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Institutional and Strategic Barriers to Public—PrivatePartnership: An Analysis of Dutch CasesErik-Hans Klijn a & Geert R. Teisman ba Associate Professor in the Department of Public Administration , Erasmus University ,Rotterdamb Professor in the Department of Public Administration , Erasmus University , RotterdamPublished online: 15 Mar 2010.

To cite this article: Erik-Hans Klijn & Geert R. Teisman (2003) Institutional and Strategic Barriers to Public—PrivatePartnership: An Analysis of Dutch Cases, Public Money & Management, 23:3, 137-146

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The Problem of Co-operationFor the past two decades, a large number ofcountries have been investigating andpromoting Public–Private Partnerships(PPPs). The Dutch Knowledge Centre onPPP, set up in the late 1990s by the DutchMinistry of Finance, has stated that‘International experiences demonstrate thata faster and more efficient implementationof infrastructure projects is possible throughpublic–private partnership (PPP). Bothpublic and private actors in the Netherlandshave displayed an interest and willingnessfor PPP’ (Kenniscentrum, 1998).

PPPs can be defined as ‘co-operationbetween public and private actors with adurable character in which actors developmutual products and/or services and in whichrisk, costs, and benefits are shared’. Theseare based on the idea of mutual added value.

Actors foresee additional benefits and expectthat these will outweigh the (extra) cost ofco-operation. Benefits can take a variety offorms, for example financial/material (profits,working space, and increased transportcapacity), or more intangibly (image andknowledge development). The costs of co-operation can be one-time only (preparation,adaptation of the internal organization), orrecurring (organizational co-ordination,adaptation and tuning of substantiveobjectives). But what is important is the addedvalue of synergy, i.e. being able to develop aproduct with characteristics that would nothave been available without a PPP.

Co-operation, however, implies anincrease in the number of participants. Also,in partnerships, the actors are usuallydependent upon each other. These two basicconditions create problems (see, for example,Emerson, 1962; Scharpf, 1978; Rogers andWhetten, 1992; Klijn and Teisman, 2000).

Network GovernanceThis problem of co-operation can be exploredthrough the network perspective ongovernance, which assumes that policy isdeveloped and implemented in networks oforganizations (see, for example, Kickert etal., 1997; Klijn and Koppenjan, 2000). Policynetworks can be defined as ‘changingpatterns of social relationships betweeninterdependent actors which take shapearound policy problems and/or clusters ofresources and that are formed, maintainedand changed by an ecology of games’.Networks emerge and continue to existbecause actors are dependent on each other.Actors cannot achieve their objectives without

Erik-Hans Klijn isAssociate Professorin the Department ofPublicAdministration,Erasmus UniversityRotterdam.

Geert R. Teisman isProfessor in theDepartment ofPublicAdministration,Erasmus UniversityRotterdam.

BAM Conference PrizeThe Public Management and PolicyAssociation and Public Money & Managementawarded a prize for the best academic papersubmitted on a public sector theme to theBritish Academy of ManagementConference in September 2002. All eligiblepapers were refereed, and then discussedby the public management ‘track’ at theconference. The final decision was made bythe chairs of the public management andpublic–private partnerships tracks, whowere Francis Terry and Richard Kerley.This article is an abridged version of theprize-winning paper.

Institutional and Strategic Barriersto Public–Private Partnership: AnAnalysis of Dutch CasesErik-Hans Klijn and Geert R. Teisman

Public–Private Partnerships (PPPs) are becoming popular in Europe, but doesthe reality match the idea of co-operating actors who achieve added value togetherand share risks? An analysis of three PPPs in the Netherlands suggests that, inpractice, PPPs are less ideal than the idea. Partners have difficulty with jointdecision-making and organization and tend to revert to traditional forms—bycontracting out and by separating responsibilities.

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resources which are possessed by other actors.Thus, networks are characterized by a limitedsubstitutability of resources, which ensuresthat sustainable social relations are createdbetween actors.

Within these policy networks, actorsconduct themselves strategically in policyprocesses. This theoretical framework seespolicy processes as a series of games (seeScharpf, 1997 for an explanation of the gameconcept). The multiplicity of actors and theirvarious (and often conflicting) perceptions,interests and strategies, make these gamescomplex (see, for example, Teisman, 2000).

