Title: Infrastructure Public Private Partnerships in the Education Sector PPPI Workshop World Bank Institut
1Infrastructure Public Private Partnerships in the
Education SectorPPPI WorkshopWorld Bank
InstituteJune 18-20, 2007Cairo, EgyptNorman
LaRocquenorman.larocque_at_xtra.co.nz
2Agenda
- Introduce notion of infrastructure PPPs in
education - Review international examples of infrastructure
PPPs in education - Examine a number of technical issues in education
PPPs - Concluding comments
3- Part IEducation Infrastructure PPPs in an
International Context
4I Public-Private Partnerships Defined
- No fixed definition of PPPs
- Definitions differ in terms of scope and
formality of arrangements. - Various definitions
- risk sharing relationship based upon an agreed
aspiration between the public and private sectors
to bring about a desired public policy
outcome. - Commission on UK PPPs
- cooperative venture between the public and
private sectors, built on the expertise of each
partner, that best meets clearly defined public
needs through the appropriate allocation of
resources, risks and rewards. - Canadian Council for PPPs
5II Forms of Public-Private Partnerships
Service Delivery Initiatives
Infrastructure PPPs
Demand Side Finance Initiatives
Strategic Partnerships
- Private management of public schools
- Contracting with private schools for education
delivery - Before and after school care
- Private information/ testing services
- Private sector review
- Outsourcing of non-core functions
- Outsourcing of delivery by public tertiary
institutions
- Private Finance Initiatives - finance,
construction and maintenance of core and non-core
educational assets - Private leasing of public school/ tertiary
institution facilities - Equipment and maintenance of IT laboratories
- Publicly financed vouchers and scholarships
- Privately financed vouchers and scholarships
- Publicly provided student loans
- Subsidies for private schools
- Private involve-ment in curriculum development
- Private sector involvement in quality assurance
- Adopt-a-school initiatives
- Research PPPs
- On-job-training
- Public/private tertiary institution affiliations
- Social marketing
6III Public-Private Partnerships Common Elements
- Formal arrangement with contractual basis
- Involve public and private sectors
- Whole of asset life consideration
- Outcomes focus
- Sharing of risks/rewards between public and
private sectors - Recognise complementary role of public and
private sectors.
7IV Infrastructure PPPs
- Increasingly common form of contracting for a
range of public services eg. transport, water,
telecommunications, etc - Less common, but increased use as a form of
procurement for educational infrastructure - Used in a range of developed and developing
countries school construction, classroom
blocks, hostels, IT, laboratories, etc - Different types of infrastructure PPPs, each
exhibiting varying degrees of private sector risk
assumption and responsibility DB, DBFO, BOOT,
BOO, etc.
8IV Infrastructure PPPs (Contd)
- Private sector partners invest in school
infrastructure and provide related non-core
services - Government retains responsibility for the
delivery of core services such as teaching - Government/private sector arrangements governed
by long-term contracts 25-30 years - Contracts specify the services the private sector
has to deliver and standards to be met - Service contracts often bundled finance,
design, building, maintenance and employment of
non-core staff - Payments are contingent upon the private operator
delivering services to an agreed performance
standard.
9V Potential Benefits of PPPs
- Improved timeliness and efficiency in delivery of
educational infrastructure - Improved efficiency and quality in delivery of
post-construction services - Secure specialised skills that may not be
available in sector - Overcome public service operating restrictions
obsolete salary scales, restrictive civil service
work rules - Address infrastructure gaps more quickly than
under traditional public procurement - Allow government agency to focus on functions
where it has a comparative advantage (ie. core
business) - Overcome corruption
- Make the cost of services more visible.
10VI Infrastructure PPPs Summary Examples
- Bulk of PPPs in education are at the school level
UK, Ireland, Australia, Nova Scotia, Germany,
Netherlands, Ireland, Hungary, Finland, Denmark,
Japan, Korea - Some tertiary education examples of PPPs
Australia, UK, Mexico - Found in developed and developing countries
- Private Finance Initiative (PFI) in UK is largest
PPP education programme - Australia making increasing use of PPPs in
education New South Wales, Victoria, Queensland
- Proyecto Prestacion de Servicios in Mexico,
schools in Egypt - Other countries looking at education PPPs
Botswana, Alberta (Canada), Colombia, Belgium,
Austria and the Czech Republic.
11VII (a) Private Finance Initiative (PFI),
Britain
- PFI part of broader policy of public service
modernisation in Britain began early 1990s,
renewed emphasis in 1997 - Context big backlog in school repairs (7
Billion) - 144 signed projects for Department of Education
and Skills 4.1 billion (13 of total) - 30 PFI deals in progress in the Higher/Further
Education sector, with a capital value of 630
Million - Typically 30 of costs are for caretaking,
maintenance and other services - Decision to use PFI based on Value for Money, not
accounting treatment
- Building Schools for the Future programme
- 15-year investment programme 2.2 billion
capital investment per year - focus on secondary schools
- Local Education Partnerships (LEPs) work with
Local Authority and Partnerships for Schools to
develop infrastructure strategy - LEP contracts to deliver the investment through
PFI and conventional procurement
12VII (b) PPP for New Schools, Egypt
- PPP to build 2,210 new primary and secondary
schools in Egypt, in an attempt to meet
Presidents target of 3,500 new schools by 2011 - Initial project started in late 2006 300
schools in 23 governorates - Response by private sector led to expansion in
early 2007 to include a further 1,910 schools
around the country - Government provides land, while private sector
designs, constructs, finances and furnishes
schools and provides non-educational services
under 15-20 year agreements - Value estimated at LE11 Billion (approximately
US2 Billion)
13VII (c) Proyecto Prestacion de Servicios (PPS),
Mexico
- Government contracts with private providers to
design, finance, build, operate, and maintain
assets and services in health, education, and
transport. - Twenty-eight projects are being developed in
these three sectors, including 5 polytechnic
colleges. - Currently, the Government is piloting PPS to
build a new campus for the University of San Luis
Potosi, with an expected US30 million
investment. The project is expected to expand the
enrollment capacity of the university from 1,500
to 5,000 students by 2010.
