Why do some PPPs fail to meet objectives? Evidence from Ireland

Eoin Reeves

Governments around the world are seeking new ways of meeting the challenges of renewing and providing new infrastructure.  Factors such as disenchantment with traditional procurement methods and increasing pressures on public finances (intensified by the global economics crisis) have encouraged governments to look to public-private partnerships (PPP) for the purpose of meeting these challenges.  The use of PPP is however a recent phenomenon and the evidence on whether it achieves goals such as better value for money and speedy delivery of infrastructure is patchy.

My recent article in Local Government Studies, The Not So Good, the Bad and the Ugly:  Over Twelve Years of PPP in Irelandseeks to add to the emerging evidence on the experience with PPP by focusing on the case of Ireland.  The Irish government initially adopted PPP in an effort to meet the demands placed by rapid economic growth in the late 1990s.  Since then it has, in relative terms, become one of the world leaders in PPP procurement.  The Irish case therefore provides a valuable country-based case study of PPP procurement.

The article adopts a framework that embraces perspectives from the literature on economics and governance.  From an economic perspective the case for adopting PPP rests on the proposition that it yields positive net social returns (in other words, the benefit-cost ratio is positive).  However, governments tend to articulate the objective of PPP in terms of faster delivery of projects and value for money compared to traditional procurement.  While satisfying these criteria is indicative of a degree of success it does not necessarily ensure a positive benefit-cost ratio.  This is attributable to the fact that these criteria are too narrow and fail to include transaction costs.

PPPs also have important governance dimensions.  A key governance issue concerns contract design and framing incentives to encourage the performance of the PPP contractor.  In a PPP context the question of incentives largely centres on the allocation of risks.  Other governance issues concern the development of mechanisms that protect accountability.  Stakeholder consultation and transparency are important in this respect and the advantages of making PPP arrangements more accessible and assessable are widely recognized.

The article adopts a case-study approach and analyses three separate PPPs at the level of local government.  Two cases are drawn from the water services sector and the third case covers the PPP adopted for the regeneration of a housing estate in Dublin’s inner city.

In the three PPP cases examined, parties to the contracts grappled with the complexity/uncertainty associated with the implementation of PPP.  In each case there was little experience on the public sector side with procurement under PPP.   Both water service cases illuminated shortcomings in the early stages of procurement especially the conduct of value for money assessments (VFM).  However, in the case where the level of stakeholder consultation extended to in-depth analysis of the initial VFM assessment there were clear benefits derived from the sharing of information between stakeholders and the adoption of a co-operative approach to preparing for PPP.

The social housing case represents one of the biggest PPP contract failures in Ireland to date.  In this case, procurement was terminated following the collapse of the Irish housing market in mid-2008.  The termination of this PPP can be mainly understood in terms of the failure to adequately transfer risk to the private sector.  The (possibly) loss-leading contractor withdrew from the contract due to inability to absorb the financial risks associated with the collapse of the Irish housing market.  The contractor also pleaded an inability to assume planning risks which materialized in some contracts.  The private contractor’s behaviour in this case exemplifies how failure to adequately transfer risk can have drastic social consequences.

These cases show how policy makers and public sector managers face difficult challenges if the PPP model is to be adopted successfully.  These include framing PPP policy, organizing competitive markets for contracts, designing contracts, enforcing risk transfer and ensuring that the thread of accountability between service providers and citizens is strong.  This may be a tall order but unless these challenges are met PPP will not improve economic efficiency or social welfare.

Eoin Reeves Profile Photo (2)

Dr. Eoin Reeves is a Senior Lecturer in the Department of Economics and Director of the Privatisation and PPP Research Group at the University of Limerick.  Eoin researches market-based reforms of the public sector and the regulation of infrastructure including privatisation, liberalisation, and different forms of private sector participation in the delivery of public services.

Partnerships and service integration – is it all just hot air?

