PPPs introduce a new "participatory" approach between the Public Administration, private partners, and affected stakeholders for financing, and managing infrastructure services. This concept of partnerships is articulated in two dimensions that may or may not coexist at once. The first dimension of partnership works at the organizational level and permits co-participation in the decision making which is achieved by the constitution of organizations such as joint venture companies or purpose built organization with a public-private joint ownership (institutional PPP). It may also involve policy-networks as special arrangements for public-private cooperation.9 Those networks open the door to increased involvement in the partnership of stakeholders other than the private partners, such as consumers, staff, regional and local entities etc. Their goal is fostering coordination between the partners and affected stockholders in addition to increase their participation and consequently favors the legitimacy of the PPP. The second dimension works at the financial level and permits risk (and reward) sharing betweens public and private parties, which is achieved by financial engagements that may embrace co-financing or co-funding, as well as temporal transfer of public asset ownership to private parties (as in the case of Build-Own-Transfer, Build-Own-Operate- Transfer, Sale-and-Lease-Back contracts, etc.).10
PPPs were used as an instrument for integrating the public and private components of local community. This meaning of "partnership" as originally used in the context of urban regeneration in the US, helps to understand the new relationship approach of PPP between the PA, private partners, and affected stakeholders within infrastructure service delivery projects. In that context, often arising out of community-led attempts to deal with the crisis of government in American communities the integration of the parties was aimed at promoting a policy making more responsive to the community's needs and to develop a cost-efficient ways to providing local services using resources from both the public and private sector. Resource constraints (including financial, technological, or lack of capacity), difficulties in dealing with interconnected issues, and the need of genuine participation of the local community all push forward a new form of organizational, participative, managerial collaboration.
The partnership involves a joint decision-making process rather than a principal-agent relationship in which the public actor defines the problem and provides the specifications of the solution. It also implies a relationship whereby each of the participants should be capable of bargain in its own behalf, rather than having to refer back to other sources of authority.11 In PPPs, both parties are involved at an early stage in developing effective joints outputs and arrangements that the partners are able to adapt to the changing political economy of the infrastructure service provision. PPPs try to overtake the "the long standing idea of a vast difference between Government and industry, or to put it another way, between hierarchy and market, between the general interest and the self interest"12.
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9 For a deeper analysis of the organizational theories on PPP see VAN HAM H. - KOPPENJAN. J. (2001) "Building Public-Private Partnerships. Assessing and Managing Risks in Port Development" Public Management Review 4(1): 593-616; and Klijn E-H. - Teisman G. (2005) "Public-Private Partnerships as the Management of Co-Production: Strategic and Institutional Obstacles in a Difficult Marriage", in HODGE G. - GREVE C. (eds), The Challenge.. cit., pp., 95-116 that framework PPP as an institutional cooperation for joint production and risk sharing. See also VAILLANCOURT ROSENAU, P. (ed) (2000) Public-Private Policy Partnerships. Cambridge, MA: The MIT Press that frames PPPs into public policy networks.
10 HODGE G. - GREVE C., The Challenge of Public-Private Partnerships, Edgar 2005, pp. 5
11 As noted by PETERS, "This autonomy will be especially difficult to come by for the public sector participants in a partnership, given that there are usually multiple levels of control and deliberation, and given further that if any public money is involved it will have to be made available through the normal budgetary process.{..}It is not uncommon for contract authority to be granted to an administrative entity, although even then there will have to be a legislative action after the fact to appropriate the money." PETERS B. G., "With Little Help from Our Friends': Public-Private Partnerships as Institutions and Instruments" in PIERRE J. Partnerships in Urban Governance, Macmillan Press LTD, 1998, pp.12
12 OSBORNE S.P., cit, pp 90; Williamson O. Market and hierarchies, New York 1975; Idem, (1979) "Transactional cost economics: The governance of contractual relations", Journal of Law and Economics, (2) 233-261; Idem, (1998) "Transactional cost economics: How it works; where it is headed", De economist, 146 : 23-58.