Aligning Public and Private Interests in a Public-Private Partnership

The document argues that while public and private sectors have inherently different goals and cultural perspectives, these differences can be leveraged through specific procurement and implementation mechanisms. It highlights 'best value' bid evaluation and performance-linked payment systems as critical tools for aligning interests. Additionally, it suggests informal collaboration methods, such as partnering sessions and joint offices, to reduce conflict and build trust during the long-term lifecycle of infrastructure projects.

• Public-private partnerships (PPPs) are intended to generate 'value for money' (VFM), which occurs when the private sector provides cost efficiencies, time savings, or quality enhancements that exceed what a conventional public procurement could achieve.
• There is a fundamental misalignment between public interests, which focus on maximizing social welfare and meeting policy goals, and private interests, which focus on financial returns for equity investors, debt service for financiers, and fair compensation for subcontractors.
• Using a 'best value' bid-evaluation system is more effective than a 'lowest price' approach because it allows public agencies to prioritize quality, timing, risk allocation, and sustainability over cost alone.
• To align interests during the contract lifecycle, public agencies should implement a three-part system consisting of output-based specifications (or KPIs), a performance-monitoring system with independent verification, and a payment mechanism that imposes financial penalties for underperformance.
• Informal collaboration mechanisms, such as partnering sessions, public-private working committees, and joint offices, can help prevent the escalation of disputes and foster trust between the two sectors.

APA

Hovy, P. (2015). Aligning Public and Private Interests in a Public-Private Partnership. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/aligning-public-private-interests-in-ppp-discussion-paper.pdf

Chicago

Hovy, Pauline. Aligning Public and Private Interests in a Public-Private Partnership. International Institute for Sustainable Development, 2015. https://www.iisd.org/system/files/publications/aligning-public-private-interests-in-ppp-discussion-paper.pdf.

Wikipedia

{{cite report |last1=Hovy |first1=Pauline |title=Aligning Public and Private Interests in a Public-Private Partnership |publisher=International Institute for Sustainable Development |date=August 2015 |url=https://www.iisd.org/system/files/publications/aligning-public-private-interests-in-ppp-discussion-paper.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{hovy2015aligning, author = {Hovy, Pauline}, title = {{Aligning Public and Private Interests in a Public-Private Partnership}}, institution = {International Institute for Sustainable Development}, year = {2015}, month = aug, url = {https://www.iisd.org/system/files/publications/aligning-public-private-interests-in-ppp-discussion-paper.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }