When viewed in context, PPPs are a new approach to large project procurement that is reforming the costly inefficiencies associated with traditional government procurement methods. The changes that have been introduced include more rigorous project evaluation, the adoption of output specification to encourage innovation and technology, the use of risk-weighted models of public procurement, certainty created by life cycle costing, independent project reviews and government capacity building in the areas of project and contract management. The model has and will continue to improve the science of large project procurement, it is an evolving model that is being modified in the light of experience and new applications and it has led to major improvements in state procurement that will lead to significant cost savings and efficiencies in the 90% of projects that are not procured in this way.
This evidence confirms that PPPs are a feasible alternative procurement method for specialised applications which offer scope for improved delivery of public assets and services. The PPP procurement option remedies the major failings of traditional procurement - delivery time and cost overruns, poor lifecycle costing practices, lack of rigour in the asset allocation and project development processes and sub-optimal service delivery outcomes. PPPs also deliver improved value for money outcomes (via lower procurement cost and capped lifecycle expenditures), incentivised management, design and construction innovation and new technology, improved sustainability at both the asset and service levels, and a rigorous project evaluation framework that is informing traditional procurement process. Issues remain - uniform methods for dealing with accountability and transparency, private sector capacity constraints and maintaining a competitive bid market, incomplete contracts and long service intervals and questions about the suitability of PPPs in some sectors of the economy. These are challenges for future improvement of the model and wider use of derivative forms for specialist procurement applications.
PPPs are also a method of procurement capable of being applied across a wide range of diverse industries. The model has been successfully trialled with multi-billion dollar tollway projects, public buildings and applied to a number of smaller bundled projects delivering non-core services and more specialised applications such as the Southbank Institute in Queensland, the Southern Cross Station, Royal Children's Hospital and the Convention Centre projects in Victoria.
Given the available evidence from over 10 years of applications, the question we no longer need to ask is whether PPPs are a good or a bad thing. The question we should now be asking is how we can improve the model to achieve better public services in the future.
NOTE
The references for this Appendix are available from the author at
mregan@bond.edu.au.