Games are played in arenas—some gamesare played out in several arenas at once(Klijn et al., 2000). Arenas are the actioncontext in which the games take place. Arenascan be characterized by a specific set of actors,the decision-making situation in which theyfind themselves (constellation of preferencesand positions), and the organizationalarrangements according to which decisionsare made. Arenas are ‘activated game fields’and can be located within one or morenetworks. Some of the actors in a networkwill not be involved in all the games andarenas.

Games are likely to become complicatedif they take place in arenas that are located indifferent networks—this makes it moredifficult to connect the various interactions.Also, in these cases, it is more likely thatdifferent rules of behaviour will be needed(Klijn, 2001).

Actors, Networks, Arenas and StrategiesPPPs include actors from different networks,each with their own history and practices,and they are constantly influenced bydecisions made in other arenas. A PPP iscreated by a game that involves more thanone arena (for instance central and localgovernment), and more than one network(for instance a traffic and transport networkand a public housing network). At the sametime, a game surrounding a PPP project canbe influenced by decisions taken in othergames and arenas.

In these games, each of the actors choosestheir own strategy. This can make decision-making in PPPs extremely complex, becausedecisions are faced not only with aninstitutional complexity, but also with astrategic complexity.

PPPs in Dutch Key ProjectsProjects in the Netherlands where it has

been decided that PPP should play animportant role are called ‘key projects’. Theconcept of the key project is used by theDutch Ministry of Housing, Planning andthe Environment (‘VROM’) to define large-scale urban development projects which fitin with national policy. The aim of the keyprojects policy is to strengthen the economicstructure, while at the same time improvingenvironmental quality and providing a moreeffective use of space. There are presentlysix key projects on urban redevelopment inthe Netherlands. They all involve large,existing office buildings, infrastructure andshopping and recreational services. Becausethe projects require an invasion into theexisting urban infrastructure, a wide varietyof actors is involved.

The plans were adopted by the Dutchgovernment because they offer a high levelof local improvement. In addition toemployment and improved access, thegovernment also wishes to realize a moreintensive use of the existing urban space, aswell as revitalizing social-economic activity(Kenniscentrum, 1999).

Case StudiesIn this section, we identify somecharacteristics of the partnerships involvedin three examples of these projects.

Case 1: The Utrecht Central Station (UCP) ProjectThis project involves redeveloping the areaaround the railway station, including theHoog Catharijne shopping centre in whichthe station is situated. It calls for theconstruction of 330,000m2 of new offices,1,750 apartments and 61,200m2 of shops, inaddition to some infrastructuraldevelopments intended to open up thecentre. The number of barriers that restrictaccess to the Central Station, HoogCatharijne, and Jaarbeurs Complex (aconference centre) is to be reduced. Inaddition, the project aims to improve publicspace, for instance through the constructionof new public squares and the improvementof existing ones, reduce the amount of waterpresent in the Catharijnesingel (CatharijneCanal), and improve the infrastructure forcars and bicycles. Another objective is toimprove internal traffic facilities so thatpassengers have quick, efficient and easytravel using public transport and achievegood connections to other types of transport.Finally, the project aims to strengtheneconomic opportunities.

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In the early 1980s, the Dutchgovernment, the Dutch national railways(NS), the owners of the Jaarbeurs Complex,and the owner of the Hoog Catharijneshopping centre drew up plans to redevelopthe area. A memorandum of understandingwas published in 1988, when the four bodiesagreed to develop a master plan for the area.Taking into account the differences ofopinion between the municipality and thethree landowners, a new initiative waslaunched—after realization of the masterplan in 1993—which involved the creationof a development corporation owned by themunicipality and by three large projectdevelopers. None of these project developershad any existing interests in the area, andwhen initiatives by this coalition were blockedby the three existing actors (the threelandowners) in mid-1995, the developmentcorporation effectively ceased functioning.