Axel Kaehne

Since the 1990s, policy makers and academics have had a pet project in public service reform. Over time, they have called it differently but always meant essentially the same: public services collaborating with each other to improve service quality. At some point, it was called partnerships (remember the Partnership Agenda under Tony Blair’s government?), then it was service integration, a term particularly popular amongst health care professionals.

But what drives this collaborative agenda and where should it lead? Have we achieved anything over the last decades or was this all just hot air?

Academics have pointed out for a long time that there is a glaring gap in the partnership and integration project – evidence. We know from studies that working together does make a difference to professionals. This would be good if the main objective was to overcome service fragmentation per se, yet what drives much of the public policy announcements are intentions to improve service quality for users and patients.

Conceptualising service collaboration has been a well tilled field. Personalisation of services, where public services are shaped around the needs of the user is one way of thinking about improving public service delivery. Direct payments are a powerful instrument to re-orientate public services by putting the user in control. Yet, direct payments have been met with fierce resistance from some corners of the professional establishment, whilst the Welsh Government actively discouraged local authorities to use them until recently. Consequently, the take up of direct payments has been low.

In addition, producing evidence of the effects of service collaboration has proved to be the proverbial ‘holy grail’. The main stumbling block to it has been to establish a robust link between organisational changes and service improvements. As services improve their collaborative practices, the interface between users and professionals may often be largely unaffected. Organisational changes may not be noticeable for users. My paper on multi-agency protocols shows that even where the evidential link between changes and outcome is well defined, effects may be marginal and introspective at best.

Another reason is that service improvements are most urgent when users or patients draw on support from many different professionals because of the complexity of their needs. In the field of children’s services it is not uncommon to have families dealing with fifteen different professionals or more at a time.

The complexity of service delivery impacts on how organisational changes are perceived by the users and how they are affected by them. Key working may be a useful example. Potentially, key workers were supposed to reduce the number of professionals working with a service user, yet there is little evidence that they have had this desirable effect. More often than not, key workers joined the long list of professionals without reducing the need to be in contact with others. In other words, they turned into another layer of service delivery on top of the already existing ones.

So, why is it so difficult to improve service delivery in collaborative contexts? The answer lies in the discrepancy between policy objectives and the levers for change we have available. Policy makers constantly profess a desire to improve services by urging professionals to work together. Yet, there is only one player in this game who really knows what would constitute better services: the user. As long as professionals are in the driving seat, users will be a polite afterthought to their practice. Whether you call it partnership or service integration, collaborative practice grows from user demand. Better public services for users with complex needs should not be a product of professional generosity but an outcome of user demand. Until the user is in control of the service they get, service collaboration will remain little more than hot air.

Axel’s article, ‘Multi-Agency Protocols as a Mechanism to Improve Partnerships in Public Services’, is published in Local Government Studies.


Dr. Axel Kaehne is currently Chair of GORWEL, the Welsh Foundation for Innovation in Public Affairs and a Senior Research Fellow at the Faculty for Health and Social Care, Edge Hill University. He is also Senior Research Fellow at the Alder Hey Children’s Hospital NHS Trust in Liverpool.

The impact of media logic on democratic legitimacy in local governance networks

Iris Korthagen and Ingmar van Meerkerk

Many policy- and decision-making processes in today’s democracies increasingly take place in governance networks, these are interactive or network forms of governance. This raises an important question of how democratic legitimacy is being shaped in these networks and which factors impact upon this.

The opportunity for citizens and stakeholders to give voice are viewed as important sources for democratic legitimacy in governance networks, with this enhancing the quality of deliberations between stakeholders and accountability of decision-makers. An important factor which is scarcely examined is the impact of media on these sources of democratic legitimacy. The media can give voice to actors, they can provide a forum for deliberation and they can provide an important channel for decision-makers to account for their decisions.

Rather than neutrally transmit information and images the media select and frame news stories by a commercial logic: news needs to be made every day and it needs to be sold. This means that news is relatively more negative than positive, skewed towards dramatic human interest stories and content designed by public relations professionals. This raises the important question of how this media logic affects democratic legitimacy.

