Actions Shares. Embeds 0 No embeds. No notes for slide. Excerpts may be reproduced without authorization, on condition that the source is indicated. FOREWORD Ur b a n i z a t i o n are essential for poverty reduction and the is one of the provision of adequate housing, infrastructure, most powerful, education, health, safety, and basic services. It The Global Urban Economic Dialogue series is estimated that presented here is a platform for all sectors 93 percent of of the society to address urban economic the future urban development and particularly its contribution population growth to addressing housing issues.
This series also gives us an interesting Global poverty is moving into cities, mostly insight and deeper understanding of the widein developing countries, in a process we call range of urban economic development andthe urbanisation of poverty. Indeed, increasing global challenges in these areas.
The persistent problems of poverty andslums are in large part due to weak urbaneconomies.
How strategic public-private partnerships are shaping up in cities
A View of Highway 6 in IsraelFigure 8. Current trends urban population. As a result, there is a severepredict that this number will continue to shortage of adequate housing and much of therise with urban population growth being basic infrastructure so desperately needed tosignificantly more pervasive and rapid in the sustain urban growth is either deteriorating, ordeveloping world than that of the developed.
According to the World Bank, over 90percent of recent urbanization has occurred This study, prepared for the United Nationsin developing countries, with urban areas Human Settlement Programme, aims to providegaining an estimated 70 million new residents insight into how the public-private partnershipeach year. This trend is especially prevalent in PPP model can help promote sustainableSouth Asia and Sub-Saharan Africa, the two housing and urban development for countriespoorest regions in the world, where the urban at all levels of economic development.
Thepopulation is expected to double by While the keynational economy and a significant contributor ideas and guidelines presented here can be usedto quality of life. Consequently, as cities grow to help shape future government policy, it isand the urbanization process continues, there important to recognize that the application ofis rising pressure on governments to house the the PPP model is not described in full detail. As it stands, a to housing and wider urban developmentmajority of the developing cities expected projects in their communities. Recognizingthis, governments around the world are turning Almost all countries around the world haveto PPPs as one possible financing option for large witnessed some form of PPP investmentscale investments in the provision of affordable in the provision of housing and urbanhousing and other basic infrastructure assets.
AlthoughA finance model entirely driven by the level and success of PPPs varies sharply,collaboration between the public, private, and particularly in the developing world,3at times nonprofit sectors, PPPs take many their well-documented potential informs shown below , but generally represent a consistently generating efficiency gainsmore dynamic, long-term agreement between in developed countries like Canada, thevarious parties in which each sector contributes Netherlands and the United Kingdom UK and shares some level of risk.
This may include the design and water treatment facilities, roads and hospitals. Role of Public-Private Partnerships. This specifies projectapproach can offer greater value for money results in terms of the quality delivered, ratherwhen compared with traditional procurement. Some of the advantages of Risk sharingPPPs can be defined as follows: Public-private partnerships are designed so that risk is transferred between the public andCost Savings private sectors, allocating particular project risk see figure 1 to the partner best able to Cost savings materialize in several different manage that risk cost-effectively.
This creates economies of scale by Maintenance and Operationalmotivating the private sector to organize its Devaluation of Currency applicable to projects financed by international lenders activities in a way that drives efficiencies andmaximizes returns on investments.
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Public-Private Partnerships in Housing and Urban DevelopmentPPPs Deliver On-Time money for other important projects without affecting calculations of the measure of its With financing risk routinely transferred indebtedness. Therefore, the private sector has a direct can be defined as follows:financial interest in ensuring that projects andservices are delivered on-time, if not sooner. Additional Costs Public-private partnerships represent goodEnhancing Public Management opportunities to lower overall project costs. By inviting the private partner in, the public However, when compared with traditionalauthority can transfer risks and responsibilities procurement, the complete PPP process invitesover the day-to-day operations of two or more additional costs that, if not managed properly,phases of the urban infrastructure project to can erode some of the potential economicthe private consortium.
This frees the public benefits of this model. PartiesImproved Levels of Service bidding for a project expend considerable skills By bringing together the strengths from and resources in designing and evaluating thethe public and private sectors, PPPs have project prior to implementation. Dependingthe unique ability to share a diverse range of on the number of project bidders, costs canresources, technologies, ideas and skills in a add up as all participating bids tend to becooperative manner that can work to improve factored into the overall cost of the project.
This can be Public-private partnerships free up funding very costly, particularly for a public agencyfor other urban infrastructure projects in two inexperienced with the private sector andways: first, through the potential cost savings requiring additional help to protect the publicinherent in the PPP approach, and second, interest.
Trends in new mobility services and public–private partnerships
Seeing that it is the private partner price of financing can result in higher capitalwho typically absorbs the financing risk, the costs ranging between 1 and 3 percent. In the event that a change is In view of the fact that the private sector required to either the use of an infrastructureabsorbs a significant portion of the project asset, or to the type of urban service offered,risk, important decisions over outcomes PPPs have proven to be inflexible - both inare inadvertently shared with that partner.
Loss of Accountability Partnerships are typically governed bya complex web of contracts which extendresponsibility over the provision of housingand other urban service to a wide range ofpartners. If not clearly defined, contracts canoverlap roles and responsibilities and blur linesof accountability for the public taxpayer.
Mitigating Risk The more complex the urban project and themore people involved, the higher and morevaried the risk becomes. Although a carefullystructured PPP manages risk through a well-defined contractual agreement, some risk isunforeseen and therefore difficult to mitigate. In the case of such unexpected risk or projectfailure , oftentimes it is the public authoritythat is left to not only pay for the failure of therisk, but also the emerging costs.