The municipality began co-operatingwith the landowners again in 1996 and inDecember 1997 this new venture presenteda Definitive City Plan Design (DCPD). Themunicipal council tentatively approved thisplan despite growing opposition organizedby a new political party called ‘LeefbaarUtrecht’ (Liveable Utrecht). Agreementswere made about investments in ‘publicspace’ on condition that the Dutchgovernment would contribute. With the helpof an urban architectural supervisor, and aspecially created quality team, guaranteeswere built in to monitor progress.

In spring 2000, co-operation betweenthe municipality and the private sector failedonce more. The private sector participantswithdrew because they felt that theinvestments they had to make in the publicspace were too high.

Shortly after this break-up, LeefbaarUtrecht won the election and obtained animportant position in the local council. Theparty started to amend the plans, and in2002 consulted the citizens on two newversions. In 2002, the version whichincorporated certain ‘green’ qualities (moretrees, restoration of canals) was accepted.Not only do several important issuesregarding mobility and finance still need tobe solved here, but we may also question thelabelling of the project as a ‘partnership’.

Case 2: The Amsterdam South AxisThe ‘South Axis’ project concerns the(re)development of the area surroundingthe Amsterdam South/WTC railway station

and the southern part of the motorwayaround Amsterdam. During the 1980s, therehad been a rapid expansion of new officespace in this area. One example is the newoffice of the large ABN-AMRO Bank. TheCity of Amsterdam had to make decisions onthese expansions case by case, and in 1994 itwanted to develop more systematic planningfor the area. For this purpose, the citymanagers set up the ‘South Axis Coalition’ inDecember 1994, in which all the prominentprivate actors took part. It was a kind ofinformal strategic group without any fixedmembership. To support the coalition, aworking group was set up consisting of civilservants from the main departments of theAmsterdam local administration in order todirect research toward possible solutions andstart working on a master plan. A first draftof the plan was presented in October 1996.Sections of the master plan were discussedwith interest groups in late 1996. As a result,additional housing (1,500 units) and otherfunctions were added to the existingproposals. In 1997, the Real Estatedepartment of the NS joined this strategicgroup, and the partners started workingtogether on further development of the plan.They paid special attention to the idea ofrelocating transport infrastructureunderground (motorway, heavy and lightrail), in order to create possibilities aboveground for the construction of new officesand housing.

This master plan was approved by thecity council in January 1998. The area wouldbe developed into a high-potential area ofoffice space and private housing combinedwith transport facilities. The city initiated anumber of fact-finding studies to explorethe technical and financial possibilities oflocating infrastructure below the first floor.Three important private actors, the INGBank, the ABN-AMRO Bank and NS RealEstate, started to organize their strategies ina consortium. After some negotiations withthe city, they guaranteed an investment of 2billion Dutch Guilders (about 630M euro) inreal estate above the tunnel containing thetransport arteries, provided it wasconstructed and financed by the government.However, after long delays, no concreteresults were obtained for the financing of theunderground transport infrastructure. Theenthusiastic co-operation between citymanagers and private actors began tostagnate.

Although agreements should have been

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signed by early 1999, in reality no agreementwas reached on how to proceed further. Thepublic–private co-operation structure beganto unravel, and the focus shifted to therealization of real-estate projects that werenot dependent on the new underground carand public transport infrastructure. Thepublic managers once again took on a centralrole in the planning process. They revertedto negotiating on a bilateral basis with severalprivate and public actors for commitments,money (from public actors) or partialinvestment projects (with private actors).Although the interaction between public andprivate actors remained intensive, their jointorganization began to come apart, andresponsibilities split up along traditionallines.

In retrospect, the interaction that existedwas used mainly for joint fact-finding, notfor joint responsibility and joint decision-making. In terms of partnership, theAmsterdam South Axis is a good example ofthe type of co-operation that starts with highambitions in terms of strategic alliances andjoint decision-making, but in reality developstowards a network structure in whichtraditional roles are played and co-operationis based on bilateral agreements andimplementation is split up in separateprojects.

