“You’re only as successful as the stakeholders say you are.”
That’s the assessment of Judy Pfeifer, chief communications and public affairs officer at Toronto transport agency, Metrolinx. She adds: “That is why I bring in all those organisations such as unions and local groups.”
Getting everyone involved on a project is becoming more and more important – and increasingly difficult, as critics sprout up around the world.
A growing number of global organisations are now actively promoting the use of PPPs to deliver major infrastructure improvements, whether it be in emerging economies or more settled markets such as Canada. Organisations like the Global Infrastructure Hub, the World Bank and a raft of multilateral development banks are all encouraging governments to harness private sector capacity, cash and capability to transform their infrastructure.
At the same time, however, the world is facing a strong push back from critics of the model and those that are sceptical of the motives of private sector investors when looking at public services and infrastructure. In the UK, for example, an MP on the influential Commons Treasury committee recently said “no sane politician” would advocate for more use of the PFI model to bring private investors into the market.
And it is not just in the UK. At the World Bank’s annual meetings in Washington in October, Eurodad, the European Network on Debt and Development, launched a campaign targeting the promotion of PPP by the bank and its affiliates in developing countries. And Canada, too, has often been hit by protesters objecting to the “privatisation” of their public services.
It has long been said that greater education is needed at a government level to help public officials understand what a PPP can offer. But in truth, the education programme needs to go far wider than that, to make those whose services are being affected understand that it is not simply a case of the public sector selling them off to the highest bidder.
“There is an ongoing trust conversation that this industry needs to be having and it needs to be the new normal,” argues David Morley, senior vice president of business strategy and communications at Infrastructure Ontario. “We are going to have to advance this.”
So what is the industry doing to counter this narrative of ‘public good, private bad’, where there appears to be no room for a more nuanced approach?
First of all, it is clear that the market is playing catch-up on this issue. Many point to the UK, where the use of PFI exploded in the early to mid-2000s, as an example of where they were caught out. Keeping their heads down, engaged as they were in a constant stream of new projects, many in the UK industry failed to take on the critics, while the government failed to explain why it was using the model.
While the government of the time supported PFI, all was good. But when a new government came into power in 2010, no-one had any answers to the politicians who made huge political capital out of attacking the model as an example of profligacy.
Matthew Vickerstaff, head of project finance at the UK’s Infrastructure and Projects Authority, admits that there is plenty of learning to come from over 700 PFI projects. “What you learn with so many projects is that some will work, and some won’t, so an evidence-base that demonstrates success is important.”
The good news is that there is now a much greater recognition of the need to properly work out what does and doesn’t work – and not just in the UK. “We have to learn from the delivery of projects,” says Philip Davies, chief executive of Infrastructure Australia. “Some go well and some less so, but we don’t gather enough of that data. We need to do that to provide transparency.”
It has long been said that the real proof of the PPP pudding will become clear at the end of the bulk of the contracts’ lifespan, when comparisons can be made between buildings procured under a privately financed model and those that were built with public funds around the same time – but with no guarantees over maintenance.
This area is already under scrutiny in the UK, says Vickerstaff. “In order to help develop an evidence-base we are planning to evaluate a number of projects at the end of their contract terms and compare them with schools and hospitals of the same age which have been managed in the public sector,” he explains.
And this is also an area in which Davies believes Australia can still do plenty more. “The big thing we are still missing is the post-completion reviews on projects. Have we delivered the outcomes that we promised? These need to be carried out five or 10 years after completion.”
For Davies, gathering such evidence is not only important for winning hearts and minds in the public, but also crucial in getting the various authorities aligned to deliver much-needed infrastructure.
“In Australia, there are big negotiations over funding in terms of tax receipts received by the federal government going back to states,” he explains. “We get caught up in the middle of that. So that makes it really important that we can back-up decisions with an evidence-base.”
This approach was formalised when Infrastructure Australia began its work on putting together its list of priority projects for the federal government. “One of the things we have done is to use the evidence-base to inform the priority list,” Davies continues. “The game-changer was looking at what was needed and where.”
By focusing on this priority list, Infrastructure Australia has been forced to look not only at the procurement model it is using, but what is needed where, and why such projects are urgently required. That gives rise to debates over how such schemes can be effectively financed, so that any decision to use a PPP model has undergone a rigorous debate that can be readily defended.
“What we are looking at now is a much greater clarity about the service levels we are trying to deliver,” says Davies. “For example, how far away could people be from a primary care centre if they live in the city, compared to someone living in a remote community, and so what are the needs in those different places?”
Being able to explain to people the rationale behind why a project is – or in some cases isn’t – being delivered is the important first step.
But for project professionals on the ground, keeping the public on-board during the long months of construction – when irritation around inconvenience can merge with doubts over private sector involvement to allow opponents to whip up local anger – is critical.
As Australia moves away from the more straightforward road projects and into complex metro systems, Davies acknowledges that this is an area where both the public and private partners in projects will have to raise their game.
“Metro transit systems are much harder to get support for: they are more disruptive and harder to explain to the public,” he says. “So we are seeing much more engagement with the public.”
Experts agree that constant engagement is vital. “When you hit problems, it means you have built up some social capital you can use to keep the project on track,” says Pfeifer. She says that the public engagement work that Metrolinx did on the Eglinton Crosstown project has become a model for it to use on future light rail transit schemes.
Davies suggests that an international forum providing details of lessons learned would be immensely helpful to the industry. In part, that is one of the aims of the Global Infrastructure Hub, or an organisation such as the European PPP Expertise Centre, where good practice is already shared.
However, finding out exactly what went wrong – and where – is unlikely to be easily available under any case study, due to the sensitive nature of the private companies involved. As a result, it may be better for the public sector to simply work on gathering more and more data to drive its future decisions.