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Aha, it’s actually pretty straightforward.
In my neck of the woods, things tend to move a bit smoother when you're pitching fresh ideas, mostly because that typical brand of "everyday corruption"—you know, those little grease-the-palm moments—is almost non-existent. I mean, sure, the big-time stuff exists, but that's involving much bigger fish than what we're looking at here...
Maybe AT&T could serve as a decent ice-breaker for something resembling a Public-Private Partnership, since they're a company with way too much at stake to play around, and they still maintain that semi-governmental structure (which I usually complain about, but I guess I'll make an exception this time).
slycrane94
I mean, the whole point of using a Public-Private Partnership in a slow-moving country like ours is really about jumpstarting things from a complete standstill rather than actually speeding them up. When you look at the gap between what the government can borrow and what private firms can pull off, we're talking maybe a 1-2% difference, which I guess isn't even that huge in the grand scheme of things.
The government doesn't technically care about turning a profit, but since that margin just gets baked into the final price anyway, it feels a bit like choosing between eating a burger with onions or just a burger and some onions on the side... it’s essentially the same thing.
Wherever a standard concession makes sense—assuming the terms are actually decent from an economic standpoint—there shouldn't be any reason not to go that route, mostly because it lets the government dodge all those pesky risks and sudden political shifts that tend to mess everything else up.
But honestly, there aren't even that many projects left globally that the government can just hand over as concessions, and it seems like we're heading that way here too. Some things get labeled as concessions, but usually, the value of the contract's annexes ends up being worth more than the actual deal itself (take that ridiculous offer from Bouygues for the highway stretch, for instance: 50 years with a government guarantee on $83 toll fees per passenger car??!!!).
In my opinion, the biggest kicker is just that private companies get to cherry-pick the exact jobs they want, focusing on whatever fits their niche and letting them undercut everyone else.
I guess I can tackle most of these questions since I actually work on a Public-Private Partnership project over in the United Kingdom, so I know a little bit about how this all works historically.
I caught a glimpse of their presentation materials at the U.S. Chamber of Commerce—though I wasn't actually there myself—and I have to say, it’s pretty obvious why everyone seems so confused.
The presentation was fine, I suppose; they didn't technically lie about anything, but the whole thing had this vibe of "let's just get this over with so we can go home."
For instance, even though this concept started gaining traction here about a decade ago, most people still don't really grasp what it is. Things aren't exactly running perfectly yet, and while there's plenty of pressure to scrap the whole idea, I doubt anyone could honestly argue it's been a total waste of time.
What was missing from that presentation was a ComparisonForCommonPeople—you know, some kind of simplified model to help those who don't want to get bogged down in dry, academic theorizing (my apologies to those whose actual job it is to do that, like me, I guess) but would still like to understand what the hell is actually going on. Mixing it up with a standard concession makes people think, "Oh, I already know how this works," and then they tune out... whereas the real emphasis in a PFI is, at least in my opinion, on that "I" for "Initiative."
I'll try to pass along a description that showed up in the news last week, which helped clear things up for me too:
It goes like this:
Take the Chicago County Hospital in a suburban city, for example.
-The maintenance costs for the hospital are roughly $333 annually (let's just ignore three more zeros for a second).
-Emergency transport costs are around $167 (assuming, say, all the ambulances from Washington, D.C. have to drive straight to that specific hospital because it's the only one with the right equipment),
-Utilities run about $200,
-Staff wages come to $1000.
The Department of Health and Human Services is happy with the hospital; there aren't any unexpected losses, and everything is more or less okay.
Now, look at Vinci. They're a massive firm, and let's say they're finishing up a huge project where cash flow and leftover obligations start piling up (which always happens in the final third of a job). Once that project wraps up, Vinci will have 1,000 workers they'll need to reassign or lay off...
If a new government contract pops up that they could potentially win—well, nobody's having a better day than Vinci!
And the Government, being the Government, tends to be a bit sluggish; things usually only happen when their backs are against the wall.
If someone over at Vinci decides to pick up a pen and calculates that if a new hospital were built near the Lake area (assuming construction and everything else costs $10000), then:
-Maintenance costs for the first 15 years would be 50% lower, because it's a new building.$167
-Emergency transport costs would be $100 (assuming statistically that 70% of patients come from the western part of the city).
-Utilities would be cheaper $117 (I know this from personal experience, I guess).
-Staff wages would be $833 (since they wouldn't necessarily have to pay for commuting...).
When you add all that up and present it to the Government, it turns out that—even if we don't strictly *need* a new hospital—if we build a new one using Vinci's money, and we simply set aside enough of Vinci's money each year to cover the savings between the old and new hospital over 20 years, everything gets paid off. The old hospital can be sold, the Government doesn't lose anything—they actually gain—and Vinci finds more work...
Of course, there has to be a public tender, but since Vinci likely already has everything prepared and tailored to their setup, there's a pretty high chance they'll land the job. And if they don't (but the Government still wants the PFI route), they at least get paid for the work they did developing the PFI plan.
So, that's how it works in a perfect world, though obviously, things always get a bit more complicated than that.
Sorry, I meant to keep this brief, I guess I rambled a bit...