Public-Private Partnerships: Cost-Effective or Cash Cow?

Public-private partnerships between local governments and private contractors have the Trump Administration's favor. But in a "P3 market in its infancy," can they cut costs or simply line pockets?

1 minute read

June 27, 2017, 11:00 AM PDT

By Philip Rojc @PhilipRojc


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Tim Roberts Photography / Shutterstock

Cited by the Trump Administration as an effective means to build out infrastructure, public-private partnerships let local governments work directly with private companies. Not to be confused with public-private initiatives of the philanthropic variety, "PPPs" or "P3s" prompt a lot of debate.

Matthew Goldstein and Patricia Cohen write: "Companies can complete projects quicker and more cheaply than governments can, proponents say. Letting private industry take the lead can also limit the amount of debt that cities and states need to take on."

Overall, the authors appear unconvinced. "And whatever the advantages of giving the private sector a stake in public works — rather than leaving the government in control — experts agree that while some public-private partnerships may result in near-term savings, there is little hard evidence that they perform better over time."

Cohen and Goldstein note that P3 deals are more common in Canada and overseas due to a bigger municipal bond market in the United States (and a correspondingly smaller P3 market). The worry is that if they're implemented more often in this country, P3s will fail to cut costs, instead transferring them to the public via long-term contracts.

Tuesday, June 6, 2017 in The New York Times

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