Title: Public-Private Partnerships and Privatization
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Permanent Link: http://ufdc.ufl.edu/WL00001543/00001
 Material Information
Title: Public-Private Partnerships and Privatization
Physical Description: Book
Language: English
Publisher: Bookman-Edmonston Engineering, Inc.
 Subjects
Spatial Coverage: North America -- United States of America -- Florida
 Notes
Abstract: Powerpoint Presentation
General Note: Box 8, Folder 7 ( Vail Conference, 1997 - 1997 ), Item 21
Funding: Digitized by the Legal Technology Institute in the Levin College of Law at the University of Florida.
 Record Information
Bibliographic ID: WL00001543
Volume ID: VID00001
Source Institution: Levin College of Law, University of Florida
Holding Location: Levin College of Law, University of Florida
Rights Management: All rights reserved by the source institution and holding location.

Full Text



DEFINITIONS


Public/Private Partnership ("P3"):

A sharing of responsibilities, risks
and rewards between private sector
and public sector organizations in
the joint pursuit of a common
public service goal.

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DEFINITIONS


Privatization
Economics 101
"The broader and more relevant meaning
of privatization must refer to nothing
more or less than greater reliance upon
market forces to generate production of
particular goods and services."
-George Wilson, Indiana University

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I
Quality o

G


10 20 30 40
Source: 1992 Reason Foundation Survey oa
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DRIVING FORCE

PRIVATE SECT(


N

ES FOR USE OF

)R SERVICES



Cost Savings
f Service
provides Additional Service to Community
I I I I
greater Flexibility in Service Provision



Shorter Implementation Time for Service


50 60 70 80
f the 24 Largest Cities in the U.S.
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Conventional Design/Bid/Build/Operate
Program Management Services
Conventional with Contract Operations
a Design-Build
Design-Build-Operate
Full Service


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PUBLIC PRIVATE PARTNERSHIPS
MODELS PRIVATE SECTOR SERVICES























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CONVENTIONAL DESIGN/BID/
BUILD/OPERATE STRUCTURE













Familiarity with
approach
Public/political
acceptance
Control of functions




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* Schedule considerations
* Multiple parties to retain
and supervise
* Responsibility to staff
* Need to finance


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C


CONVENTIONAL DESIGN/BID/
BUILD/OPERATE


I d ila nta or es INr t




m
(0
N

PROGRAM MANAGEMENT

STRUCTURE







CONTROLS

PROGRAM PUBLIC
MANAGER AGENCY




PUBLIC AGENCY
OPERATIONS
DEPARTMENT
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PROGRAM MANAGEMENT


Schedule acceleration
Dedicated Team
Specialized expertise
Staff addition
Potential savings




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* Reduced oversight
* Additional service
* Less control
* Potential Internal
Conflict


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I.


, m


Adintare 1)i sa ia ii a c e























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CONVENTIONAL STRUCTURE
WITH CONTRACT OPERATIONS














Potential cost savings
Rapid staff mobilization
Reduced regulatory
responsibility
Less labor conflicts




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* Reduces public agency
control of plant
operations
* Need to procure services
* Concern with capital
investment
* Existing employee
anxiety


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CONVENTIONAL WITH CONTRACT
OPERATIONS





DESIGN/BUILD STRUCTURE

DESIGN/BUILD STRUCTURE I


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* Accelerates schedule
* Reduces design and
construction cost
* Tax exempt debt
financing available
* Creates design/build/
operations accountability
* Reduces operations costs
* Improves design
documentation


* Reduces control of
design and operation
* Debt on balance sheet
* Operations contract
(e.g., 5-15 year term)
limits flexibility


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DESIGN/BUILD/OPERATE
STRUCTURE

~~Arm~~ Ianwnc


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DESIGN/BUILD/OPERATE
STRUCTURE
L_~ 0 1 I








FULL SERVICE STRUCTURE


* Accelerates schedule
* Reduces design cost
* Creates design/build/
operations accountability
Reduces operations cost
Improves design
documentation
No debt on balance sheet
Potentialprivatizer tax
benefits, reducing cost to
public agency
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* Reduces control of
design and operation
* Tax exempt debt may not
be available
* Full service contract
(e.g., 20-year term) limits
flexibility
* "Fair market" or
negotiated purchase
option at end of term


