In any municipality, it is necessary to identify the potential impacts of PPPs on the municipal structure and vice versa, and take steps to consider, over an agreed timeframe, structural changes within the municipality that promote partnerships. The factors affecting structure will include:

•  municipal objectives, and the proposed scope and content of the partnership;

•  the roles envisaged for the municipality and their impacts (Is the municipality regulating the contract? Is the municipality separating the function into a utility? What is the impact of shifting functions and power?);

•  potential roles and relationships of all actors;

•  the level of senior management involvement and their commitment to coordinating changes in management, procedures, finances and other organisational factors; and

•  capacity gaps between the municipality and the private operator and the need for capacity building.

In order to focus the partnership on the poor, other factors will determine the most appropriate structures and vehicles. These include:

•  the potential role of the community, the capacity building needed for the community and the importance of improving access for communities to decision-making and dispute resolution;

•  attempts to integrate partnership activities with other poverty-reduction responses wherever possible; and

•  any alternative mechanisms for delivery, and the payment options envisaged (where municipalities still play a role in cost recovery).

The development of partnerships will often require a municipality to reconsider the location of functions, and may lead to task convergence or departmental mergers. In water and sanitation arrangements, consideration will have to be given to the management of each function (if they have been placed in separate departments in the past); for solid waste partnerships, more departmental separation may be required (solid waste is often located within the health department); and in partnerships that exclude customer management, consideration needs to be given to the capacity and role of the revenue department to coordinate this function.