Public-Private Partnership Contracts: A Tale of Two Cities with Different Contractual Arrangements

20 Pages Posted: 31 Jul 2012

See all articles by Rui Cunha Marques

Rui Cunha Marques

Technical University of Lisbon (UTL) - Centre for Management Studies (CEG-IST)

Sanford V. Berg

University of Florida - Department of Economics

Date Written: January 6, 2010

Abstract

This paper analyses regulation by contract in public-private partnerships (PPPs) for infrastructure services. Although the benefits of competition for the market and subsequent regulatory contracts are recognised, the literature also identifies contract design failures. When considering these limitations, it is useful to distinguish between contracts associated with purely contractual PPPs (concessions) and contracts for institutionalised PPPs (mixed company). Two cases from the Portuguese water sector are used to illustrate problems arising in the preparation of public tender documents: the "best" bidder is often not the winner. Often, risks are not allocated correctly nor is effective monitoring ensured. Comparisons between the two types of contracts show how external regulation can be useful in mitigating contractual problems. This examination of bidding procedures and contract design yields several implications for policy-makers; in addition, the study presents recommendations for improving regulatory contracts.

Keywords: public-private partnerships, water utilities, concessions, mixed companies, contract design

Suggested Citation

Marques, Rui Cunha and Berg, Sanford V., Public-Private Partnership Contracts: A Tale of Two Cities with Different Contractual Arrangements (January 6, 2010). Public Administration, Vol. 89, No. 4, 2011. Available at SSRN: https://ssrn.com/abstract=2120073

Rui Cunha Marques

Technical University of Lisbon (UTL) - Centre for Management Studies (CEG-IST) ( email )

Technical University of Lisbon
Avenida Rovisco Pais
Lisbon, 1049-001
Portugal
+351218418305 (Phone)

Sanford V. Berg (Contact Author)

University of Florida - Department of Economics ( email )

Gainesville, FL 32611-7140
United States
352-392-0132 (Phone)
352-392-7796 (Fax)

HOME PAGE: http://www.cba.ufl.edu/purc/facultyinfo.asp?WEBID=1260

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