Factor

Areas of Evaluation

Purpose

Project relates to value capture, route to market or a long-term programme.

Business need

The outcomes are unable to be delivered efficiently and/or effectively when the parties are acting independently.

Complementary objectives

The public and private sector parties have complementary objectives and skills and each has a contribution to make to deliver outcomes successfully.

Shared risks and rewards

Where the public sector prefers to share the risks of developing and rolling out the JV business (in return for sharing the rewards) rather than bearing them all itself

Corporate entity governance

The project would benefit from the sort of formalised and well understood governance system inherent in the creation of a corporate entity. A JV structure encourages greater focus on achievement of a jointly agreed business plan, achieving goals and direct accountability for the performance of a JV's business.

Management and control

The public sector wishes to gain benefits from sharing management responsibility for the work, and that the introduction of additional participants over time is desirable. Where appropriate, it is possible for public policy objectives to be preserved by securing the desired level of control in the decision making of the JV at both participant and management levels.

Separate legal identity

Desirability for the creation of an entity with its own legal capacity,93 separate from its founder participants, so that the JV can: own and deal in assets; employ people; enter into contracts in its own right and; if it is classified to the private sector, work outside of some of the specific limitations and constraints of public sector budgeting and framework controls. These features need to be balanced against issues such as insolvency legislation, directors' liabilities (where the JV is a company) and wider implications for the public sector body such as public accountability, ministerial responsibilities and audit requirements.

Access to finance

A JV structure is an effective medium for securing investment and funding or otherwise raising finance from private sector sources.

Flexibility

There is a need for flexibility, e.g. when the detailed objectives and the means by which they are best delivered cannot effectively be fixed at the outset. Examples include where required outputs (such as quality and volume of the services needed), or the way in which the objectives can best be delivered (perhaps as a result of technology advancements or by new policy targets and standards), are likely to change over time.

Clear exit strategy

The realisation of value created by the public sector and other participants can be released through the exit arrangements available in JVs.

Retain profits

Public sector wishes to have the option to retain profits in the JV entity to fund research and development or business growth so that the participants realise capital growth only when they sell some or all of their equity interest in the JV.

Access to skills

Public sector wishes to improve access to the skills and other resources of the private sector participant(s); the private sector participant will be motivated to make the better resources available as it will benefit from the profits arising in the JV. 

Incentives

Public sector wishes to give staff greater incentives to deliver, through the prospects of higher salaries and rewards such as bonuses or share options.

Branding

Public sector wishes to brand/market a product or service which is seen as being separate from the core public sector activities of the public sector participant.