News analysis Pre-nuptial rows threaten to end the PPP honeymoon

7 Jun 07
'It'll never last,' tends to be the not-so-cynical reaction when we read of apparently loved-up celebrities jealously guarding their wealth and status by drawing up complex pre-nuptial agreements. How can love and trust flourish when it is hidebound by such rigid contracts?

08 June 2007

'It'll never last,' tends to be the not-so-cynical reaction when we read of apparently loved-up celebrities jealously guarding their wealth and status by drawing up complex pre-nuptial agreements. How can love and trust flourish when it is hidebound by such rigid contracts?

While public-private partnerships might be far removed from Hollywood gossip and glitz, research suggests that the same problems apply: the focus most PPP partners give to contractual issues around decision-making and control could be counter-productive and more effort needs to be placed on building up trust and good working relationships.

The research is timely. As CIPFA members prepare to gather for their annual conference in Bournemouth next week, public sector minds will once again be focused on what strategies can be deployed to make tricky cross-sector relationships succeed.

The poll, commissioned by partnership consultancy Socia and seen exclusively by Public Finance, draws out the views of senior managers on both sides of the divide on just what they think are the key ingredients to a successful partnership, be it formal or informal. Senior executives from across government and the commercial world gathered at the Royal Society of Arts in London last week to discuss its findings and share experiences.

PPPs may have attracted their fair share of bad publicity, but the vast majority of executives believe that partnership activities will continue to be a permanent feature of the public sector landscape. According to the poll, two-thirds of managers expect partnering activities to increase over the next five years and more than 90% agree that collaboration is a vital foundation for long-term success in a globalised economy.

Socia director Alex Cameron says: 'The Treasury tell us that these partnerships are here to stay, consuming 10%–15% of total public sector investment. We need to listen to the business leaders whose experience can help us avoid the mistakes of the past.'

Ipsos Mori researchers interviewed 92 board-level directors from a wide range of public sector and commercial organisations, and their report reveals some notable consistency of opinion on just what is required to make partnerships work.

The majority of respondents (59%) cited a common purpose and the development of common goals as the most important factor in building a successful partnership.

But there was also a disconnection between the factors identified as vital to success and where attention and resources were actually deployed. The survey found that the greatest effort went into governance and operational issues, with significantly less on behaviour. More than a third of those surveyed said 'just a little' or no effort at all had been put into behavioural issues.

Socia concludes that partnerships are often doomed from the outset because the methods of working and the objectives of senior management on both sides are incompatible. Put simply, the two sectors just don't speak the same language and a lot of effort has to be put in to make one side understand the needs of the other.

John Yard, former chief information officer at the Inland Revenue, has a wealth of first-hand experience of PPPs. Now a consultant, Yard oversaw the original outsourcing of the revenue's IT services to EDS and the renegotiation of the contract when services were awarded to Cap Gemini ten years later. He agrees wholeheartedly with the survey's chief conclusion.

He told PF the trick is to put yourself in the other person's shoes: 'Unless you can understand why they're coming at the issue in the way that they are, you're going to struggle to have a conversation.

'Essentially, all that sounds like motherhood and apple pie but it's very difficult in practice to do it in the commercial environment… it depends on having a clear view of each organisation's objectives and what's motivating them.'

Yard recommends a 'stream of consciousness' approach. Parties should come together and, with the help of a facilitator, voice doubts and fears about the potential partnership. It doesn't have to be evidence-based, Yard says. 'It's about what you feel. We do it in our personal relationships all the time, but when we have a relationship at work we tend to think that's not appropriate and yet we're still dealing with people.'

Paul Kilius-Smith, head of operations upgrades at London Underground, says minds need to focus on the practical strategies needed to build in common goals and objectives at all levels of the partnership.

Partner organisations should be involved in the appointments of senior personnel, he suggests, maybe as a member of an interview panel. 'Discussions about key posts will be pivotal to making sure relationships work and continue to work over a long partnership period. Having a way of almost gaining consensus on changes to key personnel is a good idea,' he says.

Linked to that is developing partnership behaviour as part of management training programmes, Kilius-Smith adds. 'People can get trained into writing contracts and looking at performance regimes and all the other management aspects of managing the contracts, but the actual behaviour, how to be a good partner, is not necessarily something you would see in a normal management training programme… Part of your HR programme ought to be developing partnering skills.'

Mark Camley, chief executive of Royal Parks, agrees that healthy working relationships and making sure partners are a good cultural fit are key aspects of a successful PPP.

But he adds that attention needs to be paid to issues of succession and continuity: a PPP shouldn't be exposed to failure because of a change of top personnel.

He told PF: 'Senior staff tend to be around less than the average length of contracts. Where senior civil servants are expected to spend about four years on average in a post, contracts are lasting, on average, between six and ten years.' Relationships cannot just be between the individuals at the top of the organisations involved, he says, rather partnership has to run across all levels.

A good example, he says, is the grounds maintenance contract that Royal Parks signed last year. This included a three-year apprenticeship scheme, which will begin this September. Although the apprentices will be employed by the contractor, their training will be funded jointly by the contractor, Royal Parks and the Learning and Skills Council.

'That's looking at how we can get succession, not only for the contractors in the long term, but where we in the Royal Parks will look to find our park managers,' Camley says.

There is general optimism about the future, although John Yard adds that there is still a long way to go. 'I think understanding relationships and making relationships management work is an increasingly important skill in the twenty-first century and perhaps more important than people imagine.'


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