We recently examined this relationship by comparing three local governance networks in the Netherlands. Using content analysis of documents, case studies and interviews, we came to the conclusion that the media logic increased the potential of certain sources, while it decreased others.


The media are a vehicle to generate attention for certain issues and to gain influence in the process. By adapting to the media logic we found citizen groups succeeded in attracting media attention and were able to put their issues on the political agenda. However, the media logic restricted the messages of citizens’ groups that came through. For instance, having harsh, negative sound bites and organizing protest actions were more attractive than a nuanced and collaborative attitude.


The media can function as a watchdog, as checks and balances in the process and as a platform for diverse deliberations. We found deliberative processes were broadened by the perspectives of the citizen groups that gained media attention. Nevertheless, as the media are more interested in entertaining stories, with a focus on conflicts and drama, this partly reduced the quality of the deliberation process. Images seemed more important than well elaborated deliberations. Furthermore, the media, in our cases, were more a platform for citizen groups than for political authorities.


The media are a communication channel for generating transparency and accountability. Since the media were at times so negative about the proposed project plans, they forced political authorities into a reactive communication style: they had to fight against a negative image. Proactive communication, such as branding, is difficult in the context of the citizens’ dramatic stories.

We observed that citizen groups deployed active media strategies at times when they were losing faith in the outcomes of the interactive governance process. Indeed, some decisions were partly changed in favour of the citizen groups that gained media attention. In that sense the mediatized reality can have a substantial impact on the reality of governance.

Certain citizens’ groups thus extended their influence on the policy- and decision-making outputs through their media strategies. At the same time these strategies can be seen as go-it-alone strategies that can damage trust relationships with the authorities and the other actors involved and even isolate the group from the interactive governance process. This also raises an important challenge for political decision-makers. To what extent should they listen to those citizens who are barking loudly in the media, while other stakeholders are trying to reach compromises in an interactive setting?

A full account of this research is available in our recent article in Local Government Studies, published online 09 Jan 2014.


Iris Korthagen is a PhD studenet at the Department of  Public Administration at Erasmus University Rotterdam and a member of the research group Governance of Complex Systems (GOCS). Her PhD project focuses on the mediatisation of public decision-making processes. She studies how the logic of news reporting influences the content and the process of decision-making in governance networks.


Ingmar van Meerkerk is a PhD student at the Department of Public Administration at Erasmus University Rotterdam. His PhD thesis focusses on the role of boundary spanners and the impact of boundary-spanning activities on the democratic legitimacy and performance of interactive governance settings. For his thesis he has published in several international peer reviewed journals, such as Policy Sciences, European Planning Studies and Environment and Planning C.

Can local government govern in the digital age?

Paul Hepburn

The digital age continues to bring policy challenges for local government. From harnessing ‘big data’ for the public good to developing  ‘smart’ cities the policy expectation is that local authorities will deliver appropriate governance without which, it is argued, urban life in the 21st century is likely to be rendered more complicated, fragmented , unequal and potentially dystopian through ad hoc technological fixes.

All very well and Hobbesian but ‘good’ or ‘smart’ governance in this context is one where the citizen is centrally involved in the decision making process. It is questionable then if the local government institution is fit for this assigned purpose given that many commentators view it as having failed to meaningfully engage citizens during the well-funded e-government programme run by the previous New Labour government.

Since that time the social web and apps development, to name but two, have opened new opportunities for local policymaker wishing to involve citizens in the policy making process.  My article, based on empirical research into the online activity associated with the Manchester Congestion Charge Referendum, illustrates the political difficulties local government faces in turning these opportunities into effective online engagement and in doing so suggests some remedial policy responses.

