Implementing Public-Private Partnerships in Municipalities

Abstract

Contractual flexibility in public-private partnerships increases plausible political contestability and industry capture. The anticipation of political hazards, hold-up, and knowledge-transfer barriers redounds to regulatory and contractual rigidities that reduce managerial efficiency and often impede implementing public-private partnerships. Based on 20 projects embarked upon by the city of Warsaw, I examine the management of public-private partnerships in emerging economies to minimize political hazards and contractual inefficiencies. Key policy implications are (1) integrated headquarters, (2) accountable project selection criteria, (3) involvement of consultants to legitimize the process to subsequent administrations, (4) ex ante risk allocation and ex post performance measurement procedures, (5) predetermined termination clauses, (6) commitment to learning-by-doing, and (7) established knowledge transfer and retention mechanisms. Thereby, modern public management of public-private arrangements requires balancing service provision efficiency and political hazards from interested third parties.