Public-Private Partnership

The Key to Successful PPPs

Challenges in Public-Private Partnerships

PPPs have become a well-established tool to join forces between the public and the private sector. While worldwide experience shows a high success rate in large-scale development projects, a certain ratio of failures or less profitable ventures is inevitable.

The main driver for reaching the established objectives lies in assuring the right equilibrium between the public sector interests (usually low- or non-yield activities) and the benefits of the private sector (typically mid- or high-yield activities). By establishing a firm regulatory framework and an efficient monitoring scheme, these obstacles can be overcome.

The need to clearly define tasks and strictly enforce responsibilities becomes a key factor especially in commodities of daily life such as power, transport, fresh water or solid waste. They are categorized as “public needs”, where the state-owned entities must retain a leading role in securing their availability and the affordability. By transferring too much decision-making power to the private partners, negative results in quality and quantity of the services often follows, especially in long-term investments like maintenance or new technologies.


Positive PPP experiences worldwide

England is considered the mother country of the PPP concept with a total of 700 projects at a volume of UK£53bn since 1993. Failures in the area of health care supply or the recent case of Metronet’s financial problems certainly show the risks of joint undertakings. However, it must be noted that around 75% of all PPP projects are realized within their planned time and budget frames – a figure three times higher than in conventional state projects.

When looking at the service sector, to which tourism and specifically waterfront developments can be counted, the success rate comes to even higher numbers. These projects fulfil some of the key criteria identified in best-practice examples worldwide: mutual private and public interest; pilot projects with multiplier effects; investment volume over US$50mn. Examples from various Middle East countries confirm the high level of market acceptance of the model: Saadiyat Island / Abu Dhabi; Dubailand / Dubai; The Wave Muscat / Oman; or Mina Al-Arab / Ras Al-Khaimah.


Key success factors

The PPP approach is a most promising when centred around growth sectors like tourism or real estate. Joint interests of the public and the private sector foster the financing and the development of partnership initiatives. Of utmost importance is a clear distribution of tasks and responsibilities, usually done on the basis of standard contractual agreements.

Especially in tourist and leisure developments, the knowledge of the market demand and the access to target groups are core competences of the private sector – and when partnered with the support from public institutions, the outcome is very likely to create economic benefits for all partners including the local population.



Andreas Hauser