Involving The Private Sector In Public Building Investment - A European Survey Ñ

The inclusion of private agencies in carrying out tasks in the field of structural engineering and transport infrastructure, which have previously been carried out by the public sector, is a question that is being keenly discussed at present. Given the limited room for manoeuvre in public budgets and in view of the anticipated gains in efficiency resulting from solving problems through partnership, some see a good opportunity for implementing large-scale property projects to the benefit of everyone involved. On the other hand, it is feared that this will lead to a greater strain being put on the citizen if additional costs arise, e.g. in the form of charges, and that the means at the disposal of public agencies to influence developments will be significantly reduced. A wide range of experience of including the private sector has been gained in many European countries in the field of public building investments, in particular in connection with structural engineering works and toll roads as well as bridges and tunnels and railway infrastructure. The Federal Ministry of Transport, Building and Housing has commissioned a research project with a view to presenting this as a synopsis and hence deriving recommendations for ways of applying the conclusions to Germany. The winner of a competition for the contract, a joint venture linking the universities TU Bergakademie Freiberg and TU Berlin, was assisted by a team of experts comprising members of staff from the Ministry, the Federal Office for Building and Regional Planning and the Federal Audit Office. Interesting observations have been made in the following EU Member States, Great Britain, the Netherlands, France, Italy, Spain and Portugal. The private funding of road construction regularly plays a key role in this context. Great Britain has already gained the most practical experience in this field and also has the most sophisticated thinking as far as the theoretical analysis of the subject ìpublic-private co-operationî is concerned. The Netherlands are planning to make a new start with private funding after two tunnel projects were criticized, in particular by the National Audit Office. The reorientation of the way the State deals with property matters was linked to the setting up of a professional, more centralized property management (Public Real Estate Management). The principal criteria for assessing the success of projects in Europe are: - concentration of experience and dissemination of knowledge through centres of competence; - general tax conditions ensuring equal treatment of private and public service providers; - award procedures which help to actively ensure through competition that the best solution among several offers is chosen; - a distribution of risks that places the risks where they can be taken on at the lowest economic cost from the userís point of view; - an appropriate representation of future payment and revenue flows achieved with the aid of suitable interest rates; - the inclusion of the effects of a solution for the economy as a whole; and especially the application of a life-cycle-oriented approach instead of a short or medium-term perspective limited solely to the budget of a single local authority. The successes achieved in other European countries show that including the private sector more in the setting up and implementation of property projects initiated by the public sector will result in projects being realized with which both the state authorities, the private agencies involved and also the citizens as users and taxpayers are satisfied. On the other hand, private advance financing only provides short-term relief from budgetary bottlenecks without showing any advantages for the economy as a whole. It becomes apparent that the inclusion of private agencies in carrying out public tasks does not automatically result in advantages. This is only the case where multi-stage procedures that maintain competition create benefits for the economy as a whole.