Ever since the rise of privatization and public-private partnership (PPP) models in the 1980s, most governments have operated under the assumption that the private sector outperforms the public sector when it comes to procuring and delivering infrastructure. But this can no longer be taken for granted.
The reality is that public sector capability and capacity has – in many places – significantly improved. Recognizing they are now being benchmarked against private sector performance measures, many have learned valuable lessons and have now incorporated private sector practices into their own organizations. While public sector appetite for investing in sufficiently skilled and appropriately compensated resources – whether it be for project management or operations – remains a significant concern, the gap between the public and the private sector is starting to narrow.
That is not to say that the private sector’s role in infrastructure is diminishing – quite the opposite. In fact, the last few years have seen the rise of a phalanx of global developers and operators in key segments such as ports, airports and transportation as governments continue to leverage the specialized expertise of the private sector to drive improved results.
Ultimately, we expect to see the knowledge gap between public and private sectors continue to shrink as the cycle of interaction, experience and improvement continues.
While the movement towards privatization and PPP over the past few decades certainly answered some long-standing concerns about public sector capabilities, it has also proven to be a catalyst to public sector improvement. Over the long-term, we expect the private and public sectors to continue to drive each other to achieve ever-higher levels of performance, regardless of the chosen implementation method. As a result, we expect to see fewer public and private decisions being made on ‘ideological’ grounds in the future.
© 2017 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.