The Disadvantages of a Public and Private Partnership

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Public-private partnerships help to build infrastructure, such as roads.
Public-private partnerships help to build infrastructure, such as roads. (Image: Hemera Technologies/AbleStock.com/Getty Images)

Public-private partnerships take place whenever the government and the private sector come together to provide the public with good infrastructure and meet other community needs. These partnerships are usually characterized by a sharing of some risks, such as duties, capital and responsibilities. Unfortunately, these partnerships have several disadvantages.

Control

In every partnership, loss of total control is usually inevitable. Therefore, the two parties must discuss the level of control each has over certain aspects, such as the master plan and facility management. Because of this, delays may arise in decision making, since the people who are required to approve certain decisions may not be readily available.

Trust

For partnerships to succeed, each of the partners has to rely on the other. The partners have to take a leap of faith and assume the other party will deliver on its part of the project as agreed. Therefore, both parties must work to build a sense of mutual trust.

Political Interference

Most public-private partnerships are high-stake projects concerning national infrastructure. Because of this, their implementation usually attracts media attention and political interest. Sometimes, politicians interfere with the implementation because of changing political considerations. If this happens, the project will be endangered, and the private partner, with little or no political clout, will lose.

Sharing of Costs

In a genuine partnership, the two parties decide on a fair and reasonable sharing of costs, risks and responsibilities. Partnerships generally need to achieve some financial goals. The two partners should make efforts to combine contingent and non-contingent income. To do so, the partners need to be very creative. They should make efforts to provide payment in such a way that it is not tied to project performance. Sometimes, however, one partner may try to take advantage of the other by reneging on the cost-sharing agreement. This can endanger the project.

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