The local online influence of the sad, the bad and the very rich

The promise of e-democracy is that it will renew the democratic process and enable ‘ordinary’ citizens’ voices to be heard above those that have traditionally dominated politics. This proved not to be the case during the Congestion Charge Referendum and analysis of the related hyperlink network and interviews with actors prominent in this network revealed how powerful economic businesses offline were dominating the political narrative online. Evidence collected here showed how these businesses used their offline political connections to diminish the online voices of those that opposed them.

Along with the influence of the very rich online engagement on this issue was often characterised by angry, offensive and anonymous postings which served to deter people from participating or sharing information. It also reinforced the belief of some policy-makers in the superiority of traditional forms of communication.

Local government and the online network

The role of local government during the referendum was to ensure that all relevant information was made available to the voting public and to attempt to engage them on the issue. Of course they used online media in this process but their engagement was hampered by a toxic mix of institutionalised  ‘silos’ of information, a prevailing culture of anxiety about the new media and an inability to assign any real political value to online engagement. As a consequence their tepid interventions online were often counter-productive and helped to fuel a lack of trust amongst the public in the information they were trying to impart.

Remedial policies

Some of these obstacles to more effective online intervention by local government are more straightforward to resolve than others. The modernisation of local government needs to be driven forward and the institutional structures, culture and prevailing perceptions of citizenship need to be aligned with the requirements of the digital age. How far and how fast local government will change is contingent upon a number of factors, countering the online influence of the sad the bad and the very rich is probably dependent upon how far local government climbs Arnstein’s ladder of participation.

A full account of this research can be found in my recent article ‘Local Democracy in a Digital Age: Lessons for Local Government from the Manchester Congestion Charge Referendum’, Local Government Studies.


Dr Paul Hepburn is a Postdoctoral researcher at the Hestletine Institute for Public Policy and Practice, University of Liverpool His work explores the potential of the new digital media to enhance local democracy and local governance. He uses methods and tools for analysing and explaining the structure of online political networks. Paul previously worked in local government where he implemented an e-government programme.

Health and wellbeing boards: a new type of partnership?

Anna Coleman

A great deal rests on Health and Wellbeing Boards (HWBs), a new type of local partnership. These were established under the Health and Social Care Act 2012, to act as a forum in which leaders from the local health and care system could work together to improve the health and wellbeing of their local population and promote integrated services.

Last year, the House of Commons Communities and Local Government (CLG) Committee concluded that HWBs have a pivotal role and their success ‘is crucial to the new arrangements’.  However, it also warned of the danger ‘that the initial optimism surrounding their establishment and first year or two in operation will falter and go the way of previous attempts at partnership working that failed and became no more than expensive talking shops’ (House of Commons CLG Committee, 2013 paragraph 22, 14).  We examine these issues and the early development of HWBs in our recently published article in Local Government Studies.

While partnerships are seen to be a prerequisite for tackling ‘wicked issues’ (those issues so complex that their solution lies with a multi-agency response), historically they seem unable to break free from the ‘silo-based’ structures which govern how many UK public services are organised and delivered.

The official vision for HWBs from the Department of Health emphasises: joint local leadership between Clinical Commissioning Groups (CCGs) and local authorities; key roles for elected councillors, clinicians, and directors of public health, adults and children’s services; the enablement of greater local democratic legitimacy of commissioning decisions, and provision for opportunities for challenge, discussion, and the involvement of local representatives (Department of Health 2011 p15). However, HWBs have no formal powers, and their ability to influence others will depend upon their success in building relationships.

Established as sub-committees of local authorities, the exact membership of HWBs is not formally mandated, and locally HWBs can choose how they wish to work. Recent research (Humphries 2013) has suggested several features of HWBs which could potentially set them apart from previous partnership initiatives. These include: involvement and engagement of GPs; better governance and accountability (due to being sub-committee of the LA); encouragement of wider relations between the NHS and broader LA (not just Social Services); and opportunities afforded by the move of Public Health functions to local government. However similar initiatives have historically fallen short of initial expectations.

