August 2010
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August 2010 |
This month we’ve heard more about the Government’s public-private partnerships (PPPs), with two recent announcements regarding their plans. Decisions to build a new prison at Wiri under a PPP and to look at using PPP arrangements to build and maintain school property are part of a growing trend (also seen internationally) to use private expertise to enhance services and give better value to taxpayers.
It’s not without it’s challenges though. Understanding your own costs and risks is critical to making any good procurement decision. With a PPP, this challenge is about developing the public sector comparator – a measure of what the project would cost if delivered through conventional procurement. Most public sector costs are not structured to enable reporting on the “whole of life” costs of design, build and operate. Nor are they readily able to quantify what are often intangible risks and the impact of transferring these risks to a private provider.
However, rigorously estimating full costs and quantifying the risks are critical to achieving a sound PPP decision. Applying this greater care in estimating the full costs to all forms of procurement will improve decision making, whether it is out-sourcing, in-sourcing, shared services or a PPP decision. An example that we have recently worked on has been considering the decision-making required when looking to in-source or out-source legal services. A key challenge here was valuing the risk reduction and quality gains that might be available from the choice of a wide-ranging external panel of legal expertise.
Education and economic development
Communities which would happily offer incentives and rates relief to attract a new business (or a Peter Jackson film) often do little to support the integration of local polytechnics and universities within their communities. Yet local tertiary education institutes have the potential to fundamentally change a local economy and are internationally cited as a major factor in the economic performance of a region.
A number of communities are at risk of losing linkages between themselves and tertiary education because of tighter financial constraints and limits on the funding of student numbers. This combined with aging assets means many educational institutes are looking hard at their asset base and locations. Recent cabinet decisions on procedures for sale of land holdings for tertiary education, and the Government’s evaluation of PPP models for primary and secondary education can create opportunities for greater partnerships with communities.
Fundamental to this is a need to develop business plans which can guide the future growth of tertiary education. Every million of new capital investment needs 100 new students to underwrite the business plan, at a time when the funding is hard to acquire
Recent projects.
- Bay of Plenty Regional Council
Consulting with officials and councillors through a series of workshops on the options for rating policy, including the allocation of
Rotorua lakes restoration costs. - Establishment of Fiji Procurement Office
Establishing a new Central Government organisation to manage the procurement of government goods and services in Fiji. Once Cabinet approves new regulations, procurement processes and training will be rolled out across government. - Review of the Building Act
Working with the Department of Building and Housing’s Building Act Review team to consider options for institutional arrangements for building consent application and processing. - Benchmarking of Property Services
Benchmarking of property operations against best practice for a public sector entity. This involved categorisation of the activities into five key business lines, developing an understanding of best practice in each area and recommending actions to improve performance.
