Public Private Partnerships

Public Private Partnerships

The Worldwide Revolution in Infrastructure Provision and Project Finance

Darrin Grimsey and Mervyn K. Lewis

This path-breaking book considers the recent trend for governments to look increasingly to private sector finance, provided by private enterprises constructing and managing public infrastructure facilities in partnership with government bodies.

Chapter 1: The Nature of Partnerships

Darrin Grimsey and Mervyn K. Lewis

Subjects: economics and finance, financial economics and regulation, public finance, public sector economics


INTRODUCTION In 1998, the British Inland Revenue service completed the process of relocating 2000 staff from 11 buildings in the Manchester area to a single site, and moved into new fully serviced offices in the city centre of Manchester. The building is ventilated (i.e. no air conditioning), has lighting that switches itself off when people leave, contains gas-fired heating with individual thermostatically controlled radiators, double glazing, building materials made from sustainable sources and building management systems that monitor the use of resources. It was also constructed under the UK government’s Private Finance Initiative (PFI) as a result of a 20-year design-build-finance-operate (DBFO) contract awarded to a private sector body as a partnership arrangement.1 The idea of designing a building to be environmentally efficient is not new. What is new is the realization that partnership arrangements such as the PFI are particularly good vehicles for bringing about this objective because they emphasize value for money over the life of the building, not just the cheapest cost, and encourage a focus on whole-of-life cycle costing implications. Rather than there being separate design, construction, financing, operations and maintenance arrangements as occurs with traditional public procurement, these functions are combined under one contractor. This integration (‘bundling’) within a long-term partnership framework provides financial motivation for the project company to think beyond the design stage and build in energy-reducing and waste-minimizing features that may cost more initially but result later in lower operating and running costs, and so deliver cost effectiveness over time. Such ‘green’...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information