Case 3: Hoog Hage, the Central Station Project inThe HagueThis project involves the restructuring ofthe area around the Central Station and waspart of a large-scale inner-city renovationproject started in the 1990s. In 1999, thedecision was taken to develop first a smallarea (400 by 400 m2) around the station,which holds a large concentration of offices(mainly government departments and somecultural institutions such as the NationalLibrary and Museum of Literature). Eachday, some 350,000 people use the train,metro or bus in and around the station. In2002, growth was expected to reach 120,000m2 of office space, 50,000 m2 of residentialhousing, 30,000 m2 for other functions, and2,500 new parking spaces.

In the course of 1996, the main actorsinvolved in the project set up an informalsteering group to discuss initiatives forconstructing plans for the area. This steeringgroup commissioned a firm of architects todraw up the first draft of a master plan forthe area. All the actors approved the draft ofthe master plan, which was presented in

early 1997, and in June signed a covenant inwhich they agreed to carry out furtherresearch into the spatial and financialfeasibility of the plan. The plan was alsogiven key project status.

Although several actions were taken,including an unsuccessful attempt to set upa company to organize the joint financialcontributions of public and private actors,no final plan had been realized by the end of1998. One of the actors, the Shell PensionFund, which held an important site, opposedthe plan. After intense discussion, the PensionFund agreed at least to co-operate in thejoint planning process until late 1999.

Commitment, however, had beensomewhat eroded, and the local actors werewaiting for a commitment from the centralgovernment. To speed up the developmentof the area around the station, in 1999 theCity of The Hague decided to separate thecore area around the station from the projectand develop this area. It asked for financialsupport from the Dutch government. InJuly 2000, funds were granted from the keyproject budget. The city approved a projectdocument outlining the programme for thearea and the various facilities. The partnersthen began working on a new master planfor the area. The county government(Stadsgewest Haaglanden) had also becomeinvolved.

In early 2002, a draft master plan waspresented to the city. The city and the NS,Multi Vastgoed and Babylon, whichrepresented the shops and cinema next tothe station, signed an agreement confirmingtheir support of the master plan. The privateactors were the first to develop a number ofprojects within the area. The master planalso regulated the phases of redevelopmentand enforced arrangements regardingfinancing and organization of the project.The 2002 agreement can be viewed as anupdate of the 1997 agreement, but moresolidly underpinned by financial obligationsand organizational arrangements.

DiscussionThe course of action taken in these threecases leads to a number of conclusions, whichare confirmed by other projects in theNetherlands (for example van der Ham andKoppenjan, 2002). First, regenerationprocesses are long and complex. This patterncan be seen in every intensively-used urbanarea, especially around railway stations. Thiscomplexity has to do with the high amount

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of ambitions that have to be met in theseareas. In Utrecht, the conflicts betweeneconomic and mobility needs and values ofscale and quality of life were particularlyintense and have actually changed thepolitical landscape.

Public actors (mostly city governments)remain the key institutions which take theplanning initiative and consult private actorson individual elements of the project. Whilemore intensive or formalized forms of co-operation have been attempted—for instancein the early stages of the South Axis project(the strategy group) or the Utrecht Centreproject (in the period 1998–2000)—they areshort-lived. Partnerships are tempting dueto the added value they can create but, inpractice, a bilateral agreement is the mostthat partnerships can deal with.

As a consequence, the concept of anintegrated and combined investmentprogramme is often converted into a set ofloosely-linked projects. ‘Synergy’ and ‘jointdevelopment’ are nice words, but do notseem to be possible within the existingfragmented decision-making arenas. Allbodies are far too preoccupied with theirown procedures and internal issues to beable to act as partners.

Actors and InterdependenciesIt is not easy to convert ambitions into actionsin public administration. One problem isthat implementation of the ambitions thatare formulated at the national level have tobe performed by local actors—municipalities,local interest groups, and private investors.Our cases were no exception.

We examined the roles of key playersand peripheral actors in our case studies.Key players are formally involved in theprocess and/or interact on the substance andprocess of the project; they will have signeda formal agreement. Peripheral actors arethose with an interest, but they are notsystematically included in the interaction.They are part of the institutional context inwhich projects are embedded.