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FULL SERVICE STRUCTURE


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- -


'80 '82


I I I


'84 '86 '88


'90 '92 '94
'90 '92 '94


'96 '98


Year


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THE CONTRACT O&M MARKET

HAS GROWN AT 18% PER YEAR


$1,500



$1,000


Market Size
($ millions)


-I


N


$500


$0


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OUTSOURCING OPTIONS


* meter reading
* design engineering
* plan checking
* laboratory services
* billing
* system maintenance
* operation and maintenance
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NQ
Nc


BENCHMARK


Question:





Question:



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Can you outsource or
privatize incidental
services more efficiently?


What do you really do for
your city or community?


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TYPICAL $40,000/YEAR SALARY EMPLOYEE




I EMPLOYEE COST


HOLIDAY
VACATION
SICK LEAVE
BEREAVEMENT LEAVE
INSURANCE
Life
Medical
Dental
Disability
Vision
RETIREMENT PLAN
P rivate/P ER S
Deferred Com sensation
TOTAL
PERCENT


PUBLIC PRIVATE
$1,695 $1,585
2,700 2,300
1,450 540
230 230

250 175
3,850 2,750
575 400
515 150
200 125

3,600 1,600
1,200 --
$16,265 $9,855


40.60%


24.10%


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CALIFORNIA PUBLIC AGENCIES COMPARISON

EMPLOYEE BENEFIT PROGRAMS CONCLUSIONS


PUBLIC AGENCIES
Days available over 6 weeks probably not used
or valued by most employees. Max. accrual
factors should be reduced and pay-out at
termination should be eliminated. Should
consider PTO Policy.

Total cost is 15-20% higher on average due to
lack of managed care products and rich plan
offerings. Employer pays 90-95% of total plan
cost. Employees have little say in benefit
programs. Employees view plans as users
versus consumers.


Large percentage of pay contributed to plan
regardless of business condition. Defined
benefit versus defined contribution approach.


Antiquated plans that do not maximize value
for employees or employer. Agencies do not
get a strong return for the dollars Invested in
their benefit programs.


PRIVATE SECTOR
Have found that 5-6 weeks is best offer to match
employee needs and productivity goals. Trend
towards PTO policies versus different plans for
Sick Leave and Vacation.


Cost lower due to managed care focus and fewer
dependent units covered. Focus on managed
care and employee choice of plans. Employer
funds 75% of total cost. Cafeteria plans the
prominent design. Employees view benefits as
privilege not entitlement.


Average plan is 1/3 of amount contributed by
public agencies. Employer contributions vary
based upon company performance.


Ever changing focus to improve value based
upon new plans and more effective delivery
systems. Views benefits as part of their total
compensation package. Empoyer defines
contribution not benefits.


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PAID TIME OFF





INSURANCE







RETIREMENT




OVERALL


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HOW CAN PUBLIC AGENCIES
COMPETE?


* An honest benchmarking
* Control on benefits
* Invest in automation
* Get motivated it's more fun
* Don't fear privatization use it to improve
* In some cases, it may be the best solution

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PUBLIC WATER UTILITIES CAN...


* Improve management
* Empower the utility
" Eliminate mandated bureaucracy
* Control councilman/director largess
" Benchmark something besides your salary
survey
Automate
Compete
Succeed
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EXTERNAL SOLUTIONS


METHODOLOGIES
* Memorandums of Understanding
* Service Agreements
* Operational Contracts
* Public/Private Partnerships
" Consolidations
* Joint Powers Agencies
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* A wide variety of Public Private
Partnerships (P3) exist
Changes from the status quo can provide
better service to clients -- the public
To maximize benefits and avoid problems,
any new form of P3 considered must be
carefully evaluated and implemented with a
thorough understanding
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SUMMARY:
PRIVATE PUBLIC PARTNERSHIPS
PRIVATE SECTOR SERVICES




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