Advantages & Disadvantages of Public Private Partnership

Meaning of Public-Private Partnership

Public-Private Partnership refers to the partnership between public & private sector. It refers to the agreement between private organisations & public organisations or government for the completion of heavy projects.

The project undertaken through these partnerships is huge infrastructural projects requiring large funds & time. Government uses the skills & experience of private companies to complete undertaken projects. Under this partnership, Private corporations finance public sector projects.

The benefits after completion of the project under this project are shared by both public sector & private sector. However, private organisations are paid according to their performance standards. The projects undertaken for these projects are like Construction of new stadium, hospital, library etc.

Advantages of Public private Partnership

Spreading of risk

Public-Private Partnership is formed for large infrastructural projects. These projects require large finance & risk. When public & private organisations join together, this risk is diversified among two.

Timely Completion

The project undertaken under these partnerships are of huge size. These require large human effort & time. Timely completion of the project is a bigger challenge.

When private companies consisting of high professionals join a public corporation, it becomes possible for timely completion. The efficiency of the project is increased due to high efficient peoples in the group.

Funding

Finance is one of the major problems for any project. Public sector projects require a large amount of funds. Sometimes government can’t arrange for the required amount of funds. It is private organisations who arranges all the finances & undertakes the whole risk.

Reallocating funds

Public-private partnership makes it possible to utilize funds in different projects. Government can utilize its funds elsewhere in more important projects. As projects are funded under this partnership by private corporations.

Disadvantages of Public-private partnership

Expensive Charges

The private corporations invest a huge amount in public projects. They undertake large risk associated with these projects. There is a top professional who are working in private corporations team. They charge huge prices for their services. This result in an increase in prices charged from the users of these infrastructures.

Downfall in Employment of Public Sector

This partnership decreases the roles & responsibilities of public sector organisations. Most of the work is done by the private sector decreasing the government role. This decreases the employment opportunities in the public sector.

Division of return

Under these partnerships, the government is required to share return from projects with private organisations. Private sector invests in public sector projects in return for income from these projects. After completion of the project, private companies charge high prices for providing services.

Limited Influence by Public sector

When public sectors join private sectors, it shares the responsibility & management of project with them. Public sectors cannot directly influence the activities of the project. Private sector after investing large amount enjoys rights & power of control over the activities. They employ their staff & managers according to their decisions.