Key players have to consider thepossibility that peripheral actors mayintervene suddenly, or that the actions ofthese peripheral actors may have a substantialimpact on the development of the area. Oneexample is the UCP case, where oppositionto the project resulted in the formation of anew political party, which played animportant role. Peripheral actors, therefore,are not without power. Looking at key players

and peripheral actors was especiallyinformative about the perceived centralityof the policy arena surrounding the conceptof key projects. Companies that want to settlein the area being developed are seen asperipheral actors, since they are onlymarginally involved in the debate on the keyprojects. In terms of the conceptual schemepresented earlier, they also operate indifferent arenas.

This complexity of actors and arenas isan essential feature of PPP projects. Timeand again, adjacent arenas and policy gamescan be constructed that are equally central ifwe define the subject in a slightly differentmanner. If, for instance, we were to ask whythe South Axis, the UCP or the RotterdamCentral Station offer developmentopportunities, the central arena would bethe arena in which decision-making aboutthe location is done by individual companies.Only a limited number of private actors,such as financiers and developers, possessthe knowledge and means to engage in largeprojects. Opportunities for replacing publicor private participants are limited (Scharpf,1978). This makes actors mutuallydependent. Even after a failure, as in thecase of the UCP, cautious interactions beginagain. While this interdependency is thereason for the co-operation, it may also leadto inertia and blocking. Actors have littleconcern about sanctions for unco-operativebehaviour, since they are indispensable to alarge degree. Also, a kind of ‘vendetta effect’may occur where actors, and especially theindividual representatives of bodies, decideto settle old accounts and even out the cost ofa previous project.

Finally, in regeneration projects,decision-making is dominated by real-estatebodies, while bodies responsible forinfrastructure and logistics play a moreperipheral role. However, the use of theirinvestments and space is crucial to the successof the key projects.

Interconnected Arenas and NetworksThe actors from the key projects contributedifferent means and play different roles.They also originate from different networks.In all of the Dutch key projects, decisionsinvolve housing and environmental planningissues, as well as transport issues. The first ofthese is handled by the environmentalnetwork, in which the Ministry of Housingand Environmental Planning has aprominent role. Transport issues are dealt

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with by the transport network, where theMinistry of Transport has a prominentposition. In both networks, various arenasare present in which the decisions are takenthat are important to the key projects.

One example that figures prominentlyin all three cases is an arena within thetransport network where decisions are takenabout a light railway system between thecities of Amsterdam, Utrecht, The Hagueand Rotterdam. Decisions taken in this arena(the ‘BOR’ arena) are important to theprojects because they create possibilities (andset conditions and limitations) not just forbetter transport, but also for improvementof the stations in those areas. But most of theactors in the key projects do not participatein this arena. And in this way we can findmany arenas where important decisions aretaken. Each time the initiators and managersof the three key projects have to askthemselves: in which arenas can I participateand what compensation does this bring inreturn for the time it costs me? Butconnecting all these decisions is also verytime-consuming and requires excellentmanagement skills. Much can go wrong anddoes go wrong when trying to establish theseconnections.

Separation: The Problem of DomainsThe fact that decisions in PPP projects haveto be linked to various different actors, arenasand networks constitutes not only anorganizational problem in terms ofmanagement, but also a domain problem.Rules that help to determine and demarcateland ownership, or rules that regulateinteractions (such as providing information,conflict management, access etc.) can differbetween networks, can conflict with oneanother, or can simply block interaction withactors from other networks (see Ostrom,1986; Klijn, 2001). Thus there is a cleardescription of what fal ls under thecompetency of a ministry (althoughcompetency conflicts between ministries arefrequent, so the rules are not entirelyunambiguous). The lines of demarcationbetween different sector networks ordepartments may also cause problems forPPP projects.

However, strict demarcation linesbetween actors also act as barriers against co-operation, since actors are unwilling torelinquish their own domain or do not wantto forge links with other actors, since thiswould not fit in with the pattern of their own

domains which has developed over time.Hence, in the UCP-case, WBN believes thatit is normal for existing investments in HoogCatherijne (traditionally the domain of WBN)to be more important than the developmentof investments around the Jaarbeurs. As aconsequence, WBN initially allowed talksabout opening new shopping areas aroundthe Jaarbeurs—on which basis the Jaarbeursagreed to invest in the public space—butultimately the WBN torpedoed these plans,claiming that the development of shops inthe Jaarbeurs area fell under the domain ofthe WBN. The Jaarbeurs project was unableto continue after this and was forced to breakoff its co-operation with the municipality. Inthe Hoog Hage case, similar problems ofdomain demarcation can be seen.

