the Wider Societal Impacts under PPPs.
Generic Benefits Matrix 3 - Wider Societal Impact
| Generic project features | Sub-category | Examples | Usually included in PSC test? | Potential NFBs | Can they be quantified? | Can they be valued? | Potential Approach |
| Wider public sector benefits | Innovation22 | Design, management and technology innovations may be replicated in future projects. | No | Yes | Difficult |
| Survey |
| Pricing of Public Service | Is the project a good indicator of how much conventional public services cost? How much is this knowledge worth? | No | Yes | Difficult |
| The value of this information will depend on what policy makers decide to do with the information. One approach to measurement would be to use the price of contracting out this measurement exercise to a consultant as a proxy of its value. | |
| Competition between delivery forms | Does the PPP project potentially introduce competition with projects that are conventionally delivered? If so, will competition with PPP delivery ensure that that other services - outside of the project in question - are delivered more efficiently? | No | Yes. Competitive forces in public service delivery can improve performance. The potential benefits of choice and competition in schools, hospitals, etc. are documented. | Difficult |
| Problem of causality. How do we know that improvements are based on competitive pressures? Surveys provide the most likely approach. | |
| Fiscal programming | Whole life-cycle approach ensures better pricing and thus better allocation of resources to other projects. | No | Yes. Better fiscal programming results in better public sector investment decisions. | Difficult |
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| Wider socio-economic impacts | Labour market23 | Investment stimulates employment in depressed area. | No | Yes | Case-by-case assessment |
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| Environmental impact24 | Reduced emissions due to better roads Cost of relocations, noise, impact on wildlife, etc. | Unlikely | Yes | Depends on each case | Partially | Several methods depending on impact. Some emissions may be traded on market and monetary value assessed (e.g. carbon emissions). Others can be quantified and expressed in physical units but not expressed in monetary terms (e.g. noise level). |
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20 Like the benefits associated with Enhanced Delivery these are incremental in nature, in the sense that they increase the size of the benefits associated with an infrastructure.
21 This factor was specifically highlighted in the State of Victoria Audit Review of Government Contracts: Contracting, Privatisation, Probity & Disclosure 1992-1999 (2000). The Audit Review noted that the presence of private operators had brought about a form of "competition by comparison", which had assisted in improving the management of prisons and the delivery of correctional services across the system. See Linda English 'Public Private Partnerships: Modernisation in the Australian Public Sector' (2008), University of Sydney.
22 Examples / evidence base: CBI, 'Building on Success: The Way forward for PFI' (2007); CEPA 'Public Private Partnerships in Scotland: Evaluation of Performance' (2005); NAO, The Operational Performance of PFI Prisons' (2003).
23 Examples / evidence base: no clear evidence of systematic benefits of PPP - this must be judged on case by case. As with all benefits, if there is Accelerated Delivery with PPP, then the full value of enjoying (labour market) benefits earlier should be accounted for.
24 Examples / evidence base: no clear evidence of systematic benefits of PPP - this must be judged case by case.