Public-private partnerships, a sine qua non condition for mobility infrastructure projects?
The Smart City Institute attended the Smart City Expo World Congress held in Barcelona from 15 to 17 November. For the launch of the 6th volume of the Smart City Practical Handbooks dedicated to public-private partnerships, our researcher Audrey Lebas organised and moderated a panel on the Belgian pavilion, which focused on PPPs (public-private partnerships) in the case of mobility infrastructures. Let's have a look at the exchanges between Fabienne Roberti, Smart Region referent at SPI, and Bénédicte Collard, Technical Director at Luminus Cities.
A public-private partnership (PPP) is a medium to long-term agreement between the public and private sectors, whereby some of the public sector's service obligations are provided by the private sector, with a clear agreement on shared objectives and responsibilities for the provision of public infrastructure and/or services.
> READ MORE ABOUT PPPS IN OUR SMART CITY HANDBOOK #6 DEDICATED TO THE TOPIC
Mobility infrastructure PPPs: What are the benefits for public authorities?
To open the discussion, the panelists were asked about the potential benefits and advantages for public authorities of setting up a mobility infrastructure PPP. Three main aspects were highlighted:
- Expertise : The expertise and innovative capacity of the private sector ensures that the best technical solution is always available. PPPs therefore stimulate the development of a more advanced solution or product. This is why municipalities sometimes prefer to pay for a service (e.g. lighting on highways) rather than the infrastructure itself (e.g. streetlights on highways) which would require a lot of investment and may not be up to date.
- Temporality : Generally, the implementation of projects using purely public funds takes longer because of the procedures and legislation in force. This temporal reality can therefore sometimes delay the realisation, launch and implementation of projects. A PPP may take some time to get off the ground, but once the project is launched, implementation is rapid. Furthermore, considering the longevity of the project, PPPs are long-term contractual relationships that are (normally) not subject to political temporalities such as elections.
- Risk transfer : Since a contract is established between the public partner and the private partner, the private partner has to achieve a certain level of performance, which is fixed in the contract. If this level is not achieved, the private partner will bear the costs. The financial risk is therefore limited for the public partner, which is a particularly appropriate criterion in view of the difficult budgetary context that public authorities may encounter.
What are the conditions for the partnership to work in the long term?
PPPs are certainly a potential asset for infrastructure projects in terms of mobility, but certain aspects can also sometimes hinder their development. Our speakers highlighted the psychological barriers that can block public-private collaborations (e.g. persistence of certain stereotypes or lack of trust in the other partner) but also the timeframes linked to public contracts which require private partners to be both very reactive and patient.
Beyond the potential obstacles, the panellists then pointed out certain conditions that would allow partnerships to be sustainable. For Fabienne Roberti, a PPP is "like a marriage: flexibility, trust and a good contract are the key words". The contract must therefore be well thought out and flexible, as conditions can change. It must also be reasonable, i.e. it must contain conditions so that it is possible to break the commitment.
For Bénédicte Collard, the preparation of the partnership beforehand is the most important part to ensure that you have a solid foundation. This includes: an inventory of the already existing infrastructure, the definition of the model for the production and use of data by the partners, and the definition of a monitoring and evaluation strategy for the project. Transparency during the partnership is also a central element.
What about the banks?
In addition to the above-mentioned conditions, our interlocutors particularly emphasised the decisive role of the banking authorities during the discussion on the key external actors. They finance the project and expect a positive return. If they decide to stop financing a project, it may stop immediately, no matter how good a relationship the private sector would have established as a service provider.
PPP as a prerequisite for mobility infrastructure projects?
Finally, the discussion ended by addressing the need, or not, to develop PPPs for mobility infrastructure projects. For Fabienne Roberti, PPPs can be considered as a prerequisite for the deployment of large-scale mobility infrastructure projects because they allow a long-term vision. For Bénédicte Collard, the situation is a little more nuanced since she considers that, although PPPs are relevant in the implementation of this type of project, both the public and private sectors have always developed projects on their own and will continue to do so.
Want to know more?
If you want to know more about PPPs, and more broadly about public-private collaborations and partnerships in the context of Smart Cities, we invite you to consult our 6th Practical Guide volume.
