The capacity of PPPs to deliver important public services, such as roads and schools, has been called into doubt by Ireland’s leading PPP academic.
Dr. Eoin Reeves, economics lecturer at the University of Limerick, has questioned the ‘Safe, cosy consensus’ surrounding the PPP model in Ireland and said the Government is not carrying out enough research before implementing PPP projects.
‘It is essential to examine all options thoroughly, and then choose the option that offers the best value for money.’
Reeves believes that every individual project should be examined in light of other alternatives, to determine whether or not the PPP model is the most appropriate for the project. The government should first get quotes from the private sector. They should then work out the alternative PSC (public sector comparator), a complex calculation of what the work would cost in the public sector. Only then can an informed decision be made as to go with the PPP model or traditional procurement.
There have been signs of bad practice already in Ireland. Of the 134 PPP projects currently in the pipeline, five schools have so far been contracted out. It is believed that the PSC was not calculated in any of these cases.
At the opening of the 2nd Annual Public Private Partnership/Private Finance Initiative Global Summit, the Minister of State Martin Cullen remarked, ‘We have to satisfy ourselves that the business case for proceeding with a project on a PPP basis is sound when compared with the conventional approach of direct build and finance.’
Reeves recommends that Ireland look at the experience of PPPs in the UK. A report published in June 2001 by the Commission on Public Private Partnerships was positive about prospects for the PPP model, but stated that the experience to date had been poor. It was apparent that decision-makers in the UK had no option but to use the PPP model when conducting large-scale infrastructural investment. In fact, it was stated that, ‘PPPs were the only game in town.’
It is too early to gauge whether this is the case in Ireland, but there are signs to indicate that it is. Sometimes, traditional procurement is superior to the PPP model. |