- The PPS scheme is based on the UKs PFI model,
and is oriented to the provision of services of
social infrastructure - Under the programme
- private sector partners invest in school
infrastructure and provide related non-core
services - the Government grants a long term contract for
the provision of services - assets can be owned by either the government or
private investor - payments are for services delivered and are
subject to performance standards.
14VII (d) New Schools PPP and New Schools PPP II,
New South Wales (Australia)
- PPP for finance, design, construction and
operation of public schools in New South Wales,
Australia. - PPP involved 9 public schools built between 2002
and 2005 and a further 10 public schools from
March 2006. - Long-term contracts 30 years.
- Private sector finances, designs and builds
schools. It also provides cleaning, maintenance,
repair, security and other services to schools
under long-term contract (until 31 December
2032).
15VII (e) Offenbach Schools and Cologne Schools
Projects, Germany
- 92 schools in Offenbach County and 7 schools in
Cologne with capital value of over EUR900
million. - Government contracting for the finance,
renovation and operation of public schools in
Offenbach County and refurbishment and operation
of schools in Cologne. - Private sector partners will operate schools for
15 years in Offenbach County and 25 years in
Cologne.
16VII (f) Public Private Partnerships (P3) for
Educational Infrastructure, Nova Scotia
- Plan for 55 schools to be built under P3
programme in late 1990s. - Schools are financed, built and operated by the
private sector. - Government leases schools for 20 years.
- Incentives built in to contract to ensure quality
construction and maintenance - Cancelled after 33 schools built cost overruns,
gold plating poor project monitoring, increased
specifications.
17VII (g) National Maritime College, Ireland
- National Maritime College, County Cork
- 58 Million capital value
- designed, built, financed and operated by Focus
Education - 25 year contract
- facilities for 750 full-time equivalent students
- Infrastructure includes classroom, laboratory and
workshop facilities and specialised simulation
equipment - Operational from 2003
- Third education project included in Irish
governments PPP pilot project.
18VII (h) Swinburne University of Technology
Infrastructure PPP, Australia
- Swinburne University of Technology (SUT) PPP
involves - accommodation for 300 students
- school of Information Technology
- redevelopment of the northern part of the campus
- SUT located in the State of Victoria.
- First infrastructure PPP by an Australian
university - Development financed by Rothschild on
university-owned land - Rothschild assumed ownership and development risk
and receives a rental payment in return.
19VIII Infrastructure PPPs in the Education Sector
- Education is well suited to infrastructure PPPs
- Stable/slow changing sector and technology
- Strong private involvement in other sectors such
as construction - Services can be relatively easily defined,
contracted and measured/monitored - Long planning horizons known demographics
- Some special challenges in the education sector,
particularly in developing countries - Weak capacity in education departments to
implement contracting initiatives and
infrastructure PPPs - Politicisation of education/corruption
- Decentralised nature of education in many
countries - Small project size for infrastructure 28 M vs
115 M/project for transport under UK PFI - Education seen as public in nature
- Policy risk effect on investment intentions
20VIII Infrastructure PPPs in the Education Sector
(Contd)
- Contracting is likely to be better than in-house
provision under the following circumstances - the more precisely a task or result can be
specified in advance - the more easily performance can be measured and
evaluated - the more competition there is among potential
providers - the less the activity is core to the agencys
mission - the more the demand for service varies over time
- the private providers can hire people with the
needed skills more easily than government can - the private providers have greater economies of
scale in producing the service.
Source Steven J. Kelman, Contracting, in
Lester M. Salamon, ed., The Tools of Government
A Guide to the New Governance (New York Oxford
University Press, 2002), 282318.
21IX Evidence on Infrastructure PPPs (Contd)
- Limited evidence on impact of infrastructure
PPPs. - Available evidence shows lower costs and more
timely delivery of PPP infrastructure projects
compared to traditional methods of procurement. - United Kingdom
- 88 (National Audit Office) and 76 (Treasury) of
PFI projects were delivered on time or ahead of
time compared to 30 under pre-PFI experience - 79 (National Audit Office) and 80 (Treasury)
were delivered at or below the agreed price
compared to 27 under pre-PFI experience. - New Schools Project (New South Wales, Australia)
infrastructure delivered 2 years earlier and 7
cheaper than under traditional procurement
methods.
22Value for Money Comparison Public vs Private
Sector, NSW New Schools II Project
23Certainty of Delivery and Price PFI vs Non-PFI
Projects, UK
Source HM Treasury (2003)
24X Conclusion
- Many examples of infrastructure PPPs across
education sector in both developed and developing
countries - Infrastructure PPPs can play an important role in
improving the quality of inputs and the
efficiency of delivery in the education sector,
but affect only non-core business, not core
business - Potential third way for improving
efficiency/performance in education sector - Recognise implementation capacity too complex
wont work.