In the complex new system, resulting from the many changes under the Health and Social Care Act 2012, and characterised by potential fragmentation and confused accountability (see our other recently published paper from research with Clinical Commissioning Groups – Checkland et al 2013), HWBs are the one element within the new system with a specific mandate to encourage integration between local bodies. This has led to potentially unrealistic expectations that they can solve longstanding and intractable problems, such as joined up working between health and social care (Vize 2013), but also provides opportunities for them to work differently and make a difference locally to the health and wellbeing of local populations. Watch this space.

Anna’s article Joining it up? Health and Wellbeing Boards in English Local Governance: Evidence from Clinical Commissioning Groups and Shadow Health and Wellbeing Boards is published in Local Government Studies.


Anna Coleman is a Research Fellow in the HIPPO team (Health policy, politics and organisation groups), part of the Institute for Population Studies at the University of Manchester. HiPPO also constitutes, jointly with researchers from The London School of Hygiene and Tropical Medicine and the University of Kent, the Department of Health Policy Research Unit in Commissioning and the Healthcare System (PRUComm). PRUComm provides evidence to the Department of Health to inform the development of policy on all aspects of health-related commissioning.

Disclaimer: The research for both referenced papers is funded by the Department of Health. The views expressed are those of the researchers and not necessarily those of the Department of Health.

Delivery of public services and economies of scale: Cooperation as an alternative for small municipalities

Germà Bel

The economic crisis has strongly affected many developed countries, and has caused serious tensions in government finances. These constraints are particularly important at the local level, because local governments have limited taxing bases, and fiscal competition is stronger. Policy discussion on local government reform and local cost reductions, as well as increasing efficiency in local service delivery, is widespread.

Besides the measures of suppression or reduction of intermediate local government in some countries, the most relevant feature of local government organizational reform is the search for a better scale, to be able to provide local services in a more efficient manner. A policy frequently proposed to reduce costs is merger of municipalities. In practice, most experiences worldwide have had compulsory character, given the usual reluctance of municipalities to merge. However, it is by no means clear that municipal amalgamation results in cost reduction.

An alternative reform of local service delivery increasingly which is increasingly used has been intermunicipal cooperation, which focuses on functional consolidation of services instead of focusing on amalgamation or consolidation of governments. Little is yet known about why municipalities engage in cooperation to deliver local public services.

Shedding further light on this question is the aim of our recent article ‘Why do municipalities cooperate to provide local public services? An empirical analysis’. We use a database of the Spanish region of Aragon, characterized as having many small municipalities. Our empirical analysis confirms that small municipalities need to cooperate with other municipalities so as to reduce the costs of providing services. The need to exploit scale economies, which is not possible for small municipalities individually, may be one of the main factors driving the decision to cooperate.

Of course, municipalities could also contract to a private vendor to benefit from scale economies. However, higher transaction costs with privatization seem to be particularly influential in the decision of local governments to privatise or cooperate in the delivery of solid waste collection. Our analysis shows that small municipalities prefer to cooperate so as to reduce costs, while larger municipalities prefer to privatise the delivery of the service.

The clear policy implication of our work is that intermunicipal cooperation, as opposed to privatisation, may well be an optimal solution for the delivery of services by local governments in small municipalities. Municipalities of this type have to face the problems of a lack of competition and high transaction costs, while facing the need to exploit scale economies. By cooperating, scale economies can be achieved with lower transaction costs and fewer concerns for competition than is the case for private production.

A full account of this research is available in my recent article with Xavier Fageda and Melania

Full details of this research are available in my article with Xavier Fageda and Melania Mur: Why do municipalities cooperate to provide local public services? An empirical analysis.  Local Government Studies, 39(3), 435-454.


Germà Bel is professor of Economics at Universitat de Barcelona and Visiting Professor at Princeton University (Woodrow Wilson School). His research focuses on public sector reform, with a special emphasis on privatization and regulation, and he is particularly active in the study of transportation infrastructure and local public services.