Cost-cutting 'damaging PPP relationships'

7 March 2017 Exclusive: The continued focus on cutting costs in operational PPP contracts is having a negative impact on relationships, research from Partnerships Bulletin and O&M performance management software provider, Service Works Group (SWG) has found.

The Operational PPP Survey found that 73% of respondents believe cost-cutting will have a detrimental effect on relationships between the public and private sector partners in managing contracts.

Respondents overwhelmingly said that there are pressures to reduce costs on operational projects – suggesting that partnerships will continue to face challenging times ahead.

Overall, 89% said there is currently some degree of pressure on private parties to reduce the prices they charge the public sector on operational projects.

Gary Watkins, CEO at SWG, said: "Cost-cutting could start to cause partnerships to become adversarial, especially if they have not been managed properly.”

"Carrying out a proper benchmarking exercise, for example, is not a quick exercise. Without proper payment mechanism software to provide data integrity and auditability, tensions can arise among stakeholders."

The findings offer the UK government an important reminder of the need for projects to be properly considered and resourced for the long-term, as it prepares to launch a new pipeline of PF2 projects in this week's Budget.

The full results of the survey will be published in the April edition of Partnerships Bulletin

This page was last updated on:
19 September 2017.

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