In short, the institutional fragmentationof PPP projects can create enormous barriers.It enhances the complexity of decision-making and calls for a huge managerial effort.

Institutional Roles and StrategicBehaviourAlthough actors do get together to undertakecollective action in the beginning, often thisaction does not result in a collective outcome.Either actors hesitate to commit themselvesto each other or—and sometimes both ofthese things happen—joint efforts and theintegral character of projects becomedisconnected at a later stage. The outcome isa clearer separation of responsibilities inwhich each of the (mainly public and private)actors concentrates on their own task. Thisalso results in a dominant pattern, in whichthe relationship is organized contractually,rather than as a partnership.

This article shows how difficult it is tochange role conceptions and domaindemarcations. Some authors believe that thedivision between public and private domainis impossible to solve, pointing out adifference in value patterns. Jacobs (1992, p.32) describes the public and private domainas two ethical systems with different ‘moralsyndromes’. The public domain ischaracterized by the guardian syndrome,the private domain by the commercialsyndrome. Typical of the guardian syndromeare values such as:

•Avoiding trade and commerce.•Striving for discipline and loyalty.•Respecting tradition and hierarchy.

There is also a certain degree of fatalism,

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linked to a strong devotion to the task athand. The commercial syndrome ischaracterized by values such as:

•Avoiding violence.•Achieving agreements on a voluntary basis.•Honesty.•Competitiveness.

Other values, such as optimism andappreciation of initiative, are also part of thissyndrome. According to Jacobs there aretwo types of survival: tasks that belong to thestate, and trading linked to the marketsystem. The two moral syndromes eachbelong to a pattern of survival; they aresurvival systems and cannot be mergedwithout a problem. In fact, you could saythat they are mutually exclusive.

Other authors also doubt the survivalrate of hybrid organizations or hybridconstructions. Simon (1990) translates thisinto a distinction between task and marketorganizations. A task organization receivesan assignment from a principal, together

with the means to fulfil that task. Simon’svalues are comparable to Jacobs’ guardiansyndrome:

•Obedience.•The absence of a profit motive.•Loyalty.•An orientation towards continuity.

The market organization does not have aprincipal, but it does have clients. Such anorganization is dominated by values whichinclude:

•Respect for contracts.•Appreciation of zeal and initiative.

These values are similar to the values ofJacobs’ commercial syndrome. Simonassumes that mixed types between task andmarket organizations will not be stable andwill evolve in a particular direction. Thus, atask organization that starts generating itsown income and seeking clients willeventually evolve into a complete market

Table 1. Relations between the core businesses, values and strategies of public and private actors.

Public actors Private actors Tension

Core business Objectives: (sectoral) public objectives Objectives: realizing profits Different problem definitions:Continuity: political conditions Continuity: financial conditions political risks in expectations

versus market risksin annual figures

Values Loyalty Competitive Government reluctant in processDevoted to a self-defined public cause Devoted to consumer preferences versus private party reluctant withControllability of process and approach Controlled by shareholders on the knowledge(political/social) basis of results Government reluctant in resultEmphasis on risk avoidance and Emphasis on market opportunities versus private parties reluctantpreventing expectations and risks and innovations with their own effort

Strategies Search for ways to guarantee Search for certainties to produce Confrontation leads to a mutualsubstantive influence (primacy of the and/or obtain a contract locking-up’ of agreementspublic sector) Minimizing political risks and ‘and thus to tried and testedMinimizing expectations and insecurity organizational costs as types of co-operation (contracts)of implementation costs a consequence of public ‘viscosity’

Consequences Emphasis on a limitation of risks Emphasis on certainty of market The creation of added value throughfor PPP and on agreements that lead to share and profit, which cross-border interaction

agreed procedures and public leads to an expectant attitude is not realizedsector dominance and limited investments until the

moment when the contract isacquired

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organization.

