Public sector decision-making in the context of public-private partnership. Case: Pneumatic waste collection
School of Business | Master's thesis
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AbstractScarcity of funds has arisen the need for the public sector to seek for new ways to fund important investments. This has increased the popularity of Public-Private Partnerships, which are found to be a worthy alternative to the traditional procurement methods. Nowadays, these partnership arrangements are widely used in the provision of public services. In a Public-Private Partnership a public operator does not purchase an asset but signs a long-term contract with the private company for the supply of serviced asset. The private company builds and maintains the needed facilities and delivers the acquired services. Instead of a large initial investment, public sector operator makes a regular payment, which covers the use of the asset and provision of the related services. Public sector should pursue Public-Private Partnership only if its overall benefits exceed the benefits of other options. This is normally shown with a value for money analysis, which is a variant of the net present value method. However, decisions to conduct a Public- Private Partnership are not always based on analytical findings. Furthermore, accounting in general is not a neutral instrument but it can be used to promote or disguise decision- makers motives. Many studies have questioned the reliability of the value for money analysis. The purpose of this study is to identify characteristics of decision-making practices in Finnish public-private-partnerships thorough a case study. Empirical data was collected by interviews and observations of a competitive tendering of a pneumatic waste collection system. This study shows how public sector decision-making is a complex task that may dilute responsibility. Additionally, it reinforces the assumption that public sector decision- making is often focused on economical aspects. This study also highlights the weakness of the value for money analysis to disregard the fall back position, an option where the public sector decides to provide the needed services with already existing infrastructures.
Public-Private-partnership, Investments, decision-making