The paradoxes of small Public Private Partnerships: Another Economy, a life in a cradle or voluntary innovation?

It is commonly assumed that transaction costs linked to the establishment of Public Private Partnerships (PPP), make it prohibitive to make them too small. In a Danish context this has been safeguarded by the authorities, which recommend sizes over 13, 4 million euro (100 million euro). The research behind this paper sets out the challenge this size limit.

The paper present quantitative and qualitative material on small PPP on the Italian and British real estate market. It is shown that small PPP (below 13,4 million euro) are widespread in the two investigated countries. It is thus not through databases containing data on realized PPP-s possible to find any lower limit for these established PPPs.

This apparent paradox is then qualitatively investigated. Are these small PPP really full blown PPP? It is investigated whether the PPP are really Design, Build, Finance and Operate project and to what extent these small projects are sound businesses and represent operable units for the clients and citizens.

Cases are developed within education and healthcare. The analysis suggests that another type of economy apparently is in play. It is thus characteristic within education projects in UK that the largest portion of small PPPs are of a size below 5,4 million roughly reflecting the lower limit of obligatory tendering according to EU-law.

Among these there are indeed a good portion of “real” PPPs. It appears that local public units endeavour in PPPs because they are attracted by the innovation and the companies partnering with the public side seem for a large part to be willing to see the small projects as an element of a learning process, where special conditions can be defended in order to develop competences (the thesis of the cradle- the special protection PPP).

Neither Italy nor UK have sufficiently profound and longitudinal examples to rule out this thesis of “cradle- conditions”. In the paper these results is discussed vis a vis the development of the European public sector. It is potentially very important for local small units in the public services if small PPP are feasible.

It is thus promising for democracy and participation of citizens for the future.