Strategies of Co-operation between Publicand Private BodiesAlthough Jacobs’ and Simon’s views aresomewhat extreme, they provide a basis fortheorizing about public–private co-operation. They emphasise the need forcoherence between organizational structures(to be designed) and organizational values(that dominate and can be only partiallyinfluenced). The inability to create new formsof coherence could explain why PPP is sodifficult to realize and why attempts at co-operation often result in organizationaldivisions, while attempts at regulation resultin contracting-out procedures and contracts.

Such procedures and contracts fit in withthe value patterns of the organizationsinvolved and demand the least amount ofadaptation on the part of these organizations(see table 1). Public actors generally feel thatthey are in control if a contracting-outapproach is used, and thus run a limitedrisk. This fits in with their value patterns ofhierarchy and the primacy of the publicinterest. They do not have to adapt theirinternal organization and can provide thepolitical arena with a clear decision. Privateactors run no more risks than they areaccustomed to. They can work with a type oforganization (contract) that is familiar tothem and they can acquire the contract in acompetitive effort.

Here we touch upon one of the coreissues of PPP, which is that the values ofpublic bodies will result in strategies aimedat controlling the substance of projects andminimizing financial risks. Public bodies donot mind spending money, even if itgenerates few returns. But public opinionhas to be taken into account if there areexpectations of costs and benefits, whichsubsequently fail to be realized. A recentexample is the auction of the UMTSfrequency bands. Because expectations wereraised through foreign auctions, the DutchCabinet was severely crit icised fordisappointing returns, even though in thepast the government gave away these typesof services almost free and no one wasbothered by it. In such cases, politicalaccountability is without mercy. Thus, themanagement of the public’s expectations isan important task when engaging in PPP.

The values of private actors lead tostrategies where the certainty of obtaining a

market share and profits are central, butwhere there is also an emphasis on seizingopportunity. However, there is an importantdifference in the public sector. A governmentcan tolerate losses as long as they are acceptedby its political and public electoral supportbase. Private enterprises are judged by resultsand therefore cannot hide behind symbolism.For them, it is the market mechanism that iswithout mercy.

As long as no contract is awarded, privateactors wait. To put it somewhat morecynically, we could say that they have learnedthat government would rather do nothingthan do something innovative (and thuspotentially risky). Private bodies have alsolearned that it is better for them to providestandard solutions at reliable profits ratherthan present new (improved) solutions whichmay lead to unrest. A good example is thecorrugated asphalt on highways—developedsome time ago—which is safer when it rains,but more slippery when it is icy. The mediamade a substantial fuss about this, whichresulted in a political risk.

PPP: The Right Form at the WrongMoment?We have found that the explanation for theinability to develop partnerships lies in acombination of three factors:

•Complexity of actor composition.•Institutional factors.•The strategic choices of public and private

actors.

A contractual division of responsibilities, onthe other hand, takes into account the existinginstitutional fragmentation (both betweenthe public and private spheres as well aswithin each of them) and is a familiar, triedand tested form to manage public–privaterelationships. And splitting the project up insections reduces the complexity of thedecision-making process. Furthermore,contracts reduce risks and act as a guaranteeagainst opportunism (Williamson, 1996).

This is reflected in public actors wantingto minimize expectations andimplementation costs while securing apolitical influence on the projects. Privateactors look for certainties in order tominimize political risks. Together theyproduce a situation in which they focus on aseparation of responsibilities and emphasisecontractual relations.

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This effect unfortunately works againstprojects which require innovation and thedevelopment of high-quality products. Also,the realization of products and services of anintegral nature is rarely accomplished. Here,strong tension is visible between the explicitwishes of actors and views on the necessity ofintegrated high-quality products and servicesin a network society on the one hand, andthe existing institutional structures andchosen strategies of actors on the other hand(Kenniscentrum, 1998, 1999; SER, 1999).

Perhaps PPP is a logical arrangementthat will find its place in a network societywhere knowledge and resources aredistributed over various actors. Such a newsociety, however, does not exist. PPP is simplyan example of the right proposal at thewrong time. Real partnerships do not (yet?)fit in with the institutional rules, roles andhabits based on a public–private division atthe beginning of the 21st century. ■

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