Money is tight and budgets are strapped, whether you’re talking about the euro, yen or dollar. Anyone selling to government entities today knows it’s a problem. As a result, many officials are turning to the private sector for help.
Now’s the time to capitalize on this increasing trend toward public-private partnerships (PPPs). Structure your proposals around these three critical PPP success factors:
- Allocation of risks
- Identification, allocation and limitations on rewards
- Need for public accountability
After you accept the realities of doing business with government entities, you can start exploring the opportunities. If past efforts in the public-private arena have been less than stellar, note that circumstances are shifting.
The time is ripe to deliver heightened value to public sector accounts.
Example of why that’s the case in the United States:
The government’s Government Accountability Office (GAO) and other fiscal oversight entities such as the Congressional Budget Office have declared federal fiscal policy to be "unsustainable" long-term. The reasons cited? Fundamental structural imbalances shaped largely by demographics, health care costs and the rising federal deficit.
It’s a similar story with many other countries at regional and local levels, where officials face shrinking federal funding while trying to accommodate increasing public requirements.
Add aging infrastructures and declining revenue sources such as property taxes, and state and local officials – are looking seriously at alternatives – like their federal counterparts.
That’s where you come in.
A new reality
Given disturbing fiscal forecasts, the question is: How will public entities afford what citizens expect in the 21st century?
Clearly, enhanced PPPs will be part of the solution – this excerpt from the U.S. Department of Transportation, Federal Highway Administration offers insight:
"Expanding the private sector role allows the public agencies to tap private sector technical, management and financial resources in new ways to achieve certain public agency objectives such as greater cost and schedule certainty, supplementing in-house staff, innovative technology applications, specialized expertise or access to private capital. The private sector can expand its business opportunities in return for assuming the new or expanded responsibilities and risks."
Factors for success
As you contemplate a PPP, consider risk, accountability and the other PPP success factors noted above to determine what you can reasonably accept and how you can deliver the most value for your government customer.
Remember that your government customers have different needs than CEOs. The government isn’t interested in profit margins. Rather, it needs to provide the needed service or finish the project at an acceptable cost.
The ideal solution accomplishes that goal while providing you with an acceptable rate of return for any risk you assume.
Visualize the finish line
A unique challenge of public-private partnerships is the transparency required. These projects require accountability to the public, which ultimately pays the bill. The public needs to see that its money is spent wisely.
Because of this challenge, some government agencies may try to prescribe exactly how the work will be done. Instead, have them define "end states." Allow them to specify the results they need and introduce efficiencies to achieve those results.
Due to those budget constraints noted above, you may need to help your government partners find funding for your project through PPPs. Since competition for capital is fierce, the sales professionals who are most successful help their government partners visualize the results, demonstrate the public benefit and find ways to earn a healthy return, often through "dual benefit" solutions that have both public and commercial application. That’s a win for everyone!