From the Introduction:
The main reasons for use of Public-Private Partnerships (PPPs) for infrastructure and related public services are to make use of private capital for public services, stimulate innovation, increase the level and quality of services and improve Value for Money (VfM). However, the approach adopted for implementing PPP schemes is not necessarily aligned with those objectives. In fact, PPPs are outsourcing transactions mainly based on a market approach where all specifications are signed in a contract that is necessarily incomplete. Often, the incompleteness of contracts and the high transaction costs generate disadvantages for the public sector in favour of the private sector and this is partially attributable to the simplistic approach to risk sharing, rooted in a lack of distinction between managing and bearing risk. In order to address that lack of distinction, this study proposes a new interpretation of PPPs as strategic alliances based on risk governance rather than PPPs as outsourcing transactions based on risk transfer.
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