Yet oftentimes,the private and public sectors are embracing governments are finding that aligning goalspartnerships for the provision of housing and and maintaining a healthy level of trust isurban development. This is particularlyand meet the needs of the rise in population, the case for subsidy-driven urban projectsgovernments around the world are facing where additional and continuous governmenta range of challenges. Public AcceptabilityDiffering Goals There may be considerable resistance to Ordinarily, the goals of the private sector private sector participation in the provisionfundamentally oppose those of the public of urban development, particularly for moresector: the former focuses on economic gain traditional public urban services such aswhile the latter strives to protect the public affordable housing, water, sanitation and wasteinterest through regulation and minimization management.
Oftentimes, these urban servicesof risk. Countries in the first stage include, but are not informed and supportive of the urban projectlimited to, India, China, Russia, South Africa, Poland is an on-going challenge for all governments. However, it is to be Financing Challenges for PPPsexpected that assuming this new role will be The global financial crisis has drasticallydifficult for many localities that lack the basic changed the financial landscape for urban PPPsnegotiation, finance, contract and other skills all around the world. On one hand, tighterrequired to manage highly complex urban spending reviews have led many governmentsprojects such as PPPs.
This is particularly true to adopt PPP models in order to try and easefor local governments in emerging or fragile the immediate effect on growing deficits.
Onstates where even the basic laws and regulations the other hand, strict credit conditions haverequired to conduct business with the private made banks and investors increasingly cautioussector are entirely absent, severely lacking, or about taking on additional projects, making itsubject to change. In the current context, many governments are struggling to secure revenue support streams for urban sectorChallenges in Governance for PPPs, some of which are considered high risk.
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In the eventand other interests or non-profit groups see that a private company does not perform thefigure 2 , many of whom have a large stake in project agreement obligations, under suchthe successful outcome of the project. This can account for up forged.
Equity is usuallyasset. As an aside, most lenders will not grant provided by private contractors involved inloans for urban projects that have not carried the project, but can also be made availableout a rigorous assessment of all project risks, through third-party equity investors whoor which are potentially open-ended and not have no other contractual relationship withwell-defined in their objective.
Because the return on equity is received only after the financing debt has Nevertheless, once a loan has been secured, been serviced, equity financing is consideredlenders play a useful role in reviewing and high risk for investors and therefore is one ofoverseeing the overall performance of the urban the most expensive forms of project funding.
Stringent standards on Nevertheless, equity funders play a usefulthe part of the lender usually result in lenders role in securing debt financing from lendersseeking out their own set of technical, legal, that may require some collateral for the loan,and other advisors to monitor the progress as well as providing advice in the event thatof the project.
In riskier sectors or projects, problems do arise amongst the other private sector partners. Preparation Guide. IfUnlike other project participants where the financial rewards for the private consortiumrelationship with these parties is generally not are seen as too high or too low, or the projectlegally binding, public resistance to an urban lenders are mainly profit-driven rather thansector partnership can be detrimental to its performance focused, then the legitimacy ofsuccess.
As such, maintaining transparent and the partnerships can be undermined for theaccountable communication channels with paying public.
As such, the degree of private PPP procurement. Used widely, the VfM test focuses on PPP Unitsoutputs by identifying risk and appropriately The development of PPP units on the local orallocating it, and by calculating internal costs national level that house the skills required toto governments through the implementation instigate and manage urban sector partnershipsof the Public Sector Comparator PSC test. For theform of public procurement. For the public stakeholders, the units can assume manyApplying Lessons Learned functions including: Facilitate PPP projects, Where a PPP approach to infrastructure share expertise and knowledge and provideand service delivery has been adequately education and skills training on a wide array ofmeasured, a good working method to apply PPP concerns.
Ultimately, creating units thatwhen thinking about implementation is keep participants informed and well-trained isthat while standardized PPP processes are part of the responsible management neededimportant, and have served governments well, for effective PPP implementation on the partstark community differences in such factors of the public sector.
It may be more cost-friendly, for example, to build an infrastructure asset usingDisciplined Planning materials that are more expensive at the outset A disciplined approach to planning outlining but which prove more reliable and robust for the long-term. Initial time spent of the project, success of an urban sector PPPfully exploring objectives and core values actually needs to consider the long-term effectsregarding the purpose of the project and how of the project on the wider public communityit intends to benefit the public will avoid and how it connects with other urban sectorsmissteps later in the process.
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- Urban Redevelopment’s New Civic-Public-Private Partnership.
- Urban Models Public-private Partnership, Hardcover.
- Public-Private Partnership in Housing and Urban Development.
This can also such as roads and hospitals, as well as otherprovide a degree of certainty and reassurance policies and institutions surrounding theto all parties involved. A partnership with the private sector can fall under a consultative approachModels and their Structure whereby the government seeks out expert advice There is a spectrum of organizational models from the private sector or community groups.
Last, under community development Design-Build: The private sector designs and builds infrastructure to meet public sector performance approaches, the private and public sectors specifications, often for a fixed price, so the risk of cost come together in a particular community and overruns is transferred to the private sector. Many do not jointly contribute their strengths to achieve a consider Design-Build Models to be within the spectrum of PPPs. Bundling several small for a specified term. Ownership of the asset remains with scale projects into a contract with one private the public entity.